Tom’s Franchise Information Blog

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Not long ago, I received an email about a 156 page letter I wrote to the Federal Trade Commission on the issues of the new Franchise Rule, which is now law. The individual emailing me was a franchisee who felt that they were burned by their franchisor. They said; You franchisors, use the franchisees for your capital and consider them sacrificial lambs to your own greed!

I was a little taken a back, but not entirely, as I use to be a Franchisor and I have heard all this “evil franchisor” stuff the prior. What is interesting is that, I have also been on the AAFD board and worked to secure fair franchising standards for the franchisee side of the equation. I emailed back and said:

Indeed, I am a “former” franchisor, not an EX-Franchisor, of course. I see your points, my thinking is that in a franchise system, the Franchisor wins when the franchisees win and the franchisees win, if the franchisor wins. When the government intervenes and over regulates, all these costs are passed onto the franchisees and this causes excessive lawsuits, tighter and more controlling documents and agreements. It messes up the franchisor/franchisee relationship from the start makes it adversarial. It is horrible what government has done.

You see I am thoroughly against over regulation especially by the FTC as they cannot even solve the SPAM issue or the Identity Theft issue. Just yesterday some SOB tried to charge one of my credit cards in Monterrey Mexico for $4.66 and it was obviously one of those identity theft thieves and they were testing it. We cannot trust the FTC to regulate franchising, they cannot seem to do anything right, no matter how much additional budget funding they get there in my opinion based on 20 years of strict observations.

So, what is the answer to franchising regulations? De-regulate and allow free markets to prevail, as franchising accounts for 1/3 of every consumer dollar spent in our nation. Impeding franchising will kill our economy, trust me.

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