Franchise owners (franchisees) have locally-owned and operated small businesses. Franchisees take on all of the risk to start these businesses, while franchisors take on zero risk and are all somehow able to have completely one-sided franchise agreements.
These agreements strip away essentially all rights of franchisees when dealing with the franchisor. Some things make sense in this arrangement - you pay to be part of a franchise to learn their systems, have a recipe for success, and have approved products/menus/ingredients to create consistency within a brand.
The problems with many of these is that franchisors have zero accountability. They can enter into horrible business deals with suppliers where they make money on kickbacks, driving up the costs for franchisees and reducing/eliminating profits. Franchisees are forced to use their vendors, regardless of how nonsensical the costs are or inefficient/problematic the technology is. Many agreements take away the rights of multiple franchisees to get together in a class action lawsuit against a franchisor who is not acting in the interest of its franchisees. Nearly all agreements force a waiver of trial by jury and force arbitration as a first step.
If you are a franchisee in one of the very few successful franchise brands (meaning the brand is profitable for both franchisees and franchisors), you aren’t going to have many of these concerns. For the overwhelming majority of franchisees, these one-sided relationships/agreements create a myriad of problems.
There should be some standard protections and franchisee rights to protect small business owners who take on 100% of the risk while their franchisor takes no risk and is able to profit in many cases over even failing franchisees.
One serious consideration should be the non-compete portion of these agreements. If a franchisee signs a 10-year contract and comes up for renewal, they should not go into that scenario with a gun against their head. The franchisor should have to bring enough value for a renewal to make sense or the franchisee should be able to keep their business and leave the brand. If it is a good brand (let’s say Tropical Smoothie Cafe where customers know the brand throughout the country and they deliver solid marketing, menus, etc.), the franchisee is not going to change the name on the door and make their own smoothie brand. It wouldn’t make sense because the franchisor continues to bring value.
Again, 100% of the risk (franchise fees, royalties, payroll, insurance, marketing, taxes, rent, personal guarantees on rent, SBA loans, personal guarantees on SBA loans) falls on the franchisees and not the franchisor. If the owner spends a decade in a brand and decides that the franchisor is not bringing value and just skimming from their profits, that owner should be able to leave the brand without repercussions.
Something needs to change for these small business owners who are so vital to the communities in which they serve and create jobs.