IFA "Fouls one off" in latest report...

https://www.franchisewire.com/ifa-issues-responsible-franchising-report/

While the intentions of the International Franchise Association are admirable, the most recent recommendations from this association's latest report leave something to be desired.

Everyone wants a level playing field with both Franchisors and Franchisees behaving in a responsible, ethical, and hopefully inspiring manner. The truth is that this is often not the case and governing rules become necessary primarily to keep honest people.

Now it should be noted that the IFA has no legal or governing authority over the Franchising space. What they do have is the ear of the Federal Trade Commission (FTC), which does have the legal authority to govern and investigate individuals and companies within the franchising space. Franchisees that have a legitimate complaint against a Brand and/or Franchisor can formally file this complaint and the FTC is required to investigate. https://reportfraud.ftc.gov/ Like most government agencies the more information you provide that supports your claim will make it easier for the FTC to investigate and consequently please be as thorough as possible and be prepared for follow-up questions, supporting documentation, testimony, and any other requests that support your claim.

Getting back to the most recent IFA recommendations, the biggest miss in support of their charter, which is to create fair and honest business practices within the Franchising space, is Item 19 within the Federal Disclosure Document (FDD). Item 19 gives the Brand / Franchisor the opportunity to share the financial results of their Franchisee business partners. Those brands with a strong proof of concept are eager to share these results as this will help them grow their Franchise network via new Franchise business partners. Emerging brands and/or those brands with less than favorable proof of concept results are reluctant to share these financials for obvious reasons. The IFA should make the recommendation that the Item 19 section of the FDD is mandatory for all Franchised locations that have been open for more than one (1) calendar year. This will accomplish two things; 1. The Franchisor will be forced to focus more on the Franchisee unit economics; 2. The Franchisee will be forced to focus more on the financial results of their business from day one (1). Further, the recommendations as it pertains to items, 7, 19, 20, & 21 take the form of improved and easier to understand reporting. What they fail to do is provide a solution to this recommendation by sharing examples or best practice templates for Franchisors and Franchisees to follow. Under this recommendation a Franchisor can believe they are being clear and transparent, which is a subjective measure, and is defined by the originator of the information being presented.

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