Does Responsible Franchising Exist in The USA? Part 1 - With Aaron Harper, Matthew Haller

The Franchise Hot Seat Podcast with Dr. John P. Hayes - Director, Titus Center for Franchising

DESCRIPTION:

The podcast discusses the concept of responsible franchising, focusing on the selection of the right franchisees. The International Franchise Association's recent social media posts have emphasized the collective responsibility of the franchise community to protect the franchise model. However, the concept of responsible franchising, also known as responsible development, has not been widely accepted in the United States, unlike in Europe where organizations like the European Franchise Federation and the British Franchise Association have been promoting it since the 1980s. The podcast host criticizes American franchisors for selling their brand's master licenses for large sums of money, often leading to failure due to lack of readiness for international expansion. This has led to a perception of greed among American franchisors.

The host also discusses the fear of failure that deters people from buying franchises and emphasizes that not all franchisors are equal. Some are more responsible in developing their franchise networks, providing effective training and support, and having experienced people to teach the system to franchisees. However, there are also franchisors who lack the experience or resources to develop successful networks, or who are simply selling franchises for profit, which is not beneficial for the franchisees.

The host advocates for the franchise community to work together for the good of franchising and to embrace responsible franchising. The current interest in responsible franchising is partly due to potential franchise legislation that could potentially harm the franchise industry. The host encourages all communities to protect franchising, starting with the franchisors.

Matthew Haller, president and CEO of IFA, and Aaron Harper, CEO of the Rolling Suds franchise brand, have proposed four core tenets of responsible franchising: setting clear expectations, ensuring capital adequacy, choosing the right franchisees, and promoting sustainable growth. The host agrees with these tenets but expresses concern that franchisors may continue to fall short in choosing the right franchisees, which often leads to issues within franchise networks. The host plans to discuss solutions to this problem in the second part of the podcast.

- With Aaron Harper, Matthew Haller.
TIMESTAMPS

01:15 - Overview of Responsible Franchising

03:30 - Emphasis on Collective Responsibility by International Franchise Association 06:12 - Lack of Acceptance of Responsible Franchising in the United States

08:45 - Contrasting Approaches in Europe with European Franchise Federation and British Franchise Association

11:20 - Critique of American Franchisors Selling Master Licenses

14:50 - Perception of Greed Among American Franchisors

17:30 - Discussion on Fear of Failure and Varying Degrees of Responsibility Among Franchisors

21:05 - Advocacy for Collaboration and Embracing Responsible Franchising

24:30 - Concerns Regarding Potential Franchise Legislation

28:15 - Call for Franchisor Communities to Protect the Industry

31:00 - Introduction of Matthew Haller and Aaron Harper

32:45 - Four Core Tenets of Responsible Franchising

35:20 - Setting Clear Expectations

38:00 - Ensuring Capital Adequacy

LINKS:

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