Multi-Unit Franchisee Magazine Issue I, 2016 | Page 64

Freedom of Associations
should I sign a franchise agreement if my
corporation has substantial assets, much
more than required by the franchisor in
the qualification process?”
When it comes to transfers, he says,
most franchise agreements have a provision that the buyer must sign the thencurrent franchise agreement. Yet, if the
seller made their initial investment decision based on a royalty rate calculated
over a 20-year agreement, this provision

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reduces the value of their investment if
they sell in say, year 13 and the buyer has
to sign at a higher rate.
“One thing that should not change is
the royalty rate. That needs to be guaranteed for 20 years—even if you sell the
business,” says Hashim. “To raise it from
4 to 5 percent decreases my equity. When
the term is over, all bets are off.”
On the other hand, many people think
franchise agreements should be more equal.

Improving the System

ary Robins is a longtime Supercuts franchisee with 48 salons. He’s involved
in the independent Supercuts Franchisee Association (SFA), as well as with
the CFA, where he’s a board member. “The CFA helps us make our voice
at SFA be a little louder and have a little bit more clarity,” he says. “We want to run
our association better and bring more value to our members by getting together
with other association members.”
The SFA’s mission is to enhance the personal and professional lives of its members by sharing best practices, he says. It’s also to present a “united voice from the
franchisees to take to our franchisor—mostly in a positive direction.” He also appreciates the value of being in a group of successful people
in the same business dealing with the same issues he is.
“Whatever challenge you may be experiencing, other
people have gone ahead of you and have addressed that
challenge in nine different ways from five different directions,” he says. “Why wouldn’t you join the association?
It’s a no-brainer.”
On the legislative front, he says, “There are a lot of great
franchisors out there, but there are some bad actors.” The
challenge is how to advance legislation to protect against
the bad actors without causing harm to the people who
are doing it right. “It’s a balancing act.”
“We [CFA] work cooperatively with other organizations, the IFA specifically where we have common ground,
and make reasonable progress on franchisee-franchisor
issues, which would include supporting certain aspects of
Gary Robins
legislation, whether at the state or federal level to protect
franchisee equity.”
Internally, says Robins, relations with the franchisor are good these days—but
there’s always room for improvement. “How do we make the brand better?” he
asks. “There’s always a little bit of friction. It’s their brand, they own it. We have a
different opinion sometimes on how to improve the brand. That’s always the issue:
working in a spirit of cooperative endeavor. I think our franchisor is great in that
respect. They certainly work with us in a spirit of cooperation.”
One item on his agenda this year is the large number of new franchisees entering the Supercuts system. “We have more new franchisees in the past 2 years than
in the past 15 years combined,” he says. This is a new issue for the brand he says,
and raises two questions: 1) how to get the new franchisees engaged in the SFA,
and 2) how to ensure corporate is ramping up its resources to make sure the new
franchisees are successful.
Robins says his involvement stems from his passion about entrepreneurship
and franchising. “I think franchising is a great place to start, and I want to protect
it. I want to see more young people start businesses.”
At the end of the day, says Robins, there are two types of franchisors: 1) those who
say, “This is our brand, we own it,” and 2) those who say, “Our success flows from
the success of our franchisees.” Fortunately, he counts Supercuts among the latter.

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“I disagree pretty strongly with the idea
that f