The Universal Franchisee Bill of Rights
by Ed Teixeira
At a recent meeting the Coalition of Franchisee Associations (
CFA) ratified the Universal Franchisee Bill of Rights. Itís important that
franchisors and franchisees understand what this document states.
Whatever role one plays in the franchise industry itís important to
recognize and be aware of important change. An example of this type of
franchise industry change recently took place. On June 22, 2011, the
Coalition of Franchisee Associations (CFA) unveiled the Universal Franchisee
Bill of Rights during the CFA Day Forum. The CFAís Fair Franchising
Committee presented the document to representatives from CFA member
associations and individual franchisees.
The Universal Franchisee Bill of Rights contains a number of key
components, including: freedom of association, good faith and fair dealing,
full disclosure regarding fees, fair sourcing of goods and services, right
to renew the franchise, right to transfer, encroachment, termination rights
and fairness in dispute resolution. Only members of boards of directors of
franchisee associations can ratify the Universal Franchisee Bill of Rights.
The Coalition of Franchisee Associations Inc. (CFA) is comprised of some
of the largest independent franchisee associations. The CFA headquartered in
Washington, D.C. states its mission is providing vital support and
assistance to the franchisee community. Following are the components of the
The Universal Franchisee Bill of Rights
- Freedom of Association: A franchisee may freely
associate with other franchisees or associations.
- Good Faith and Fair Dealing: A franchisee may rely on a
franchisorís good faith, fairness, exercise of due care, and
performance including the administration of advertising,
rewards programs, marketing funds, and franchise or
- Uniform Application of Brand Standards: Franchisors
shall maintain consistent operating standards under a
specific franchise system brand name and uniformly apply
such standards in a non-discriminatory manner.
- Full Disclosure Regarding Fees Collected From
Franchisees: A franchisor shall make available to the
franchisee all records of marketing, rewards programs, and
related fees that have been paid by franchisees, vendors,
suppliers, and licensees.
- Right to Price: A franchisee may establish the price of
goods and services it sells.
- Fair Sourcing of Goods and Services: A franchisee, or
franchisee purchasing cooperative, may purchase from any
vendor, goods and services that meet the formally
established standards of the franchisor.
- Right to Renew the Franchise: A franchisee may renew its
franchise under terms free of unreasonable costs and or
- Right to Transfer: A franchisee shall have a right to
transfer its franchise to a qualified purchaser, including,
but not limited to, family members or business partners,
without unreasonable costs, stipulations or penalties.
- Encroachment: A franchisee shall have specific mar- ket
protection wherein the franchisor shall not materially
impact the franchiseeís business, or allow another entity
with the same or a similar brand to operate.
- Ample Notice of Significant Change; Franchisee
Termination Rights: Notice of significant change to the
franchise system shall be given in a reasonable time prior
to required changes. A franchisee may terminate without
penalty, or liquidated damages, if a change to the franchise
system would cause substantial negative impact or if the
franchisee is experiencing substantial financial hardship.
Under such termination any non- competition covenant shall
- Default; Franchise Termination Rights: Prior to
franchise agreement termination, the franchisee shall be
given de tailed reasons for alleged default and reasonable
time to cure. Termination shall not occur without good
cause, and termination shall not compel payments of
liquidated damages or early termination fees. All franchise
agreement rights shall remain in full effect for any
franchisee not in default or that cured a default. A default
under one franchise agreement shall not constitute a default
under a different franchise agreement.
- Fairness in Dispute Resolution: A franchisee may elect
to have all dispute resolution proceedings and legal action
occur in the local venue of the franchisee and shall not be
required to submit to mandatory binding arbitration.
To learn more about the organization, please visit
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at