Franchisee associations are a common voice — for griping or open dialogue, Chad Finkelstein

These franchisees can add themselves to the growing list of people owed money by Target, but it isn’t necessarily every franchised Target Canada pharmacist for him- or herself. Several of them joined forces well in advance of the events of this past week and formed an association called the Pharmacy Franchisee Association of Canada (PFAC) with a view to confront the collective issues they were facing with Target as the revenues they had anticipated failed to materialize.

Financial Post
January 25, 2015

Franchisee associations are a common voice — for griping or open dialogue
Chad Finkelstein

Target%20pharmacy3.jpg

The exterior of a Target store is in Toronto. Target says it will close its 133 stores in Canada, a market that it entered only two years ago. The Canadian Press/Nathan Denette

By now we have all read the post-mortems of Target Canada, and studied in-depth analyses of the empty shelves, misguided brand adaptation for a local market and unpaid suppliers. But the fates of the franchisees have been somewhat overshadowed. No, not the retail stores — Target is not a franchise system and each store is corporate-owed and operated. But within those stores, certain outlets are actually franchised.

For example, the Starbucks units inside Target stores were franchised operations, run by Target and not by Starbucks head office. Those outlets all shuttered earlier this week. The pharmacies in Target stores in Canada were also franchised, and those pharmacist franchisees do not necessarily grab the same headlines as a closed Starbucks or Target does, so the profile they can generate remains to be seen.

These franchisees can add themselves to the growing list of people owed money by Target, but it isn’t necessarily every franchised Target Canada pharmacist for him- or herself. Several of them joined forces well in advance of the events of this past week and formed an association called the Pharmacy Franchisee Association of Canada (PFAC) with a view to confront the collective issues they were facing with Target as the revenues they had anticipated failed to materialize.

And why shouldn’t they? In Ontario, Alberta, Prince Edward Island, New Brunswick and Manitoba, and shortly B.C., where franchise laws are in place, franchisees are entitled to band together and associate as a group. Not only that, but all of these provinces’ legislation expressly prohibit franchisors from interfering with a franchisee association or engaging in any conduct that deprives a franchisee of the opportunity to participate.

Franchise associations frequently serve as a forum for franchisees to coalesce, identify common grievances and communicate with the franchisor as a united voice. There is strength in numbers, and franchise associations are often heard by franchisors, where individual franchisees may not be heard. Not to say that every issue advanced by a franchise association is necessarily the correct position to take or one a franchisor must respond to, but the benefit of the association is that issues become difficult to ignore.

Of course, a franchise association can exist for far more purposes than to gripe about franchisor mistreatment or misguided system policies or directions. At its best, the association works with a franchisor, and not against it.

It can even allow franchisors to initiate discussions with a group of franchisees before making certain decisions. For example, when introducing a new product line, encouraging store renovations or rolling out a rebranding strategy, franchisors find that the benefits of open collaboration outweigh the cons.

With an association already in place, franchisors are able to broach common issues once, rather than having to reach out to each individual franchisee. It should be noted that courts look favourably on franchisors who can demonstrate that they initiated system changes and modifications after having consulted with their franchisees.

It is far too early to predict what result PFAC can achieve in the face of Target Canada closures, but franchisors and franchisees alike should be open to exploring what the formation of a franchisee association can do to improve the system and their relationships with each other.

Chad Finkelstein is a franchise lawyer at Dale & Lessmann LLP (www.dalelessmann.com) in Toronto and can be reached at moc.nnamsselelad|nietsleknifc#moc.nnamsselelad|nietsleknifc or (416) 369-7883.

http://business.financialpost.com/2015/01/25/franchise-associations-are-a-common-voice-for-griping-or-open-dialogue/


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