Susan P. Kezios is the President and Founder of the American Franchisee Association. She was an expert witness at a public hearing in March of 2000 as part of the creation of the Arthur Wishart Act.
The full hearing can be found at Queens Park website.
You will find a few familiar names that have had an impact on our Franchise Agreement within this hearing.
Here are a few excerpts of Ms. Kezios testimony;
She is giving a comparison of issues that affect both U.S. and Canadian Franchisees.
“When you are buying the franchise and you sign the contract, you say, “What happens at the end of my initial term?” and the franchisor sales representative says, “Don’t worry, we’ll renew you.” What they don’t tell you is that you’re not going to be renewed on exactly the same contract. They say, “You will sign” – this is important: Today, when I’m buying the franchise, I am signing that when my initial term ends, I will sign the then current contract. As long as I’m not in default, I will be able to sign the then current contract. You don’t know what that contract is going to be. The franchisor doesn’t even know what that contract is going to be. So you are agreeing today to sign something 10 or 15 years hence that is a moving target.”
Here she explains the need for governmental legislation within franchising;
“Why has franchising evolved to where legislation is necessary? Two reasons: When it started in the United States in the 1950s, it was often a handshake. It was a two- or three-page agreement, a pretty easy contractual relationship. But franchise agreements have evolved today to the point where, except for the provisions relating to the use of the trademark, the use of the proprietary information and payment of fees, almost every other provision has some element of controlling, trapping or defeating the franchisee.”
“Franchisees, you have to understand, are governed by these totally one-sided contracts that are drafted by the franchisors’ attorneys. There is unequal bargaining power from the beginning … and the franchisor has arbitrarily decided on the rules by which the two parties are going to conduct their business after they sign the contract. Those rules are incorporated into the franchise agreement, which the franchisor prepares unilaterally for the franchisee to sign. What is even worse is that franchisors justify their own abuses, post-sale, by claiming that pre-sale disclosure in these lengthy, unintelligible legal prospectuses makes any abusive trade practice they do after sale totally legal.”