The National Franchise Council (NFC) took one step forward in its quest to turn franchisors and franchisees away from litigation and toward mediation. This spring, state Attorney General Eliot Spitzer made New York the first of 12 states with franchise regulation to adopt the NFC's education process. Now the NFC's goal is to get the other states on board.
As it stands, if a franchisor commits a minor violation of the New York Franchise Act (for example, not upholding the disclosure requirement), the franchisor can go through NFC retraining in franchise sales practices rather than endure an enforcement proceeding and its consequences. "This shows franchisors are willing to step up to the plate to solve problems and cooperate with regulatory agencies, whether it's on a federal or state level," says NFC chair Morton Aronson.
New York franchisees benefit in several ways: Besides being able to mediate disputes with franchisors, they essentially receive better disclosure documents from re-educated franchisors, and can save time and money by dealing with the NFC as opposed to state agencies or the Federal Trade Commission (with which the NFC has a similar partnership).
So far, the program's future looks bright. "More state governments are starting to think outside the box and recognize they can work creatively with the private sector to effectuate public policy goals," says NFC executive director Neil Simon. Word on the street is that partnerships from additional regulatory states could arise in the near future.