American Association of Franchisees and Dealers

The American Association of Franchisees and Dealers (AAFD){{cite web |date= |title=American Association of Franchisees and Dealers, Your Center for Total Quality Franchising |url=https://www.aafd.org/ |accessdate=2012-09-29 |publisher=AAFD}} came into existence because United States laws which purport to regulate franchising effectively legalize abusive franchising practices, rather than restrict franchise fraud. As long as the franchisor discloses the details of its practices, the unethical practices are enforceable. The AAFD seeks to provide a counterbalance to franchisee-unfriendly franchising regulations and franchise misrepresentations in the franchising industry by providing resources to franchise associations, franchisees, franchise owners and prospective buyers. The AAFD is a national non-profit trade association dedicated to defining and promoting best franchise practices.

The AAFD established balanced standards of fair franchising practices for the franchising community so that franchise buyers would have objective criteria by which to judge a franchise opportunity.{{cite web |date= |title=Fair Franchising Standards | AAFD - American Association of Franchisees & Dealers |url=https://www.aafd.org/fairness-initiatives/fair-franchising-standards/ |accessdate=2012-09-29 |publisher=AAFD}}

The American Association of Franchisees and Dealers House of Delegates adopted and promulgated the Franchisee Bill of Rights on June 6, 1996, and works to promote awareness and acceptance of these rights among the franchising community and the general public: The Franchisees of America, representing the best of the American entrepreneurial spirit, hereby recognize and demand a basic minimum of commercial dignity, equity and fairness. In recognition there of, the franchisees of America do proclaim this [https://www.aafd.org/fairness-initiatives/franchisee-bill-of-rights/ Franchisee Bill of Rights] as the minimum requirements of a fair and equitable franchise system.

Franchise fraud is defined by the United States Federal Bureau of Investigation as a pyramid scheme.{{cite web|url=https://www.fbi.gov/scams-safety/fraud |title=FBI — Common Fraud Schemes |website=FBI.gov |date= |access-date=2012-09-29}}

The success of the franchising format of small business ownership has led to a significant imbalance in the relative bargaining power of franchisors and franchisees. Today, in the franchise agreement contract, the modern franchise frequently provides no exclusive territory, restricts the activities of the franchisee as an independent businessperson, provides that the franchisor controls the franchise location and restricts the franchisee from continuing in business upon franchise termination. The modern franchisee may be merely a license to operate the business on behalf of the franchisor for the term of the franchise. Some franchises agreements specifically state that the franchisee owns no equity in the business, and that the business really belongs to the franchisor. Most modern franchise agreements promise very few required services and little support from the franchisor.

In the United States, franchising is regulated by a complex web consisting of the Federal Trade Commission Franchise Rule, state laws, and industry guidelines.{{cite web |url=http://www.franchiselawsource.com/overview_franchise_regulation.html |title=Scott C. Kern, Attorney at Law, LLC | An Overview of Franchise Regulation in the United States |publisher=Franchise Law Source |date= |accessdate=2012-09-29 |archive-url=https://web.archive.org/web/20101211060439/http://www.franchiselawsource.com/overview_franchise_regulation.html |archive-date=2010-12-11 |url-status=dead }} The most recent version of the Franchise Rule was in 2007, is printed in the Federal Register / Vol. 72, No. 61 / Friday, March 30, 2007 / Rules and Regulations, pages 15544 to 15575. (page 1 to 133 of this cited pdf file) {{cite web|url=http://www.ftc.gov/os/fedreg/2007/march/070330franchiserulefrnotice.pdf#page=102|title=Federal Register / Vol. 72, No. 61 / Friday, March 30, 2007 / Rules and Regulations|publisher=Ftc.gov/os/fedreg|accessdate=2012-09-29}}

The Franchise Rule specifies what information a franchisor must disclose to a prospective franchise business as a franchise opportunity.{{cite web|url=http://business.ftc.gov/documents/inv07-franchise-and-business-opportunities |accessdate=August 29, 2012 |url-status=dead |archiveurl=https://web.archive.org/web/20131006013444/http://business.ftc.gov/documents/inv07-franchise-and-business-opportunities |archivedate=October 6, 2013 |title=Federal Trade Commission Apology Page }}{{cite web|url=http://www.ftc.gov/opa/2007/01/franchiserule.shtm |title=FTC Issues Updated Franchise Rule |publisher=Ftc.gov |date= 23 January 2007|accessdate=2012-09-29}}

Franchisors that practice franchise fraud will attempt to pressure a franchisee leaving the franchise system sign a non-disclosure agreement, confidentiality agreement, or a gag order. The gag order will help prevent prospective new franchisees learning important details about the churning franchise.

In May 2024 the AAFD published an important white-paper on [https://www.aafd.org/fairness-initiatives/white-paper-series/the-new-nlrb-joint-employer-rule/ The New NLRB Joint Employer Rule]: Unpacking the Conundrum for Franchisees: Why AAFD Accreditation can eliminate the Joint Employer Threat in Franchising.

• Franchise disclosure document
• Rollovers as Business Start-Ups
• Frivolous litigation
• International Franchise Association

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• [https://www.aafd.org/ Official website]

Category:Trade associations based in the United States

Category:Consumer rights organizations

Category:Consumer protection in the United States