Regulating the Relationship Between Franchisor and Franchisee: Has the American Dream Become a Corporate Scheme?

Authors

Harper Palmer

Abstract

Franchisors sell the American Dream to franchisees, marketing it as an opportunity to effectively “own your own business,” while minimizing initial investment. Despite this, franchise agreements often unfairly favor the franchisor—this makes sense considering the need for franchisors to set standards of performance and consistency for the brand; however, this leaves franchisees exposed to unfair and deceitful practices that often are typical of the franchising system. When Franchisors base their corporate franchise model on serving their franchisees and increasing system-wide profitability, franchise systems thrive; however, when franchisors obsess over their own bottom-line, rather than that of the franchisee, it can be detrimental to both parties. The dissonance in the interests of franchisees and franchisors has become more prominent as contemporary advancements are made in the industry. The best franchise systems find a balance between the interests of the franchisor and the franchisee to contribute to overall success. Increasing regulation on the franchise industry and incentivizing franchisors to become more focused on franchisee profitability will allow for greater mutual success and increase the likelihood of long-term sustainability of the franchise model.

First Page

186

Recommended Citation

Harper Palmer, Regulating the Relationship Between Franchisor and Franchisee: Has the American Dream Become a Corporate Scheme?, 6 Bus. Entrepreneurship & Tax L. Rev. 186 (2022).
Available at: https://scholarship.law.missouri.edu/betr/vol6/iss1/12