More Regulatory Structure for Franchising?

Posted on by Paul Segreto

enforcement2Real estate, insurance and financial services industries all fall into the category of highly regulated and policed industries.

Licensing, including testing, are required for all sales personnel. Continuing education is also mandatory. Each industry has some type of regulatory agency with enforcement powers whose primary focus is to maintain the integrity of the respective industry. Each industry maintains some type of bonding or minimal cash position requirements to ensure economic stability.

If franchising adopted a similar structure, or a portion thereof, what would be the pros and cons? What would the effects be over the next twenty years?

Recent discussions in various franchise groups eluded to the fact that there are too many franchisors within franchising today. There’s been talk of less than ethcial practices by various franchisors and very poor business practices by others. Would tighter controls and stricter requirements strengthen or actually weaken the franchise industry?

Mind you, before chastising me about all of the above, believing it is my intent to propose more regulation and the requirements that come along with regulation, please understand it is not my position that any of the above be entertained. Instead, I believe issues need to be discussed, problems need to be identified, and solutions need to be implemented to fortify ALL franchising sooner by the ENTIRE industry itself, rather than later when it’s out of our hands.