Federal Trade Commission 4/18/97 RE: Franchise Rule (16 CFR Part 436?) To Whom It May Concern: I am a Franchisee of 15 years and currently operate 17 locations employing about 300 people. This letter is to express my strong belief that the FTC needs to address the business practices Franchisors are now attempting to use on their existing Franchisees. With growth of the Franchise universe during the last 20 years, Franchisors are now succumbing to the temptation to use their privileged position to institute coercive operating, exit, renewal and competitive practices. Over the past five years, my Franchisor has changed its focus from "Parent of Franchisees" to "operator of company owned stores". The Franchisor is now opening company owned stores to compete with its own Franchisees. In this way, the Franchisor cashes in on the name recognition built by the very Franchisees its predatory practices now harm. This practice is predatory because the primary banner under which the Franchisor solicited our money and legal commitment was the growth and well-being of the Franchisee body. But the opening of company owned stores to the detriment of established, successful Franchisee locations demonstrates that existing Franchisees live in a marketplace where, if they are successful, the Franchisor will invariably find the temptation to enter the market as a competitor to great to resist. At that point, the constructive agreements which described the initial relationship no longer protect the Franchisee from the challenges of the better financed Franchisor with in-house legal staffs. Because of this and similar situations, I ask that you not restrict your oversight to new Franchise offerings. The existing Franchisee community is in need of assistance to assure that Franchisors are held to a minimum standard of good faith and fair dealing. This minimum standard is absent from many current Franchisor's operations. Sincerely, Terrence L. Packer 6472 Camden Ave. Suite #203, San Jose, CA 95120 (408)927-9171 Fax (408)927-9172 |