AAFD Accredited Agreements Do Not Translate to Good Franchise Investments

Blue MauMau:

The Chair of the American Association of Franchisees and Dealers, Robert Purvin, says that the organization’s accredited franchise agreements should not be seen as an endorsement to buy that franchise.

Here is his interview with the Blue MauMau community.

Blue MauMau: What meaning does the AAFD accredited fair contract have?

Purvin: The meaning is that it is a fair contract and a contract that the AAFD has endorsed as being at least 95% in compliance with the AAFD’s Fair Franchising Standards. AAFD Accredited Contract Status is NOT a validation of the business model of a brand. The marketplace goes in and buys something because of the sizzle and forgets there may not be ownership of that sizzle.

Often what happens is when you look into a franchise agreement you find that you didn’t buy anything. McDonald’s owns the real estate. It owns the equipment. You have very limited renewal rights so you don’t pick up value. You may buy a revenue stream for a period of years, which may justify your investment, but the agreement places a franchisee in a very precarious position .

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