IFA's Mission Statement
The International Franchise Association protects, enhances, and promotes franchising.
IFA: The preeminent voice and acknowledged leader for franchising worldwide.
IFA's Code of Ethics
The International Franchise Association Code of Ethics is intended to establish a framework for the implementation of best practices in the franchise relationships of IFA members. The Code represents the ideals to which all IFA members agree to subscribe in their franchise relationships. The Code is one component of the IFA’s self-regulation program, which also includes the IFA Ombudsman and revisions to the IFA bylaws that will streamline the enforcement mechanism for the Code. The Code is not intended to anticipate the solution to every challenge that may arise in a franchise relationship, but rather to provide a set of core values that are the basis for the resolution of the challenges that may arise in franchise relationships. Also the Code is not intended to establish standards to be applied by third parties, such as the courts, but to create a framework under which IFA and its members will govern themselves. The IFA’s members believe that adherence to the values expressed in the IFA Code will result in healthy, productive, and mutually beneficial franchise relationships. The Code, like franchising, is dynamic and may be revised to reflect the most current developments in structuring and maintaining franchise relationships.
TRUST, TRUTH, AND HONESTY:
Foundations of Franchising
Every franchise relationship is founded on the mutual commitment of both parties to fulfill their obligations under the franchise agreement. Each party will fulfill its obligations, will act consistently with the interests of the brand, and will not act so as to harm the brand and system. This willing interdependence between franchisors and franchisees, and the trust and honesty upon which it is founded, has made franchising a worldwide success as a strategy for business growth.
Honesty embodies openness, candor, and truthfulness. Franchisees and franchisors commit to sharing ideas and information and to facing challenges in clear and direct terms. IFA members will be sincere in word, act, and character — reputable and without deception.
The public image and reputation of the franchise system is one of its most valuable and enduring assets. A positive image and reputation will create value for franchisors and franchisees, attract investment in existing and new outlets from franchisees and from new franchise operators, help capture additional market share, and enhance consumer loyalty and satisfaction. This can only be achieved with trust, truth, and honesty between franchisors and franchisees.
MUTUAL RESPECT AND REWARD:
Winning together, as a team
The success of franchise systems depends upon both franchisors and franchisees attaining their goals. The IFA’s members believe that franchisors cannot be successful unless their franchisees are also successful, and conversely, that franchisees will not succeed unless their franchisor is also successful. IFA members believe that a franchise system should be committed to help its franchisees succeed, and that such efforts are likely to create value for the system and attract new investment in the system.
IFA’s members are committed to showing respect and consideration for each other and to those with whom they do business. Mutual respect includes recognizing and honoring extraordinary achievement and exemplary commitment to the system. IFA members believe that franchisors and franchisees share the responsibility for improving their franchise system in a manner that rewards both franchisors and franchisees.
OPEN AND FREQUENT COMMUNICATION:
Successful franchise systems thrive on it
IFA’s members believe that franchising is a unique form of business relationship. Nowhere else in the world does there exist a business relationship that embodies such a significant degree of mutual interdependence. IFA members believe that to be successful, this unique relationship requires continual and effective communication between franchisees and franchisors.
IFA’s members recognize that misunderstanding and loss of trust and consensus on the direction of a franchise system can develop when franchisors and franchisees fail to communicate effectively. Effective communication requires openness, candor, and trust and is an integral component of a successful franchise system. Effective communication is an essential predicate for consensus and collaboration, the resolution of differences, progress, and innovation.
To foster franchising as a unique and enormously successful relationship, IFA’s members commit to establishing and maintaining programs that promote effective communication within franchise systems. These programs should be widely publicized within systems, available to all members of the franchise system, and should facilitate frequent dialogue within franchise systems. IFA members are encouraged to also utilize the IFA Ombudsman to assist in enhancing communication and collaboration about issues affecting the franchise system.
OBEY THE LAW:
A responsibility to preserve the promise of franchising
IFA’s members enthusiastically support full compliance with, and vigorous enforcement of, all applicable federal and state franchise regulations. This commitment is fundamental to enhancing and safeguarding the business environment for franchising. IFA’s members believe that the information provided during the presale disclosure process is the cornerstone of a positive business climate for franchising, and is the basis for successful and mutually beneficial franchise relationships.
IFA’s members are realistic about franchise relationships, and recognize that from time to time disputes will arise in those relationships. IFA’s members are committed to the amicable and prompt resolution of these disputes. IFA members believe that franchise systems should establish a method for internal dispute resolution and should publicize and encourage use of such dispute resolution mechanisms. For these reasons, the IFA has created the IFA Ombudsman program, an independent third-party who can assist franchisors and franchisees by facilitating dialogue to avoid disputes and to work together to resolve disputes. The IFA also strongly recommends the use of the Franchise Mediation Program (FMP) when a more structured mediation service is needed to help resolve differences.
Support of IFA and the Member Code of Ethics
Franchisees and franchisors have a responsibility to voice their concerns and offer suggestions on how the Code and the International Franchise Association can best meet the needs of its members. Franchisors and franchisees commit to supporting and promoting the initiatives of the IFA and advocating adherence to the letter and spirit of the Member Code of Ethics. Members who feel that another member has violated the Code in their U.S. operations may file a formal written complaint with the President of the IFA.
For more information contact the IFA at (202) 628-8000.
STATEMENT OF GUIDING PRINCIPLES
For sixty years the International Franchise Association has worked to educate franchisors and franchisees on beneficial methods and business practices to improve franchising.
Franchising is a dynamic and evolving method of expansion and business ownership. Beginning with the adoption in 1970 of the first franchise disclosure requirement in California; working with the Federal Trade Commission to achieve the first national franchise disclosure rule in 1979; continuing with our efforts that contributed to changes to the federal Franchise Rule in 2007; and ensuring an ongoing constructive dialogue between our leadership and federal and state regulators and government leaders, the IFA has continually worked for improvements to pre-investment franchise disclosure and franchise relations.
Through the considerable and continuing efforts of our association and its members, the IFA has contributed to the growth and stability of franchising in the United States. It is because of the historic and continuing efforts of the IFA and its members to improve pre-investment disclosure and advance beneficial franchising practices that franchising is one of the most important vehicles today for the creation of small businesses ownership and jobs in the United States.
This Statement of Guiding Principles has been promulgated for and has been adopted by the Board of Directors of the International Franchise Association in our continuing effort to advance improvements in franchise practices and to enhance franchise relations. As an association of franchisors, franchisees and suppliers we believe:
1. Franchising is a unique business model. It is in the interest of the franchisor, each franchisee, the suppliers to the franchise system and the consuming public that franchisors define, maintain and enforce Brand Standards throughout the franchise system.
2. It is the goal of every business that each stakeholder be successful and franchising is no different. Franchisors and franchisees need to be profitable to be successful. However, as in any business model, franchising is not immune to the risk of failure and neither the franchisor nor the franchisee is guaranteed economic success.
3. Franchisees should clearly understand the franchise business model before investing. It is the responsibility of each prospective franchisee to conduct a thorough due diligence of the franchise system, to retain competent legal and other advisors, and to fully understand the terms contained in the Franchise Disclosure Document before signing any Franchise Agreement.
4. Prospective franchisees have the prerogative, at the start of the franchise relationship, whether or not to enter into any particular franchise relationship. Prospective franchisees may also choose to not become franchisees of any franchise system.
5. While not transferring any equity in the franchisor’s intellectual property to the franchisee, franchisees should have the opportunity to monetize any equity they may have developed in their business prior to the expiration or termination of the franchise agreement.
6. The licensor is the owner of its intellectual property, including without limit, its trademarks, trade secrets, methods and standards of operations. The Licensor has the right and also the obligation, under the law, to protect its intellectual property and to define the terms under which it licenses to others the use of its intellectual property. It is the terms contained in the Franchise Agreement that define the license granted to franchisees and which govern the relationship between the franchisor and franchisee.
7. Franchisors should clearly understand the franchise business model prior to choosing franchising as a method to expand their business concept. Franchisors should be knowledgeable and understand the financial, business and legal terms included in their Franchise Disclosure Document and Franchise Agreement.
8. The franchisor has the right, as owner of its intellectual property, to include or not include successor rights in the Franchise Agreement offered to prospective franchisees. The franchisor also has the right to establish the then current terms contained in the successor agreements it offers to franchisees. Franchisees may choose to negotiate, accept or reject any offer.
9. Clarity and transparency are essential for establishing and maintaining positive franchise relationships and for the goal of continuous improvements in the franchising environment. Franchisors and franchisees should maintain proactive business policies, communication practices and regularly consult with each other for the enhancement of franchise relations.
10. Subject to the requirements under the law, franchisors should focus primarily on the business requirements of managing and striving for improvements to their franchise system. Franchisors should support their franchisees and enforce Brand Standards necessary to enhance the economic performance for both the franchisees and the franchisor. It is the responsibility of franchisees to manage the day-to-day affairs of their businesses to meet the franchisor’s Brand Standards.
11. Improved pre-investment disclosure will benefit both prospective franchisees and franchisors by enhancing the competition among franchisors for qualified franchisee candidates. By clearly communicating the terms contained in a franchise offering, prospective franchisees will be better able to evaluate and make investment choices among the wide range of franchise opportunities available to them and to choose from those that meet their goals, ambitions, financial and, other requirements.
12. Market Forces, and not government mandates and relationship laws, should create the climate for changes to Franchise Agreements and should drive improvements in franchising practices.