minutes of the world franchise council meeting 29, …€¦ · welcome by the host association...

Secretariat for the World Franchise Council (from April 2011)

Franchise Association of New Zealand- FANZ

Contact: [email protected] or [email protected]

MINUTES OF THE WORLD FRANCHISE COUNCIL MEETING

February 27–29, 2012

Mexico City

Hosted by the Mexican Franchise Association (AMF)

ALL Members have 28 days from the distribution date of the Minutes to confirm or veto the Minutes.

This must be communicated to the SECRETARIAT in writing within the 28 days.

Members absent at the meeting who remain silent during this period are presumed to endorse the

Council's actions and the Minutes.

Minutes distributed on 20th April 2012.

Meeting co-chaired by:

Effective Chair (Chairman of Host Association):

Mr. Diego Elizarraras: Chairman – (AMF)

Mr. Carlos Roberts: International Affairs – (AMF)

Chairman Elect (Chairman of Next Meeting Association):

Dr. Mustafa Aydin: President - (UFRAD)

Assisting the above: The WFC Secretariat

Mr. David Foster: Chairman – (FANZ)

Mr. Graham Billings: Executive Director – (FANZ)

Attendance: Country Participants: 18

Absent: Australia, Austria, Belgium, Brazil, Canada, China, Croatia, Ecuador, Egypt, EFF, Finland,

Germany, Hong Kong, India, Indonesia, Italy, Japan, Korea, Morocco, Netherlands, Poland, Portugal,

Slovenia, Sweden, Switzerland.

Observers: Mexico, New Zealand, Turkey.




DAY 1 February 28th, 2012

1. Welcome by the Host Association (AMF)

Mr. Diego Elizarraras, as Chairman of the host association, welcomed members to Mexico.

He went on to say that he and the AMF would do everything possible to ensure that

everyone would have a productive and pleasant stay and outlined the timings for the social

events and the attendance at the International Franchise Fair.

Mr. Carlos Roberts added his welcome and introduced the Director General of the AMF,

Lic. Jorge Alba, who would be available to assist delegates if necessary.

Mr. Elizarraras then invited delegates to introduce themselves and following this the

Secretariat confirmed that there was a quorum and that the meeting was properly

constituted.

2. Presentation of the Agenda and General Matters

Mr. Graham Billings for the General Secretariat advised that the timing of agenda items was flexible to provide appropriate time for discussion and that some items scheduled for the following day may be brought forward. There was one additional item to be added to the agenda, a proposal to change the membership structure of the Strategic Planning Group.

A motion to approve the Minutes of the Manila meeting was moved by Mr. Jack Earle/IFA and seconded by Mrs Chantal Zimmer/FFF.

The Council unanimously approved the Minutes of the Manila meeting.

Matters Arising

Research by the University of East Anglia – Mr. Brian Smart/BFA said the research program had petered out and it would appear that this was the end of the matter. He recommended that the Council should support research that is universal and not commercially based.

Mr. Smart also reported that the United Nations World Investment Report included a section on Franchising. He had attended a meeting on Investment for Development regarding International Investment Agreements, but was not sure how franchising can take its place in transnational discussions/trade arrangements. He suggested that a discussion be undertaken regarding information that could be provided by each country.

The membership of Kazakhstan was terminated by the Secretariat as agreed by Council at its last meeting. In the absence of a traceable mailing address, this was done by email. No response was forthcoming.

Mr. Brian Smart reminded Council of the initial difficulties that there had been in establishing the WFC’s bank account due to the bank’s requirements for credit checks on all members of the Council. At the last meeting he reported that the Royal Bank of Scotland (RBS) had agreed to limit the credit check to him alone and a process of authorisation had been agreed by Council. Further difficulties had since arisen regarding a possible sale of a group of accounts, including the WFC account, to the Spanish bank, Santander, which did not meet with his approval; however he has now




been assured by the RBS that the WFC account will be retained by the RBS. The account will be opened within the next few weeks.

United Nations Paper. Mr. Brian Smart will provide a report for the Turkey meeting.

WFC Logo registration. An agenda item for this meeting.

Mr Abdul Malik Abdullah (MFA) wished to clarify the Minute of the Workshop on Day 3 of the Manila Meeting. In reference to the comments regarding previous Chairmen, he wished to state that they were as expressed by a few Members who had resigned and were not his own or the general feeling amongst members. Previous Chairman had contributed greatly to the on-going success of MFA.

3. Interim Financial Report

Mr. Brian Smart -Vice Secretariat for Financial Affairs reported that the only income had come from subscriptions and the only expenditure was the stipend paid to the General Secretariat and costs of external work undertaken.

Audited accounts were presented at Manila and invoices for the 2012 subscriptions had been sent amounting to $20,266.00. Twelve subscriptions so far had been paid although there are no difficulties expected in payment of the balance.

US$2,000.00 remains outstanding from subscriptions due in 2011 of which 50% of this was expected to be collected. The balance outstanding will be discussed at the next meeting in Istanbul.

4. Report of the Admission Committee for Venezuela and Guatemala

At the Manila meeting it had been agreed that the membership committee be comprised of Mexican Franchise Association, International Franchise Association and Malaysian Franchise Association. Mr. Carlos Roberts had spoken to the General Manager and Directors of the Associations regarding the providers/consultants who were involved in the Associations and they were to discuss that further. The WFC does not allow associations into membership where providers/consultants are in a majority. Guatemala and Venezuela had indicated that they will change their by-laws to prevent a provider or consultant being a Chairman of the Association.

Mr. Sotiris Yanakakis – Vice Secretariat for Legal Affairs, had reviewed the documents of both Venezuela and Guatemala and should be involved in approving new members. Mr. Yanakakis had sent his report on Venezuela to the General Secretariat. There were difficulties with the Guatemala documents because they were in Spanish and a translation is waiting to be received.

Mrs Chantal Zimmer agreed that the Vice Secretariat should report to the WFC or the Admissions Committee.

Dr. Mustafa Aydin queried the requirements for accepting new members to the WFC. Mr. Yanakakis replied that there are rules to be followed, although he thought there was no clear procedure as far as the process for the Committee to follow.

Mr. Carlos Roberts suggested that the role of the Committee was to work with the applicant to ensure compliance with the WFC rules and this was agreed.

Mrs Chantal Zimmer said that the procedures were clearer than they were before the Berlin meeting. Clarity is required.




Mr. Brian Smart advised that detailed procedures have been established including a legal review to check the applicant’s constitution complies with WFC requirements and also a review of the composition of the applicant member i.e. to see if the membership is representative of franchising in that country. He said that the procedures already established should be adhered to.

Mr. Graham Billings – General Secretariat, said that the Admission Committee Rules were updated last year, which included requirements for membership. Clause 3 of the Internal Rules states how the Committee is to work. Only the Chair of a WFC meeting has to be a Franchisor (Article 15 of the WFC Constitution) not all of the Chairs of member associations. It cannot be a requirement, therefore, that a Chair of a member has to be a Franchisor. He went on to summarise the procedure for the Admissions Committee as set out in Clause 3 of the Internal Rules and commented that these to be followed.

Mr. Jack Earle queried whether the applicants met the criteria. Mr. Yanakakis replied that Venezuela complied legally, but he was not aware if other requirements have been met. Guatemala he advised did not currently comply as they had not responded to the legal concerns he had raised.

Mr. Carlos Roberts believed that Guatemala could be a member once it changed its constitution to comply.

Mr. Brian Smart asked for a comment on what were the Admission Committee’s concerns. Mr Roberts replied that there had been a concern that the drivers of new Associations were consultants.

Mr. Stephen Caldeira/IFA said the legal issues for Venezuela had been resolved, but he had not seen a request to admit Guatemala and that accordingly we can’t vote to admit them until their issues have been resolved.

Dr. Mustafa Aydin commented that the Admission Committee knew the information about the applicant but the members of the general meeting did not. Mr. Jack Earle suggested that the Committee meet later that day and report back to the following day’s meeting. It was agreed that Committee will come back to the meeting on the following day with a report.

5. Secretariat Manual

Mr. Graham Billings reported that the manual had been completed and would be sent out to all members with the Minutes of this meeting.

6. Sources and Allocation of WFC Funds

Mr. Graham Billings referred to item 6 – Minutes of previous meeting. This item is a continuation of the previous WFC meeting.

Brian Smart said that in his opinion there were two requirements for funds:

i. For specific projects e.g. website, trade mark registration etc.; ii. Funding as required by the Strategic Planning Group’s actions, for example

whether a permanent Secretariat should be funded.

He further commented on the burden placed on volunteer Secretariats and that if there was a permanent Secretariat, then WFC would need significantly more funding in the vicinity of USD100,000 to USD200,000.




Mr. Stephen Caldeira was of the view that we need to work out the goals of the WFC before we consider the need for a permanent Secretariat.

Mr. Lucas Secades/AAMF queried the need a vision for WFC.

Mr. Carlos Roberts pointed out that WFC does have a vision - this was resolved in France and Mr. Brian Smart advised that the WFC has a Vision Statement, a Mission Statement and Objectives and this was generally agreed by those at the meeting.

Mr. Stephen Caldeira suggested that at the beginning of each meeting the Mission and Vision statements be restated. His concern was with work not having been done at and by the Strategy Group.

Mr. Brian Smart reiterated the original purpose of the WFC and its effectiveness in what has been done. He said that stage two of the WFC’s work is research, collection of data and adding value. His view was that the voluntary arrangements for undertaking WFC work do not work.

Dr. Mustafa Aydin supported the need for a permanent Secretariat.

Mrs Chantal Zimmer said the most important issue around the table is commitment and that if money is needed it would be found.

Mr. Diego Elizarraras stated that we have a base and a structure and need a commitment. He commented that it is the responsibility for members and representatives of member nations to be here at WFC meetings.

Mr. Gurkan Donat/UFRAD spoke on the purpose of the WFC. He viewed it as an umbrella of member associations and that the General Secretariat should not have to do all the work and that everyone should contribute to the WFC work required to be done.

Mr. Toke Allentoft/DFA regretted that his association has limited resources to contribute to WFC activities.

Mr. Abdul Malik Abdullah/MFA referred to Mr. Smart’s statement and advised that he knew that the WFC had contributed much to franchise policy making in Indonesia.

7. Proposal for establishment of a permanent Secretariat.

Mr. Yury Mikhaylichenko/RFA presented and spoke to his Power Point presentation which is attached to these Minutes.

After the presentation the following comments were made:

Mr. Lucas Secades/AAMF – thought it was a good idea but ambitious.

Mr. Brian Smart said it was a grand plan but that we needed a modest beginning. He was concerned about how the industry would be able to pay and was uncertain about the proposed projects to be undertaken.

Mr. Ivo Lamich/CAF felt the proposal was unrealistic and saw difficulties in associations getting funding.

Mr. Toke Allentoft thought the proposal was unrealistic.

Dr. Katalin Mandal/HFA said that her Association was a small one and could not provide more money to enable a permanent Secretariat.




Mr. Sotirios Yanakakis said that it was a great idea and he wanted to see the WFC be the world leader in franchising. He noted that currently we all provide our services for free.

Mrs Chantal Zimmer commented that she was confused by the proposal. She felt that we should focus on Step Two of the Strategic Plan, which had been discussed earlier and funded on a needs basis. She did not think that the catalogue proposal was a good idea.

Ms. Farah Chaaban/LFA said that the WFC needs to identify what it wishes to achieve and then work out the funding required to achieve that. She did not believe a printed catalogue was a good idea, but suggested that a committee be organised to obtain sponsors for the permanent Secretariat if that proceeded.

Mr. Abdul Malik Abdullah said we needed to identify how the project can work. He felt it was a far-fetched plan and was concerned as to the fixed overheads, although he did acknowledge that a directory/catalogue could be a possibility for funding.

Ms. Bing Sibal-Limjoco/PFA’s view was that the WFC Stage One had been done. An action plan needed to be worked out to complete Stage Two and that people should be paid on a per project basis.

Mr. Albert Kong/FLA had mixed feelings as to the financials and advised that Singapore has limited resources – he felt that an overview or control of a permanent Secretariat would be important especially in respect of staffing. He did not believe a catalogue was a possible funding initiative.

Ms. Vera Valasis/FASA believed that the WFC needs to serve the needs of its members and should take a step back to decide if this proposal is something that will help our own associations’ members.

Ms. Cherry Chen/ACFPT thought that it is an ultimate goal to have a permanent Secretariat – funding may be project-based by outsourcing. She felt that a permanent Secretariat was a big step.

Mr. Stephen Caldeira commented that the WFC’s purpose is set out in its Constitution and that while commitment and responsibility of WFC members cannot be forced on them, without such a commitment anything else is hard. IFA supports the WFC but he felt the plan is too ambitions. He also took the opportunity to express his wish that the Strategic Plan should be distributed and that it should provide member value.

Mr. David Foster said that regardless of whether there is a permanent Secretariat or not, there needs to be a commitment of members to perform the duties that they undertook to do. There is concern regarding the cost of a permanent Secretariat and its funding, especially with the possible large structure as proposed. The difficulty with obtaining specific sponsorship is what would happen if the sponsor did not renew an annual or bi-annual contract. He noted that the General Secretariat is currently paid USD3,500 each year, which really amounted only to a contribution towards costs

Mr. Graham Billings questioned the proposed location of the Secretariat being Europe or North America when the Asia-Pacific region was the fastest growing economic and franchise developing area. He also discussed the costing and the failure to meet commitments by members to do what they had agreed to do.

Mr. Diego Elizarraras, as Chairman of the meeting, thanked Mr. Mikhaylichenko for his presentation and reflected on the funding issues. His concerns were over the location of the Secretariat and issues that a specific location could cause. He also stressed the importance of members’ commitment to WFC.

Mr. Carlos Roberts said that WFC members need to commit and to keep moving forward.

Dr. Mustafa Aydin believed that WFC needed a fresh injection of ideas and needed a committee to discuss the project and move the idea ahead. A permanent Secretariat needed to be located somewhere cheap.

Mrs Chantal Zimmer suggested that each meeting commence with a report of the Strategy Group.

Ms. Farah Chaaban restated that there should be the commitment of each member to complete their tasks.




Mr. Stephen Caldeira was disappointed that many of the Strategy Group members had not delivered. He said he would go through the Strategic Plan to ascertain what had been achieved and who had not completed their agreed tasks.

Mrs Chantal Zimmer requested that the Strategic Plan be given to all members and we should all assist other countries to help achieve the plan.

Mr. Graham Billings advised that Mr. Stephen Caldeira was already scheduled to report on the strategic meeting as it was held at Manila.

Mr. Yury Mikhaylichenko responded to the comments by saying that he wanted to adopt ways to achieve our goals.

Mr. Diego Elizarraras requested that the subject should be put on the agenda for Turkey for further discussion.

Mr. Abdul Malik Abdullah felt the failure of people to do what they had committed to do is holding the WFC back from achieving its goals. He suggested that there be a series of reminders for those members on the Strategic Planning Group and others with WFC with obligations, to fulfil their goals. He said that if there is no performance by a member in achieving its tasks then those tasks should be passed onto another country. He felt that our frustrations should be communicated with those who do not perform.

8. Proposal to provide a Stipend to the Vice Secretariat for Financial Affairs

Mr. Diego Elizarraras as Chairman invited Mr. Yanakakis to address the meeting.

Mr. Yanakakis stated that he had been the Vice Secretariat for Legal Affairs since 2008. He could not go to the Manila meeting because of financial constraints – although he had been to all other meetings since he had been appointed. At all those meetings he had provided a legal report and also every six months he drafts Resolutions.

He was aware that we all offer our time and services and wished to continue to honour his commitments. He suggested a nominal Stipend for example – payment for travel so that he can be at the meetings, or alternatively he could just send the documents. He advised members that because of the extreme effect of the financial crisis on Greece he could not get to future meetings and that he would finish his term as Vice Secretariat at the end of the year. Sotirios stated that the WFC Internal Rules stated that a legal report had to be presented at all of the meetings.

Mr. Yanakakis then left the room for the members to discuss the issue at hand.

Mr. Jack Earle considered it was reasonable to pay for travel expenses.

Mr. Brian Smart felt that the matter needed more discussion and it was a shame that the Greek Franchise Association could not pay the expenses and the cost of getting Mr. Yanakakis to the meeting. In his opinion it was not the WFC’s job to pick up the costs on behalf of the Greek Franchise Association. Historically the WFC paid for external costs – for example the Australian Webmaster - and did not pay for the FCA’s costs in helping put the website together. He did not want to change the current procedure.

Mr. Stephen Caldeira stated that if Mr. Yanakakis can’t do the legal work, would someone else internally or externally and would that cost more. The IFA uses external Counsel who attend their Board meetings.

Mr. Brian Smart acknowledged the comments and said that he did not want external advice for the organisation but felt that it would be relatively easy to get legal Counsel.

Mr. Jack Earle queried whether Mr. Yanakakis represented the Greek Franchise Association or was he personally the legal counsel for the WFC?




Mr. Graham Billings on behalf of the General Secretariat said that the rules state that the General and Vice Secretariats are held by Associations who have volunteered and been appointed to carry out the tasks. The current Vice Secretariat for Legal Affairs is the Greek Franchise Association and Mr. Yanakakis is at the meeting representing that Association. To provide funding for one Vice Secretariat opens the question as to whether all Vice Secretariats could receive a stipend/reimbursement.

Mr. Abdul Malik Abdullah did not wish to see the WFC break the principle and pay for legal advice – although he suggested that the costs of Greece in getting Mr. Yanakakis to the meeting be covered in the meantime.

Mr. Brian Smart suggested making a contribution to help the Greek Franchise Association.

Mrs Chantal Zimmer asked how long we would need to assist Greece.

Mr. Stephen Caldeira moved that the WFC meets Mr. Yanakakis’ expenses for the next two meetings and that payment be made to the Greek Franchise Association.

Mrs Chantal Zimmer pointed out that the term ends this year. That is one more meeting.

Ms. Farah Chaaban said the cost to the Greek Franchise Association is the air ticket and the host nation could cover the cost of accommodation.

Resolution 1. That the WFC support Mr. Yanakakis’ expenses to Mexico and Turkey and such expenses be refunded to the Greek Franchise Association as a contribution under extraordinary circumstances. Moved by Mr. Stephen Caldeira/IFA Seconded by Mr. Brian Smart/BFA. Passed unanimously.

9. Strategic Planning Group

Mr. Stephen Caldeira reported that the Strategic Planning Group had discussed the composition of the Group and had recommended that the Host Association of a WFC meeting should serve on the Strategic Planning Group for the meeting prior to their hosting so that they can contribute to the strategic planning and be fully informed of activity.

Resolution 2. That the incoming host country shall serve as a temporary member of the Strategic Planning Group at the meeting prior to that being hosted. Moved by Mr. Stephen Caldeira/IFA Seconded by Mrs Chantal Zimmer/FFF. Passed unanimously

10. WFC Website

A report was presented by Mr. Graham Billings on behalf of Mr. Steve Wright/FCA as Vice Secretariat for Communications.

i. The existing website is out of date and is not serving WFC. Mr. Billings reported that

he had found the website was down a few weeks prior to the meeting and that this had not been known by FCA at the time.

ii. The hosting of the site was in the hands of a third party. iii. It transpired that the third party had taken down the website due to a disagreement

with the FCA.




iv. FCA had subsequently made a payment to the hosting company that resulted in the

website being restored for the time being. v. To make any regular changes to the Website would require significant payments to

the website host and that the position was untenable. The recommendation being made by FCA was:

Use Bloomtools (www.bloomtools.com) who are the current provider of websites to the FCA and FANZ and are franchisors in their own right. FCA had approached them for a quote for the establishment and running of the WFC website and this was presented to the meeting. There would be a setup fee of approx. A$9,790 including GST and hosting fee of A$55.00 per month. There were some additional features available at cost but the only additional feature that was being recommended was the “Frequently Asked Questions” (FAQs). The reason for adding on the FAQs was to enable the site to get better results from search engines as they provided editorial content which were a trigger in search engine optimisation.

Once the site became live, each member would be responsible for updating their own section.

Mr. Brian Smart queried some of the wording in the stated objectives by Bloomtools in their proposal.

Mr. Graham Billings responded that with regard to the objective of having an on-line presence for potential franchisees, the issue was that the website would not be a “buy your own business opportunity” type but an opportunity to prospective franchisees to look at franchising information and then to link into the relevant country’s information. The website could also have the international franchise exhibition directory/calendar and there would be flexibility for WFC to amend the site.

Ms. Vera Valasis suggested that two or three quotations from other countries should be obtained. Mr. Billings advised that it was a very competitive cost and that if Australia continued to be Vice Secretariat for Communications then it made sense for the website provider should be in the same time zone as the Vice Secretariat.

Dr. Mustafa Aydin recalled the WFC providing the necessary money to FCA for the website and criticized FCA for not knowing that the site was down.

Mrs Chantal Zimmer questioned how much had been given to FCA for the website to be built and Mr. Brian Smart said that a bill was paid in 2010 which he recalled was USD7,800.

Mr. Gurkan Donat considered that FCA as the original website developer should sort out the problem at its own cost. The website should be looked after to ensure that it is running and up to date. This should be the responsibility of the Vice Secretariat for Communications.

Mr. Stephen Caldeira agreed that the matter needs to be resolved quickly and that in his experience the Bloomtools quote seems fair and reasonable.

Mr. Brian Smart recommended that WFC accepts the FCA’s proposal.

Mr. Gurkan Donat said there was a timing issue and considered that WFC should form a committee and authorise the committee to proceed with a given budget. The website

http://www.bloomtools.com/




developers name should be put on the site as a sponsor and such presence should reduce the actual cost.

When questioned by Mr. Stephen Caldeira, Mr. Smart advised that the WFC has reserves of USD56,000 and that he felt we should proceed.

Mrs Chantal Zimmer agreed but thought that FCA should be held responsible.

Mr. Abdul Malik Abdullah proposed that WFC moves to accept the recommendation and then question FCA about the money previously paid. As Bloomtools are being used by the FCA and FANZ, WFC should accept their experience as a reliable recommendation.

Mr. Stephen Caldeira proposed to move a resolution that the WFC use Bloomtools to rebuild its website and that the monitoring is done in a way respectful of the group.

Mr. Brian Smart wanted a contractual arrangement to record that the intellectual property is ours, that what the website developer creates is ours and that the site was built on the Open Source platform which allows transferability if desired.

Mr. Yury Mikhaylichenko said the website was currently working but the site must be supported.

Mr. Graham Billings suggested that to satisfy some of the previous speakers the WFC write a letter to the FCA saying that they made an error and that they should rectify the problem.

Mr. Abdul Malik Abdullah suggested a payment plan which should be 30% to start off with followed by 30% and then the balance.

Ms. Farah Chaaban asked how long the FCA had been the Vice Secretariat for Communications. Mr Billings said it was about two years since it was reconfirmed but they had held this post since 2005. Whoever takes over in the future, it is recommended that the website be initially developed in Australia. Future development will have communications through the Vice Secretariat for Communications to the website developer.

Mr. Yury Mikhaylichenko suggested that a redesign of the existing site could be undertaken.

Mr. Brian Smart questioned the transferability to another host and its accessibility by WFC.

Mr. Graham Billings responded that FCA and FANZ had no problems with hosting and that to transfer to another host may incur a cost. He confirmed that FCA would ensure the requirements of intellectual property and transferability would be established prior to a commitment.

Mr. Diego Elizarraras suggested that the country reports could go onto the website twice yearly.

Resolution 3. That the WFC use Bloomtools to rebuild its website and that the Vice Secretariat for Communications monitors it to ensure it is respectful of the WFC standards

Moved by Mr. Stephen Caldeira/IFA Seconded by Mr. Abdul Malik Abdullah/MFA Passed by majority vote with FASA, GFA and UFRAD voting against the Motion.




DAY 2 February 29th, 2012

11. Mexico Ministry of Economy Presentation “Multiplying Successful Business”

Sr. Rafael Manzo Basto, Director of the National Franchise Programme, gave a PowerPoint presentation in which he showed the development and successes of the programme based on the 2007 Mexican Census and information provided by the AMF. The programme, which is five years old, is administered by the Ministry and the AMF through a joint entity with a third entity that administers the funds allocation. All franchises in Mexico are required to receive Ministry authorisation before commencing operations.

Snr. Manzo said that 742 franchises were being worked on – 14052 jobs created – 2667 franchise outlets created. Of the 495 franchise systems set up since 2007, 60% were currently active and successful, but it was still early days.

AMF Chairman, Mr Diego Elizarraras, said that Government support had made franchising grow faster in such areas as tomato and avocado horticulture (in conjunction with the Department of Agriculture) and with ex-employees of Mexican Airforce The Ministry had also assisted franchisors to attend foreign franchise exhibitions such as those held in Colombia, Florida and Los Angeles

He said that the Ministry was committed to the concept of Social Franchising, which was aiming to give people a better life and its focus was on growing stores including dry cleaning and beauty.

Mr Elizarraras said this Government assistance was a totally new concept, and was a great start as part of the AMF’s plan to have greater influence with the Government in areas affecting franchising.

In answer to a question on why Government support was available to non-AMF members, Mr Carlos Roberts replied that the Government did not want to risk being sued for not looking at non AMF member entities, even though AMF has to approve them. Snr. Manzo said that there was a slow uptake by franchisors that were not AMF members to obtain support for franchisees. In any case, where non AMF member franchisors made applications, the Government limits the support to two franchisees.

Mr. Sotirios Yanakakis commented that he would like to see such a scheme in Greece and asked what would happen if a prospective franchisee wanted to purchase from a non-AMF member but also apply for funding. Mr Roberts replied that provided the application was approved by the three entities and the franchise was more than three years old, it would be possible. Mr. Yanakakis also queried the position with regard to joint ventures or franchisor shareholdings in franchisees’ businesses but this was not a common situation in Mexico and the credits would be limited.

Mr. Brian Smart congratulated the AMF and the Ministry on the programme, especially in the development of businesses as franchise systems. Such support is not available in the United Kingdom. Their Government sees job creation is in new franchisees not through franchisors and this creates a difficulty in the UK.




Ms. Sherry Chen said that Taiwan worked with the Government on an SME guarantee bonds scheme. To qualify, one needs a commendation from related parties and the Association of Franchise Chain and Promotion Taiwan provides such letters and people join their association to get such letters.

12. Hosting Criteria

In accordance with the decision of the WFC meeting in Manila, Mr. David Foster for the General Secretariat tabled the draft Policy on Hosting of WFC Meetings for approval.

Resolution 4. That the Policy for Hosting Criteria be adopted. Proposed – Mr. Graham Billings/FANZ Seconded Mr. Diego Elizarraras/AMF. Carried unanimously.

Mr. Brian Smart commented that he believed the Policy was a good advance, especially to reduce the dependence on countries that are able to offer significant benefits and is thus more equitable.

Mr. David Foster then spoke to the proposed zones into which countries would be placed for meeting rotation purposes. The proposed 5 zones (which are attached to these Minutes) would each currently contain 8 member countries (after the approval of Venezuela and Guatemala) with the exception of Zone 5, which currently contained 12 countries. Mr Foster explained that this would be a living document as new members were approved and existing members became able to offer to host a meeting of the WFC. It was recognised that Zone 1 contained 3 countries that could potentially host a meeting, Zone 2 – 0 countries, Zone 3 - 2 countries, Zone 4 - 3 countries and Zone 5 - 6 countries.

After discussion it was agreed that for the time being, Zones 2 and 3 should be considered as one and that India should be moved to Zone 4, which would help balance out the numbers.

Dr. Mustapha Aydin queried why this had not been linked to the areas of supra-national association boundaries.

Mr. Brian Smart responded that at the moment there were only two recognised supra-national bodies in the WFC, EFF and APFC.

Resolution 5. That the proposed Zones be adopted. Proposed Mr. Jack Earle/IFA, Seconded Mr. Abdul Malik Abdullah/MFA. Carried unanimously.

Turkey, Lebanon and Taiwan are the next scheduled meeting destinations. There are two vacant spots - one in 2013 and one in 2014 for hosting.

Mr. Graham Billings for the General Secretariat reiterated for Members the hosting criteria and that the processes are already determined.

Mr. Abdul Malik Abdullah wished to place on record that MFA would like an opportunity to host the second meeting of 2013 in Malaysia.

Mr. Diego Elizarraras as Chairman thanked him for the offer and requested that he comply with the process by contacting the General Secretariat.




13. Legal Reports

Mr. Sotiris Yanakakis presented his Vice Secretariat for Legal Affairs report. He commented that it would not be very comprehensive as only a few Associations had provided information to him.

Mr. Yanakakis mentioned the legislation in Russia, which was the subject of a paper given at the last meeting and noted that he had assisted in the process. The issue was whether it was compulsory to renew a franchise agreement

Mrs Chantal Zimmer requested a soft copy of the legal report.

Mr. Lucas Secades spoke in respect of legislation in Argentina. AAMF wanted franchise legislation and it was getting close now. –They are working on further submissions to the government. AAMF wants to keep franchising healthy and there is currently an annual growth rate in franchising of 14%. There are issues with franchisor legal liability to employees of franchisees and AAMF would like the support of the WFC to sign a letter regarding this issue.

Mr. Carlos Roberts spoke to the proposition and that WFC has helped Mexico/Brazil in a similar situation.

Mrs Chantal Zimmer agreed that the WFC should support AAMF in this issue.

Mr. Brian Smart suggested that support should be given but the contents of the letter should be completely accurate.

Mr. Carlos Roberts undertook to review the letter with Mr. Smart and Mr. Secades the letter needs polishing and represent it to the meeting later that day.

14. WFC Logo Registration

Mr. Carlos Roberts read the letter from the Spanish Franchise Association (AEF). Spain is ashamed of what has happened (refer Item 16 of the Minutes of the Manila Meeting). They used to be a member but are not now and have corrected the unauthorised use of the claim to be a WFC member.

Mr. Sotiris Yanakakis as Vice Secretariat for Legal Affairs spoke to the cost and proceedings in registering the trade mark are outlined in the letter from his law office (See Appendix 1).

UFRAD is proceeding to register the trade mark to protect it, despite being covered by the Madrid protocol – it is a 6 month investigation process.

FANZ completed their registration in 1998.

No other associations are aware of any other applications by their associations.

Mr. Brian Smart said existing registrations should remain and not be subject to a Madrid Application as this could be disastrous if the application failed.

Mr. Sotiris Yanakakis agreed to double check to see if the application for one country fails under the Madrid protocol whether the whole application fails.

Ms. Farah Chaaban said that will take care of filing the trade mark in Lebanon and will pay the cost.




The total cost is approximately $40,000.00 according to Mr. Smart’s calculations and that Members should be aware of the WFC’s reserve funds. The renewal cost every 10 years would be roughly equivalent to the annual subscriptions. He suggested each Association pays for protection in its own country with a division of costs for Madrid protocol countries and European “protocol”.

Mr. Lucas Secades queried whether the cost was for three categories and Mr. Yanakakis assured him that it was.

Ms. Bing Sibal-Limjoco and Mr. Diego Elizarraras agreed that each country should pay and the Madrid protocol people share in the cost for them.

Mr. Gurkan Donat commented that with limited reserves in WFC we should either get a further contribution from each country or each country covers its own cost. He suggested that each new member country is required to cover the cost of registration in their country.

Mr. Brian Smart thought that it was too difficult to do that and that the Madrid countries should pay the Madrid costs and other countries pay the costs in their own countries. European community members should repay the WFC the cost of the original registration.

Mr. Abdul Malik Abdullah suggested that each country should pay Euro1,000.00 and the WFC pay the balance.

Resolution 6.

i. That the European community registered countries repay the World Franchise Council the cost of the existing registration equally;

ii. Madrid countries should share equally the cost of registration i.e. those countries that choose to be covered by the Madrid protocol.

iii. Other countries shall pay their own costs for registration – i.e. those countries not included in the Madrid protocol.

iv. The proposal covers countries only in the WFC and Mr. Smart also noted that in some countries there is an inability to register.

Proposed by Mr. Brian Smart/BFA Seconded by Mr. Stephen Caldeira/IFA Mr, Abdul Malik Abdullah proposed an amended resolution that the registration would be undertaken by the Vice Secretariat for Legal Affairs and each country pay Euro1,000. The amendment failed to gain a majority.

The proposal was again put to the meeting and Carried with the abstention of FASA

Dr. Mustafa Aydin believed that WFC Logo should be protected in the whole world not just member countries and was concerned as to the ownership of the trade mark

Mr. Yury Mikhaylichenko explained various techniques to protect trade marks in countries like Georgia and it was confirmed that you can get trade mark rights back if there is a “World Wide Brand”.

Mr. Sotiris Yanakakis advised that Associations should register ownership on behalf of the World Franchise Council and not by each country.




Mr Brian Smart was conscious of the amount of work the Vice Secretariat for Legal Affairs has to do and considered reorganizing the responsibilities to report on legal developments in each area. This is to be put on the Agenda for Istanbul.

15. Further Report of the Admissions Committee

Mr. Jack Earle reported on the meetings that the Committee had held with representatives of the Venezuela and Guatemala Associations. He recommended that the countries be approved for membership subject to:

i. A twelve month probation (Associate Membership); ii. Changes to the bylaws to comply with WFC rules – chair to be a franchisor and

their undertaking to register World Franchise Council trade mark.

Mr. Graham Billings for the General Secretariat reminded members of the current procedure, established in 2010, which is that the applicant’s membership starts from the next meeting.

Mr. Earle confirmed they understood they will be admitted to this meeting as guests only.

Mr. Brian Smart said that the admissions procedure needs to be complied with but currently the rules were not complied with. It is a requirement that Council members see the presentation before the vote in order to comply with the Admissions Procedure agreed in the Internal Rules. He suggested that Members see the country presentations and then vote.

Mr. Stephen Caldeira responded that in that case the Admissions Committee might just as well not exist.

Mr. Carlos Roberts said the Committee has a role, has done its work and suggested the countries be approved following the presentations from the two Associations.

16. Round Table Discussions

Argentina – (AAMF) Franchising regulation has been introduced as many companies have been representing themselves as franchises when they are not. Many have failed and this has led to significant losses to investors. The economy of Argentina has been growing for the last eight years, much of the growth through the export of Soy. The unemployment rate has dropped from 40% to 8% and according to government figures the inflation rate is also 8%, but is probably higher. Franchise systems have been growing at a healthy 14% a year

Britain – (BFA) Britain remains in recession with an unemployment rate of 8.2% being the highest for 16 years. In the age group 16 – 24 this is almost 22% and will further increase towards the end of the school year. Further job losses will be experienced due to government budget cuts. Franchises are, however, taking market share from non-franchised businesses although access to finance and recruitment of good franchisees remains difficult. The BFA’s current membership of 340 has been difficult to maintain with a threat of competition from another association. BFA has invested £200,000 in the development of an on-line franchisee support website. All franchisor members are required to register and to keep up to date, a register of their franchisees with the BFA. BFA then encourage franchisees to participate at a cost of £10 per month for which they then have access to Health & Safety and Employment Law advice, on-line training programmes and access to member benefits. BFA need to recruit 1,000 franchisees to this programme by the end of the year or it will be terminated




Czech Republic – (CAF) VAT has just been increased from 10% to 14% for certain categories including food. They have not joined the Euro zone so there are advantages to the Czech economy as a result; however, the Euro crisis is still having an impact. Access to finance remains a problem but the Association is growing and intends to become large enough to be able to influence government policies.

Denmark – (DFA) The Danish economy is not in good shape, but is better than many in the EU. Inflation is under control and the unemployment level is stable. Access to finance is a major problem as banks are not lending to franchises and the larger companies are buying back their franchises and operating as company stores to ensure compliance. DFA has a problem in retaining members and has joined with the Association of Chain Stores and Cooperatives to increase members and share costs.

Hungary – (HFA) Investment is growing but there is no assistance from the government.

Greece – (GFA) As all will know, Greece has no money and the loans provided by the EU are only going to pay the secured creditors. Whilst job losses are encouraging people to get into franchising, the banks are not making loans although it is hoped this might ease in the Northern Autumn. Food and entertainment sectors are doing reasonably well. GFA is having great difficulty in retaining members and now has a total of 71.

France – (FFF) Despite the EU crisis, franchising is going well and good systems are thriving. The major issue facing franchising in France is the threat posed by activist lawyers attempting to persuade judges to interpret franchise agreements as coming within the labour laws. FFF is fighting this with evidence that franchising is still working and is a credible business format.

Lebanon – (LFA) Despite political instability in the region the franchise sector is working well LFA has developed a good working relationship with the government and is currently lobbying for better franchising law. There is now EU support for franchising through the government. They are receiving good results from television coverage and social media.

Malaysia – (MFA) Membership of the MFA has risen to 630 with 500 brands represented in Malaysia of which 30% are international. The Malaysian government is very supportive of franchising. In the 2012 budget, it is proposed that all franchise fees will be tax deductible. The government is also pursuing the development of Micro Franchising with a fund of US$2.7m under the banner of “Franchising for All” aimed at enabling low income, retirees and the disabled to become economically active through franchising. The government also provides a grant of US$30,000 to any company wishing to become a franchise system. The 5 year blueprint is for Malaysia to be the franchise hub for Asia and South East Asia.

Philippines – (PFA) The attendance by WFC and APFC members last year significantly raised the profile of franchising and resulted in an increase of PFA membership by 30%. Whilst there is no direct government support for franchising, banks are required to set aside a percentage of their lending to fund micro franchises. There is a problem of fraudulent franchises being advertised and the MFA is working with the government on ways to eradicate this.

Russia – (RFA) The Russian economy is steady, supported by the oil and gas industries as well as military spending. Over the last three years, franchising has grown at a rate of 30% a year and there are now nearly 700 franchise systems in the country. Unemployment is at 8% and inflation is at 6.7%. Thanks to the WFC involvement, the




Ministry of Economy is supportive of franchise development into Asia and it is a good time for franchise development in Russia.

Singapore – (FLA) There was a better than expected third quarter last year and the economy grew by 3-4%. The Casino development has seen losses of staff from franchisees in the service industry and this has caused a problem. Many young people are becoming franchisors or franchisees and a new trend is that lessors are becoming national master franchisees for overseas brands. The government is pro-franchising and there has been an influx of Pakistani and Vietnamese immigrants obtaining citizenship.

South Africa – (FASA) Franchising is still going well and there will be a new franchise survey report towards the middle of the year. Franchising contributes around 12% of GDP. FASA has experienced losses of membership and attempted to get franchisees to join. Of the 30,000 only 27 joined. There was a new Consumer Protection Act brought in last year. There have been 15,000 complaints to date and although it is not known how many of these related to franchises, one FASA member has been terminated as a result of a complaint. FASA is asking the government to incorporate their Code into a government Bill that is likely to be enacted next year.

Taiwan – (ACFPT) With a regional economic cooperative agreement, there are many opportunities to grow franchising. The Taiwan government recognises franchising as an important part of the economy. ACFPT has proposed a 10 year plan of development of the government. There is a key SME guarantee fund and others who apply will receive assistance.

United States – (IFA) The US economy is still sluggish with a forecast growth of just 2.1% in 2012. Unemployment is recorded at 8%+ but is closer to 16% if people not looking for work are included. Access to credit continues to be a major hindrance to franchise development with an estimated 20% shortfall in lending against demand. A number of government actions are to the disadvantage of franchises and SMEs in general. These include the mandatory health law, tax reform that is likely to disadvantage small businesses and encouragement of union involvement in SMEs. Some States are now looking to tax franchisor income from franchisees that are out of State. On the positive side, there will be nearly 1 million veterans coming back to the USA and the possibility of tax credits for franchisees fees could stimulate demand. There is a growing trend for multi concept franchisees. IFA is very involved in assisting franchisors to develop overseas and has a significant investment in data research. There recent Convention attracted 3,000 attendees, which was a record.

New Zealand – (FANZ) The current economy is flat and has not been helped by the earthquake in Christchurch. There is hope, however, that there will be improvement this year. FANZ has seen an increase of 15% in franchisor membership this year and this is possibly related to a determined drive to strengthen relations with the government and opposition parties and seeking greater media opportunities. There will be a new franchise survey report later this year and an increased focus by the Association on training for potential and current franchisors and franchisees. FANZ is using material that was kindly provided by many WFC members to advocate for a Small Business Loan Scheme for New Zealand.

Mexico – (AMF) The Mexican economy is very dependent on the USA and oil production. There was a 3.4% growth in both this and last years. This year will see a Presidential election and next year’s economy will be very sensitive to the result. The government had proposed a new franchise law that would have had a negative effect, but this is currently frozen. AMF is encouraging the government to see the best solution is self-regulation through the AMF.




17. Social and Micro Franchising – Definitions, experiences and opportunities

New Zealand – (FANZ) there is no micro franchising or in fact a definition of franchising at all. The small business growth scheme was mentioned as an initiative by FANZ to Government for Government to support the growth of small businesses including micro franchises. FANZ is also looking at opportunities for micro franchising to assist Maori.

Philippines – (PFA) – started micro franchising 3 years ago and charges 1/10th of the regular cost of membership.

Free seminars to micro franchise potential franchisors. Received a grant from APEC to share amongst the Asia Pacific – USA, Canada, NZ, Singapore and Malaysia …

The Government definition of micro franchising is USD70,000 and below as the investment required. Small franchise is USD2,000,000. and below and employing 10 to 99 people. Social franchising e.g. local coffee industries pay farmers to grow coffee that franchisees can sell in the malls.

Singapore – (FLA) social enterprise – an idea to help people get into business on their own. The concept of chicken/rice stalls was developed for ex-prisoners but hasn’t worked well. There have been complaints from those affected near the stalls. It was the intention to give a section of population a “new chance”.

Malaysia – (MFA) micro franchising was started last year following the government saying most franchises were owned by the middle and upper classes.

Micro franchising is up to USD17,000. The proposal is to help the retired, poor, youth and women. Taking micro franchising in rural areas is the “social franchising”. Funding – Government – if there is a failure then the Government is not harsh on recovery of funds. Only 10% of the funds available for micro franchising has been borrowed from the Government.

Mexico – (AMF) There is Government support. There is confusion between micro franchising and social franchising. There is special funding to assist buying a franchise but the companies were very inefficient, especially in paying bills and retaining an income. Micro franchising – less than USD5,000. purchase price. Mainly out in poor parts of the city and for example carpenters. The intention is to help street people and the environment but has shown limited success.

A definition by the WFC of “Social Franchising” and “Micro Franchising” would be helpful.

Britain – (BFA) the UK has a definition for small and micro enterprise and e enterprise and also for social enterprise.

France – (FFF) some “Franchisors” use micro franchising to avoid having employees.

Taiwan – (ACFPT) has an issue with the Government as SME Franchisors relates to turnover. There is no definition as to what is small/medium or large franchise system. The Government has asked the Taiwan Association for a definition of small, medium and large franchises. Micro Franchise – initial and royalty fee based definition.

Mr. Diego Elizarraras as Chairman recommended that more of this discussion should take place at the next WFC meeting.




18. Strategic Planning Group

The Strategic Planning Group meeting was reported by Stephen Caldeira.

Copies of the action plan were given out to each member as previously requested. The documents showed the strategic action plan, what’s to be done and who it is to be done by.

Mr. Caldeira drew attention to the work where AMF was paired with Canada (CFA) and commented that it was not the fault of AMF that some items have not been completed. He then called for support to assist in the completion of tasks.

The main things to be attended to are:

i. Website ii. Tools iii. Visibility – image of WFC etc. iv. Execution of the plan

Any Association who wants to help, please send Mr. Caldeira an e-mail to let him know that you can assist.

It was noted that the Plan as distributed did not take into account what had been achieved the previous day.

He confirmed that there would be a strategic planning meeting at the start of the meeting in Turkey.

19. Guatemala Presentation

Following the presentation by the Guatemala Association, Dr. Mustafa Aydin reminded them that all franchise associations need to take the advice of the World Franchise Council.

20. Venezuela Presentation

There were no questions following the presentation by the Venezuela Association

21. Approval of new members

Following both presentations Council Members voted unanimously to admit both Associations in accordance with Paragraph 15 above.

22. Letter in support of Argentina (AAMF)

Mr. Brian Smart recapped the issue from this morning. The letter is to be issued after consultation with the IFA by the Vice Secretariat for Legal Affairs.

Resolution 7. That the letter in support of AAMF as attached at Appendix 2 be issued. Proposed Mr. Diego Elizarraras/AMF, Seconded Mr. David Foster/FANZ Carried unanimously.

The meeting closed at 5.37pm.




# Country/Association Att Person 1 Title/

Function Person

2,3,4 Title/Function

1 Argentina - AAMF YES Lucas Secades Executive Director

2 Australia - FCA NO

3 Austria - OEFV NO

4 Belgium - BFF NO

5 Brazil - ABF

6 Britain - BFA YES Michael Eyre Chairman

Brian Smart Director General

7 Canada - CFA NO

8 China - CCFA NO

9 Croatia - CAF/FIP NO

10 Czech Republic - CAF YES Ivo Lamich President

11 Denmark - DFF YES Toke Allentoft Executive Director

12 Ecuador - AEFRAN NO

13 Egypt - EFDA NO

14 European - EFF NO

15 Finland - FFF NO

16 France - FFF YES Chantal Zimmer Director General

17 Germany - DFV No

18 Greece - GFA YES

Sotirios Giannakakos

Director General

19 Hong Kong - HKFA NO

20 Hungary - HFA YES

Dr. Katalin Mandal CEO

21 India - FAI NO

22 Indonesia NO

23 Italy - AIF NO

24 Japan - JFA NO

25 Korea - KFA NO

26 Lebanon - LFA YES Farah Chaaban General Manager

27 Malaysia - MFA YES

Abdul Malik Abdullah Chairman

28 Mexico - MFA YES

Diego Elizarraras Chairman

Carlos Roberts International Affairs

29 Morocco - FMF NO

30 Netherlands - NFV NO

31 New Zealand - FANZ YES David Foster Chairman

Graham Billings Executive Director

32 Philippines - PFA YES

Bing Sibal-Limjoco Vice Chairman

33 Poland NO

34 Portugal - APF NO

35 Russia - RFA YES

Yury Mikhaylichenko

Executive Director

36 Singapore - FLA YES Albert Kong

Board member Int'l

Development




37 Slovenia - SFA NO

38 South Africa - FASA YES Vera Valasis Executive Director

39 Sweden - SFA NO

40 Switzerland - SFV NO

41 Taiwan YES Linda Hsu Vice Chairman

Tao-Chiech Chen Supervisor

42 Turkey - UFRAD YES

Dr. Mustafa Aydin President

Gurkan Donat Vice President

43 USA - IFA YES Jack Earle Immediate

Past Chairman

Stephen Caldeira President & CEO

Accredited Observers Accredited observers are allowed to attend the WFC as long as notice has been given to the

WFC Secretariat prior to the day of the meeting

1 New Zealand

Bhushan Arolkar - Franchisor Member

2 Taiwan

Shu-Chih (Sherry) Chen - Executive Vice President

4 Turkey Mustafa Namli - Board Member

5 Turkey Haluk Okotur - Board Member

6 Turkey

Abdullah Kavukcu - Board Member

7 Turkey

Irem Arman - Communications Co-ordinator

minutes of the world franchise council meeting 29, …€¦ · welcome by the host association...

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