Cited from my book
tittled
“Franchsing and
Licensing in Indonesia: Regulations and Practices”
By AMIR KARAMOY
___________________________________________
Chapter III
WORLD FRANCHISE
ASSOCIATION “MAFIA?”
The use of the word “mafia” in the above sub-heading is intended only to indicate
that there is the need to revamp the world franchise association. The
world association is supposed to coordinate all franchise
organizations in different countries by, among others, synchronizing their activities with that of the world organization by way of guidance and promoting cooperation. Franchise organizations in every country (both members and non-members of the world association) should be able to retain their autonomy with regards to their efforts in developing their
respective franchise industry. Autonomy here refers to the local organizations’
distinction based on their
respective local wisdom. It should not assume the posture of the world football organization FIFA (Fédération Internationale de Football Association), which wishes to manage “the pulse” of all football
organizations in the world while at the same time is embroiled in bribery and corruption cases.
The author believes
that the world franchise association should possess sufficient data and knowledge on franchise
organizations in all countries across the
world. It is not sufficient if data and knowledge
are obtained only from local franchise
associations that are members of the organization. A world franchise association must have their own independent "intelligence agent" in order to update data and information on the franchise industry and work
performances of franchise associations in the world.
The author is of the opinion that the admission requirement for a country’s membership in a franchise
association should not entirely be determined by the ability of the local
organization in paying membership fees alone, but primarily be based on their track record. In this regard, an "Intelligence agent" can provide data and information on
the performance of a franchise association in a country. Thus, the most
important requirement of member admission in a world franchise association is
the member’s good track record.
For example, it is questionable if a franchise association in a certain country is managed by a Chairperson who has been holding the same position for over 25 consecutive years (Anang Sukandar, the Chairman of Indonesian Franchsie
Association - AFI case).
What does their Articles of Association say about the
selection of their Chairperson? Is it pursuant to the organization’s mechanism set out
in their by laws? Whether a local association operates in a province or city or on a national basis should also be re-confirmed. Such matters need to be investigated by the world
franchise organization in order to ascertain the reputation of local associations that wish to be its members. This also applies to those who are already members.
One of the many negative labels that have been attached to the world franchise association is that its presence is merely to promote the economic interests
of developed or western countries. A case in point is franchise
exhibitions held by the world franchise association; it seems that they are intended to promote franchises from developed countries in South (or developing) countries, particularly fast-growing economies such as China, India and member countries of the ASEAN (Association
of Southeast Asian Nations). These countries are mostly in Asia, Africa and
Latin America and are only used as
target markets by international frachise associations.
Even if there are
efforts to advance franchises of rapidly developing countries, they are often subject to rules set
by the world franchise association. In many cases, these rules are exclusive, such as recognizing only franchise associations that are members of
their organizations. Local associations that are not members on the
international level tend to be hampered by the world franchise association’s refusal to recognize the “legality” of their activities.
In many cases, a local association that is not (or is yet to be) a member is in fact recognized by the local government
because of their qualification and professionalism in implementing work programs designed to advance the local
franchise industry. On the other hand, official members of
world franchise associations mentioned above work merely for profit and the personal gains of
Chairpersons or board members.
World franchise associations usually collaborate with their embassies abroad. For example, when
a franchise exhibition is held in New York, the party busy marketing the event is the U.S. Commercial Attache assigned to different countries. The question is, why does a franchise
association’s (a member of the private sector) activity appears to be the business of a country’s government?
International
franchise associations tend to think that they know much about franchising in
a given country although in fact their knowledge is actually poor. This is because their only source of
information is the local association that happens to be its member. For
instance, franchise data in Indonesia, as far as the author knows, is often
manipulated. For this reason, the author has proposed a number of times to the
government, especially the Ministry of Trade of the Republic of Indonesia, to
conduct primary data collection in order to obtain accurate data regarding the
growth of franchising in Indonesia.
World franchise associations often compete amongst themselves and each run their
programs exclusively. For instance, if a world franchise
association X holds an event, then members of association Y are not allowed to
participate in the event unless they are co-sponsors or advertise their products.
In my position as Chairperson of the
National Committee on Franchising, Licensing & Partnership, Indonesian
Chamber of Commerce and Industry (KADIN INDONESIA), I once
"reprimanded" a visiting delegation of a world franchise association regarding such matters. However, they brushed me aside and did not pay any attention whatsoever to it.
In view of the predominant role–and the exclusive nature—world franchise associations play, along with their tendency and inclination to promote the interests of
developed (western) countries, the author decided to introduce the shariah-based franchise idea
with Indonesia and
Malaysia as the starting points. Shariah refers to the idea
of applying and putting into practice one of God's commandments, which is "Rahmatanlil'alamin" (blessings for the whole universe and its inhabitants).
What the author means by the practice of shariah is not about
propagating religious teachings at all, much less the intention of belittling other religions. Shariah here is a value
system that is universal, a behavior guidance related to honesty and fairness, a fair
profit-sharing and proportional profit distribution system, including to the
needy, in addition to
instilling the values of cleanliness (both in the narrow and wide sense of the term), protecting the environment, building cooperation on the basis of
equality (non-discriminatory, including gender issues) and is inclusive in nature.
Why are such issues pertinent in the franchise business? Because franchise is, in essence, about sharing. In other words, it is about sharing the values of goodness and equality in business, sharing of
knowledge, skills, know-how, experience, profits and much more.
Again, shariah here is the
establishment of business conducts based on values
stated above.