Fearing more regulation, franchisors are scrambling to show that they don't need it. But Maryann K. Reid doesn't think the industry can police itself.
In 1990, Reid and her family opened a franchise with All Tune & Lube Systems Inc., a Maryland-based auto-service franchise. They soon went belly-up, losing more than $150,000. Reid claims the franchisors' trade group, the International Franchise Assn., damaged her even more.
After calling the IFA last summer, Reid says IFA President William B. Cherkasky told her to send her files so the IFA could investigate her complaints that All Tune broke its promises. The IFA didn't respond, and the Reids sued All Tune, alleging breach of contract and fraud--charges it disputes. And they protested at trade shows, wearing T-shirts critical of All Tune.
On Sept. 29, Cherkasky wrote Reid that he had sent her materials to All Tune, now called ATL International Inc. Reid says Cherkasky promised he wouldn't do that--which he denies. By then, All Tune's lawyers--Brownstein, Zeidman & Lore, the firm that represents the IFA--had countersued Reid, alleging defamation, and other claims. Reid denies the charges. The IFA says it treated Reid fairly and followed its procedures.
The case points to the difficulty of self-policing, says lawyer W. Michael Garner: "If self-regulation hasn't been effective up to date and there are cries for regulation, then why think that self-regulation will work now?"