Press Releases

FOR IMMEDIATE RELEASE - October, 17, 2001

AAFD Announces Insurance Savings for AAFD Accredited Franchisors

San Diego, CA ?San Diego, CA the American Association of Franchisees & Dealers (AAFD) and Lexington Insurance Company (an AIG Company) jointly announced today that Lexington can provide a substantial 25% premium discount for its Franchisor Errors and Omissions Insurance products for franchising companies that earn the AAFD?s Fair Franchising Seal.

Christopher Terry, Underwriting Manager, made the announcement on behalf of Lexington, ?The AAFD?s Franchisor Accreditation program provides a reliable indicator of stable franchise relationships based upon negotiated and balanced franchise agreements,? said Terry. ?Essentially, Lexington expects that the AAFD?s Fair Franchising Seal Recipients will have a significantly lower loss experience which justifies significant premium reductions.?

Robert Purvin, AAFD Chairman, expressed his appreciation of Lexington?s announcement. ?The AAFD?s Fair Franchising Seal recognizes superior franchising practices and promises to provide prospective franchise investors with valuable reference points in choosing a franchise investment. Now, AAFD Accredited Franchisors will appreciate significant savings in their professional liability premiums.?

There are over 2500 companies offering franchise opportunities in the U.S. alone, and the AAFD has worked since its inception in 1992 to develop and promote uniform standards and criteria to help prospective franchise buyers to evaluate franchisors and their agreements. Since 1996, the AAFD has accredited 8 brands: Taco John?s, Straw Hat Pizza, Sylvan Learning Centers, American Leak Detection, Microtel, Best Inns, Hawthorn Suites, Meineke Discount Mufflers. Fair Franchising Seal recipients account for more than 4000 retail units with more than $4 billion dollars in annual revenues. Four additional brands are under review; the AAFD only releases the names brands that earn accreditation.

New York attorney, Richard Rosen, Chair of the AAFD Standards Committee, expressed confidence that premium reductions will contribute to a new era of investor confidence in franchise opportunities. ?The era of accreditation of franchise opportunities represents a significant advance in the methods by which investors will be able to identify quality franchise programs,? said Rosen. He also said, ?The AAFD Awards establish high standards of quality, service and satisfaction within a balanced environment of equity, fairness and cooperative management.?

The Fair Franchising Seal is available to franchising companies that recognize and work with independent franchisee associations, have developed fair and balanced agreements, and have achieved a high degree of franchisee satisfaction. The TQF Platinum Award recognizes Seal recipients whose franchise agreements and practices substantially conform to the AAFD?s Fair Franchising Standards. All recipients must achieve a 75% satisfaction rating from their franchise owners in addition to meeting other criteria.

Lexington is the largest U.S. based surplus lines insurer.

The American Association of Franchisees and Dealers is the oldest and largest direct member non-profit trade association representing the interests of franchisees and independent dealer networks throughout the United States. Stressing market solutions and franchisee empowerment through independent franchisee associations, the AAFD has grown to represent more than 12,000 franchised businesses nationwide.

For more information, contact the AAFD at 800-733-9858, or visit our website.