Well over a year ago, someone asked for a response to the following quote from Ayn Rand.  I suspect this was largely due to the idea that such a view of individualism would be difficult to refute and consequently establish its legitimacy.  So, here's the quote:
"Individualism regards man—every man—as an independent, sovereign entity who possesses an inalienable right to his own life, a right derived from his nature as a rational being. Individualism holds that a civilized society, or any form of association, cooperation or peaceful coexistence among men, can be achieved only on the basis of the recognition of individual rights—and that a group, as such, has no rights other than the individual rights of its members.” ---Ayn Rand
While it sounds wonderful and most people would instantly agree with it, what does it actually tell us about individualism as a philosophy and the reality of human interactions?

The first and most obvious problem is the statement itself.  Who does it address?  What purpose does it serve?  The answer is clearly the collective group.  In short, such a statement is meaningless to an individualist, since it absolutely requires a cooperative group as the recipient of its message.

The second problem is the continued use of the word "right".  This is a common misconception in such philosophies, because it presumes that a "right" has a tangible existence or meaning outside the context of a collective.  Yet, who is to bestow this "right"?  

You may well ask, why rights need to be bestowed, or even that should be intuitively obvious that we are born with such "rights" so the question should be beyond reproach.  However this is a flawed argument.

One is not born with "rights".  One is simply born and must make the best use of their abilities to survive.  Now most people recognize that we clearly have no "right" in determining what kind of parents we will have, or whether they will be good or bad.  Instead we can don't even conceive of such a concept as "rights" until we are taught of their existence.

Yet, if you assert a particular "right", who are you asserting to?  Let's conduct a simple thought experiment whereby we can eliminate all other humans from consideration.  You can easily do this yourself.  Simply go out into the woods, or a wilderness area and declare your rights to the world (1).  More importantly, declare them as "inalienable" (in case it makes a difference). You are certainly free to act in whatever manner you choose, but we're talking about "rights" bestowed by the mere act of being born human.  What response do you get?  How will you ensure that your "rights" are honored?  

From this it should be clear that our concept of "rights" is only meaningful within the context of other human beings; a social group, a collective.  In short, when we declare "rights" we are actually expressing a sense that boundary conditions must exist between the individual and a group that the group must honor.  The concept of "rights" is an agreement between the individual and the group.  This is precisely why animals cannot possess "rights", since they are powerless to formulate such an agreement (2).  Therefore, it is the group that is obligated to recognize "rights" that an individual claims.  Certainly there are enough historical examples of where this hasn't worked out particularly well, but it does represent the reality of human existence.

From this we can see that the path to freedom is not by the declaration of individual "rights", but rather by ensuring that the collective recognizes such a state amongst its members.  It cannot be otherwise.  An individual that insists on declaring "rights" that are not recognized by the group will be eliminated from that group (3). 

As a result, we come full circle.  If one wishes to be an individualist, then one is subject to the behavior of the non-human world at large, which doesn't recognize your "rights".  If one wishes "rights" to be recognized, then it can only occur within a collective group of humans.

In evaluating the quote provided at the beginning of this article, we can certainly see the merits of what is being proposed, but we should be equally clear that the quotation is explicitly addressed to a collective and depends on that collective agreement to acquire meaning.  Ironically, the quote is not a declaration of individualism.  It is a declaration of how a collective should behave.  This is also clearly evidenced by stating that the "group" has no "rights".  Of course, this is correct, because as we've just seen.  No group or individual is capable of assigning "rights" to itself without the recognition of some higher group bestowing them.

While it may rankle people's sensibilities to imagine having their "rights" bestowed by someone other than themselves, they should be quite considerate of it.  After all, every time people pass a law, they are denying someone their "rights".  This doesn't happen in some vacuum.  It is a direct result of the political collective in which everyone participates (or should participate).  While there may be many laws in which the collective can agree, we should also be cognizant that we can easily become frivolous in simply advancing our own agendas.

So, if you wish to advance the individualist ideal for greater freedom, then you must be an active member of the collective to ensure that such "rights" being professed are truly being recognized and honored.  Without that, such talk is simply idealistic philosophical nonsense.

NOTE:  A point was also raised that all human behavior as always involved groups, so Ayn Rand was simply presenting the "rules of engagement" in her quote.  While this certainly seems plausible, it also depends on recognizing that there is no individualism beyond one's participation in a collective group. If appears that what people find offensive is the idea that the collective group may supercede the interests of individuals, yet isn't that precisely why we belong to groups?  If we aren't interesting in advancing the group, then why belong?  While we are looking to advance our own interests, we do so with the additional objective of advancing the group.  So even in this, we are not operating as individualists. 

In truth, we have little positive to say about people that place individual interests above the group, using names ranging from "traitors" (for those that betray a group) or "mercenaries" (for those that only commit for personal gain) or even just "selfish", to name a few.  In essence, someone that can't be relied upon beyond their own interests.
(1) One can quickly see the absurdity of declarations like the "right to life", because without the human context, would we think it reasonable to argue for a "right to be free of disease"?  a "right to be free of defect"?  a "right to be free of injury"?  When we consider these questions, we realize that we would agree that these are "rights" only within the context of human interference.  No one would believe that they are "rights" that the biosphere would recognize or honor. Basically in the natural world, your "right to life" extends only to the degree that you are able to defend your life.

(2) This is precisely where animal rights groups run into trouble, because unless humans recognize such a right, it is clear that the animal is powerless to claim it.  

Before anyone glibly responds that they would gladly accept such elimination, consider what it would mean to be eliminated from your country, your job, your family, in short anything that involves human interaction in groups of any type.  Usually people accept elimination from a group because they belong to many more than just one, that there is a separate structure on which they depend for their well-being.