Franchise Outlook

Franchisees Meet with Congress

The 2015 International Franchise Association’s (IFA) Franchise Action Network Annual Meeting took place recently in Washington, D.C., followed by a series of meetings between people from the franchise industry and their elected representatives.

The goals of the annual meeting include supporting and celebrating franchisees and the franchise business model as a whole, plus providing information for franchisees, especially those who have the chance to meet with their congresspeople. IFA sets up the meetings and helps franchisees prepare for them.

The goals of the meetings with elected officials are, first, to help franchisees learn how legislation may affect their businesses, and second, to help congressional reps to understand how legislation may affect franchise businesses.

“Not everyone understands the franchise business model and how legislative and regulatory decisions can greatly impact small franchised businesses,” said Catherine Monson, CEO of FASTSIGNS, a speaker at the event.

Franchise businesses are currently the strongest source of job growth in the nation, providing more than 8,000,000,000 jobs and 3% of the GDP. These numbers should make legislators aware that the industry is an important part of the economy, but the business model is also facing some real challenges.

The legislation the IFA is currently watching:

  • The new joint employer definition from the National Labor Review Board
  • Minimum wage hikes which sometimes treat independently owned franchise businesses as large corporations
  • New overtime regulations which will make overtime pay necessary for far more workers
  • The Affordable Care Act, which could raise the costs of labor for some franchises

While the overtime and health benefits rulings affect all businesses, and are intended to protect workers, the joint employer ruling and discriminatory minimum wage rulings will specifically affect franchisees. Reclassifying franchisees as arms of large corporations rather than small business owners could be harmful to the franchise business model as a whole.

The IFA is hoping that talking with individual franchisees will help legislators see that these laws will affect small independent business owners, not just McDonald’s or 7-11. The discussions over these rulings are often presented as workers standing up to giant corporations, but that’s not the reality of franchising in America. The majority of the nation’s 780,000 franchises are independently owned.

Not only are franchises an important part of the overall economy, they are also almost 50% more likely to be owned by minority business owners than independent businesses. 20.5% of all franchise businesses are owned by minority members, according to most recent available census data, while only 14.2% of independent businesses are.

Some observers believe that the current anti-franchise rhetoric is intended simply to increase the chances of unionizing fast food restaurant staff, a large segment of workers who are generally employed in franchise businesses. Setting up a political narrative pitting these workers against giant corporations would probably be more effective in that case than going with a scenario that pits the team against local small business owners.

The Network Meeting also includes sessions on how to choose a franchise business investment, how to fund a franchise, and other essential information for new franchisees.

Pending Request