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As Times Change, Franchising Powers Job Creation and Economic Recovery

IFA’ s 45th Annual Legal Symposium last month recalls a significant point in franchising history. Over fifty years ago, a handful of franchise industry founders gathered in our nation’s capital to discuss the myriad issues affecting the relatively new franchise industry. The industry faced a regulatory environment that was threatening the livelihoods of those who worked in the franchising industry and these new franchise leaders realized having permanent representation in Washington, D.C. was paramount to protect, promote and enhance the franchise industry, and the business model that would spawn and sustain one of the leading paths for new business formation in the United States.

Thanks to the foresight of this group, the franchise industry has indeed grown to become a huge force in our nation’s economy. With 825,000 establishments, supporting nearly 18 million workers and generating more than $2.1 trillion in economic output, franchising is a thriving segment of the small business community. Yet much like half a century ago, the franchise industry today faces a host of legislative and regulatory threats at the federal, state and local levels that could thwart our industry’s growth moving forward. As franchise leaders, you know that your business can help move our country towards economic recovery faster than other types of businesses. In order to continue this growth, IFA’s message as the oldest and largest organization representing franchising will continue to be straightforward when we face these challenges: pro-growth, pro-business policies are the best path to enable franchise businesses to grow, create jobs and get the country on the path to economic recovery.

To that end, IFA is working diligently here in Washington and in state capitols to ensure that lawmakers understand the impact of their decisions on job creators in the franchise industry. For example, the industry was successful in stopping a bill in the California legislature in April that we feel would have significantly curtailed the growth of franchising in the state. We are seeing more and more of these types of initiatives in the states and are working diligently to ensure that the franchise model is protected for both franchisors and franchisees.

IFA’s steadfast efforts to loosen the credit spigot has improved the lending environment for your businesses to grow, but we still face an 18.6% lending shortfall in 2012 to meet the forecasted demand. Part of that work is through our continued education of the lending community about the benefits of franchise lending as they begin to move off the sidelines. Additionally, IFA is focused on simplifying the tax code which has placed a great deal of uncertainty on all businesses due to the complicated and temporary nature of the code, which invariably favors large businesses over smaller businesses like the majority of IFA members. Early in 2013, we expect a full reform of the tax code to be undertaken, and IFA will be working arduously to streamline and simplify the tax code for our industry.

While IFA has a strong grassroots network and great relationships with members of Congress, your help is still needed. I want to personally invite you to attend our Public Affairs Conference in Washington September 10-12. You will join 500 other franchise leaders in meeting face to face with members of Congress and their staffs to educate them about the importance of the franchise industry to the nation’s economy.

As the economy moves towards a more steady and balanced recovery, the franchise industry must remain front and center in the minds of lawmakers and federal congressional candidates, both in Washington and back home in their districts. We must remain vigilant in our pursuit to showcase franchising as a proven business model that creates jobs faster than other industries. The more representation we can have in Washington by franchise businesses, the stronger and healthier our industry will be in the future. I look forward to seeing many of you in Washington this fall to help us carry these critically important messages forward.


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