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IFA Increases Focus on State Issues Impacting Franchising

Stephen J. Caldeira, CFE, International Franchise Association President & CEO

Stephen J. Caldeira, CFE, International Franchise Association President & CEO

With split control of the U.S. House, Senate and an increasingly lame duck President Obama moving closer every day toward the end of his second term, Washington, D.C. continues to be in a state of perpetual gridlock. No significant piece of legislation has passed Congress since the Affordable Care Act was signed into law in the spring of 2011, with the exception of “must-pass items” such as those necessary to keep the government funded and crucial to avoiding the so-called “fiscal cliff.” Looking ahead, other than the allure and unlikelihood of a so-called grand bargain on taxes and spending, and a potential bipartisan accord on immigration reform (50-50 shot at best), the only sure thing in Washington’s foreseeable future is the ongoing and disheartening negative rhetoric and partisan politics.

Amid the dysfunction of the nation’s capital, the states have increasingly become hotbeds of legislative activity. In the past several years, many states have focused their crosshairs directly on the backs of International Franchise Association member-companies and the franchise industry, and not one of their bills is aimed at improving the business environment for franchising. Rather, this legislation has put the industry on the defensive, forcing a race to educate lawmakers about the unintended consequences of bills that, while seemingly well-intended by their proponents, would have the adverse effect of making it more difficult for franchising to work as the viable business model it has become over the last half-century.

Currently, IFA members are facing challenges in numerous state capitals, most acutely in the form of “franchise relationship” legislation, but also with issues involving independent contractor status as both courts and lawmakers fail to differentiate between a franchisee and an employee. In 2013, we saw such bills introduced in Maine, California, Massachusetts and Rhode Island. While IFA successfully defeated or prevented all of these bills from moving forward, the IFA Board of Directors has appropriately recognized this growing threat to the industry and is marshaling additional resources to support our state government relations and public-policy efforts.

During our June Summer Board meeting in Chicago, I launched IFA’s “go-forward” strategy that will be regionally-focused covering the Northeast, Midwest and West. The goal of this ongoing integrated public affairs campaign is to inoculate our industry from future threats to the franchise business model. Simultaneously, this campaign will also educate key stakeholders about the economic benefits of franchising to local communities, and the existing safeguards that are already in place under current state and federal law to protect existing and prospective franchise investors.

The creation of an internal and ongoing campaign team will help the IFA to harness its current assets – staff, members, existing consultants, lobbyists and other industry influencers – to best leverage its resources and association activities against current and future threats. Additionally, developing external assets will strengthen our efforts through new coalition partners, business community associations and traditional grassroots/grasstops recruitment, and an overall, proactive state-based education initiative.

The primary and initial focus however, will be to combat efforts in states where current legislation is pending, and where we determine there might be a higher possibility for anti-franchising legislation to be introduced in the near future. A secondary focus will be to continue to build upon IFA’s increasingly high profile at the federal level to create stronger alliances with lawmakers, business-community coalition partners and key news outlets at the state level.

A proactive strategy will enhance our efforts to prevent anti-franchising legislation from being introduced. We will do this by educating legislators about the positive economic contributions of the industry to state economies, while simultaneously enlightening the media, the public and prospective investors about the legal protections that already exist under various state and federal requirements, making further government intrusion unnecessary.

An initial investment in a proactive campaign can help minimize the need to engage in more expensive, “Catch Me If You Can” reactive campaigns and bolster your association’s work to preserve and protect one of America’s most important industries and that is exactly what we are doing at the staff level.

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