For Immediate Release:
Contact: Alisa Harrison, 202-628-8000
Franchise Businesses Would be Put at a Disadvantage
WASHINGTON, DC, Oct. 23, 2008—The International Franchise Association (IFA) today urged the New Jersey Assembly Committee on Commerce and Economic Development to reject Assembly Bill 2491, which if passed, would have negative repercussions on the economic development of franchised businesses in New Jersey and the many contributions they make to the state’s economy.
“This burdensome legislation will force franchise systems to turn to the courts to resolve their differences, which is a costly and time-consuming process, taking money away from businesses’ bottom lines,” said Troy Flanagan, IFA director of government relations during testimony before the committee. “Decisions about the terms and conditions of franchise agreement are best left to the parties to the contract to resolve, not the government.”
A2491 would amend the Franchise Practices Act by expanding the definition of “place of business.” This amendment will cause certain franchised businesses already regulated by the Federal Trade Commission (FTC) Franchise Rule to be unnecessarily subjected to additional state scrutiny, putting them at a competitive disadvantage to businesses in nearby states.
Flanagan pointed out that after 12 years of contemplation the Federal Trade Commission chose not to add new post-sale oversight to the franchise business model. “Current federal and state presale disclosure requirements provide franchise investors with meaningful and reliable information necessary to evaluate a franchise investment,” said Flanagan. “This regulatory format gives potential franchisees the opportunity to compare franchise opportunities in order to make an informed decision about whether and when to invest in a particular franchise system.”
Additionally, various effective self-regulatory efforts were noted for committee members. The IFA offers on-line compliance education programs to help would-be franchisees and franchisors, and has implemented a Code of Ethics for its members that sets forth standards of conduct for relationships between franchisors and franchisees. The IFA Ombudsman Program provides franchisees and franchisors with an independent, confidential and objective resource to assist in resolving franchise disputes. Finally, the IFA, along with major franchise companies, supports the Franchise Mediation Program (FMP) for times when a more formal mediation process is needed.
According to recent economic data, there are 20,636 franchise establishments employing 246,732 workers in the state of New Jersey. This represents an annual economic output of $24.6 billion.
About The International Franchise Association
The International Franchise Association, the world’s oldest and largest organization representing franchising, is the preeminent voice and acknowledged leader for the industry worldwide. Approaching a half-century of service with a growing membership of more than 1,300 franchise systems, 10,000-plus franchisees and more than 500 firms that supply goods and services to the industry, IFA protects, enhances and promotes franchising by advancing the values of integrity, respect, trust, commitment to excellence, honesty and diversity. For more information, visit the IFA Web site atwww.franchise.org.