leadership
Communicating the Positive Message of Franchising

The franchising community must tell its story to stave off significant threats.

 

By Aziz Hashim, IFA Chair

There is nearly universal agreement that the average American worker's future looks bleak, particularly in low-income rural and urban settings where growth remains at a standstill and jobs are scarce. While the stock market has rebounded from the recession (despite some recent setbacks) and other indicators suggest the country is beginning to grow, many Americans feel the deck is stacked against them. This dichotomy has fueled a national conversation about income disparity, the future of the middle class, and vastly different ways of addressing the problem by our next President.

The country is on the precipice of an incredibly important election to decide which direction our country will head and the role government and the private sector should play in growing the economy and improving wages. Yet, irrespective of that choice, let me suggest that the franchising industry is perfectly positioned to partner with elected leaders of any party to deepen their understanding about the benefits of franchising.  Franchising creates opportunity for all while continuing to help working Americans re-enter the job market by providing job training, managerial experience, and a ladder out of unemployment. Unfortunately, many elected leaders, and the vast majority of the general public, do not understand the franchise business model. As I assume the chairmanship of the International Franchise Association in 2016, my primary goal is to change that.

Franchising offers a uniquely accessible opportunity for those who want to better their lives — for both working Americans and those aspiring to entrepreneurship. Franchising is a business model like none other because no previous entrepreneurial skills or experience is necessary to own your own business, provide jobs, and contribute to the local economy and communities. Companies who use franchising spend years developing proven practices and a trusted brand. Franchising companies then take that proven concept and encourage local families to start their own small businesses, often in areas that desperately need jobs or new services such as rural areas or inner cities where economic hardship is deeply rooted. Franchising is the quintessential American invention, taking something that works, making it efficient, adding technology, and scaling it.

For employees, often no prior skills are required to work at a franchise because much needed training to the working class is provided by the concept. For those unemployed or underemployed, franchises offer entry-level employees a starting wage and basic skills training with no prior experience required. In fact, our industry is one of the largest vocational training systems in America, one that pays employees while they are being trained. Hundreds of thousands of highly successful managers and executives, not to mention countless elected officials including President Obama and Speaker of the U.S. House Paul Ryan, started their careers at a franchise — their first step on the ladder to the middle class and higher.

Sadly, we see headwinds to our success due to government intrusion in the franchising business model. In cities like Seattle and with the National Labor Relations Board and U.S. Department of Labor, elected leaders are unfairly targeting the franchising model in the name of improving the lives of working Americans. The unintended consequences of these policies, such as cobbling together small businesses with their brand companies or requiring a franchise to pay wages higher than other small businesses, is another small business shutting down and jobs lost. We need to encourage those who are advocating for these policies to consider the risks to the workers who have jobs today but may not tomorrow, and the threat these policies pose to the American dream for future franchise owners.

Our industry is a willing participant in the national dialogue surrounding economic growth, jobs and opportunity. We employ nearly nine million people, yet most elected officials have no knowledge of how the model works and most franchise employees are confused as to whether their franchise owner is independent or a subsidiary of the franchisor. Before the government wrecks irreversible damage and crushes the entrepreneurial hopes of millions, the franchising industry should seize the moral high ground and introduce new strategies and tactics to partner with lawmakers, academia and the public. IFA and its members need to invest financial and human capital in helping government to understand realities of franchising. It’s not franchising versus government; it’s franchising and government versus opportunity inequality.

We firmly believe our model is just the sort of success story that should be used as a vehicle to achieve better results for more people. Inequality in income is merely a symptom, the root cause of which is ever-decreasing opportunity for the working class. Quite simply, the middle class is getting smaller due to lack of opportunity in an increasingly competitive world.

No level of minimum wage increase or additional regulation can create opportunity. To adequately address the problem of income disparity, more opportunities must be created. Franchising is and can continue to be a major contributor toward such opportunity creation if it partners with government, academia, and its own labor force to properly educate at all levels about the promise of franchising. The focus, therefore, needs to shift toward equalizing the opportunity inequality. There is no better business model than franchising to create opportunities for all groups, irrespective of their educational background or financial position.

 

Aziz Hashim is the Chairman of the International Franchise Association and Managing Partner of NRD Capital Management in Atlanta, Ga.