Franchising World June Edition




One year ago, Stephen J. Caldeira, CFE, who has nearly 30 years of government relations, political, communications, fundraising and professional development experience, joined the International Franchise Association as its president and CEO.
 Caldeira sat down with IFA Communications Director Matt Haller to review his first year’s achievements, challenges and rewards.


 

   

FW:
 
Since taking the helm of the International Franchise Association in June 2010, how has the overall economic climate shaped the association and its priorities? 

   

Caldeira:
 This has arguably been one of the most anti-business, pro-regulatory environments in decades and franchise businesses have struggled mightily coming out of this recession, more so than in past recessions, due to the meltdown of the financial system and the ensuing challenges of accessing the capital which is so necessary to grow, as we all know.  

Given that, the IFA has had to ramp-up our efforts
 to be more proactive by
 accelerating our focus on the critical issues important to our members: beginning with the critically important issue of credit access through the expanded SBA loan limits and guarantees that were passed as part of the Small Business Jobs & Credit Act in September 2010, and following through with an unprecedented and successful Small Business Lending Summit in April in conjunction with our Anchor Partners: Consumer Bankers Association, National Association of Government Guaranteed Lenders, CIT and the National Restaurant Association to kick-off an expanded Credit Access Campaign that will run (indefinitely) until we get credit flowing again from the commercial-lending sector.
  

   

FW:
The Small Business Lending Summit was a historic undertaking that brought together the franchise industry, lenders, government, private-sector experts and both trade and consumer media to discuss credit access challenges.
 What has been the initial result?
 What does the association hope to achieve in the short and long-term? 

Caldeira:
  Well, first and foremost, the IFA needed to foster a greater focus on collaboration and education with lenders to encourage more capital flow; we also needed to have a better understanding of the challenges facing lenders, borrowers and regulators in order to identify opportunities for investment and growth. 

The IFA Small Business Lending Summit launched what will be an ongoing effort by franchising and lending leaders to increase credit flow to the small franchise businesses that can create the jobs America urgently needs, and which we have done historically (as an industry), especially over the last decade, when we achieved a demonstrable 40 percent higher growth rate as compared to non-franchised businesses.  

Additionally, the franchising industry also needed to understand that lenders are faced with a stricter regulatory environment, reduced borrowers’ collateral, and even though the unemployment rate has dropped a full point since last November, record-high, long-lasting unemployment rates.  

As I (and we as an association) continue to impress upon policymakers, the Obama administration and the media, franchising, if properly financed, can be a catalyst to turn the U.S. economic recovery into a jobs recovery by unleashing the power of small businesses and aspiring entrepreneurs. 

What we did through our relentless advocacy efforts on Capitol Hill that ultimately led to the successful implementation of the SBA provisions in the Small Jobs bill, and what we are focusing on through the Joint Working Group (JWG) with our Anchor Partners from the Small Business Lending Summit, will continue to highlight the direct correlation between access to credit, job creation and economic output. The JWG is currently working on a Web-based Franchise Lending Toolkit to better prepare bank-ready, franchise borrowers, as well as a National Franchise Loan Network that will link best-in-class franchisors, franchisees and lenders to facilitate deal flow. These are just a couple of the ideas that have already emanated from this talented group and other ideas will follow that will undoubtedly create short-term solutions that enable long-term economic growth and job creation.
   

Another outcome of the Summit has been an increased awareness among lenders that the franchising industry creates jobs faster than non-franchised businesses and therefore, presents less risk equation.
 

Clearly, franchising is a stronger bet than other businesses and lenders have now confirmed their willingness to place a greater focus on lending to franchise businesses. As a result of our ongoing campaign, some lenders have announced they will dedicate new resources to create franchise business lending divisions, with TD Bank being a prime example. Lenders such as Bank of America and and GE Franchise Capital have also stated their willingness to increase lending to franchised businesses.
 Not a bad start, but we still have a long way to go and we will need to keep the pedal to the metal, for sure, and we will do just that.  

Another positive outcome from the Summit has been the development of a proactive media outreach strategy that will encompass print, online and other IFA and Anchor Partner communications vehicles, including broadcast media. In addition, an advertising awareness campaign in industry publications and within Washington, D.C. is already under way with articles and Op-Ed’s appearing in
The Wall Street Journal,
The Washington Post, Atlanta Journal-Constitution, Philadelphia Tribune, The Hill, San Diego Union-Tribune, Detroit Free Press, CEO Update, Nation’s Restaurant News, Restaurant Business, Franchise Times, American Banker,among many other respected national and regional newspapers and publications. 

   

FW:
 
As you work with members of Congress to raise awareness of the franchise industry’s priorities, what are some of your observations about the state of politics in the United States and how will the political environment affect franchising going forward? 

   

Caldeira:
 The American people want the partisan bickering to stop and for Republicans and Democrats to start working together to grow the economy and create jobs. The November elections made the Obama administration understand that there is a lot of angst around health care and the potential negative affect that the new law will have on both sustaining and creating jobs. The Republicans also need to understand that they were not given a mandate, but essentially an opportunity (by the American electorate) to show bi-partisan leadership by working with Democrats in both chambers of Congress, and with President Obama on ways to reduce the burgeoning national debt, cut non-essential spending, remove current and prospective burdensome regulations that continue to stifle economic growth, especially for small businesses, and to have the tough discussions on immigration, tax and entitlement reform, that each Congress seemingly continues to pass onto the next Congress.
 The recent plan by Representative Paul Ryan (R-Wis.) should be applauded for getting the ball rolling in fostering the debate that needs to happen on many of these tough issues.
    

The IFA will also continue to tout the economic impact of franchising in a still very challenging economic climate through our media awareness campaign–Building Local Businesses, One Opportunity at a Time–by featuring some of the country’s most iconic and emerging brands in franchising. The franchising industry represents 825,000 establishments, nearly 18 million jobs, $2.1 trillion in economic activity, 10 percent of GDP, and one in eight U.S. jobs. These are powerful numbers and we will continue to drive home these important statistics to policymakers as they consider potentially onerous legislative and regulatory initiatives, through an aggressive, ongoing and focused communications and marketing campaign. 

   

FW:
 
What advice would you offer franchise community members to effectively engage their legislators and regulators on issues affecting their businesses?
   

   

Caldeira:
 FranPAC is critically important and without question one of our most key strategic initiatives.
 IFA supported 138 pro-business federal candidates with a success rate of 85 percent in the last election cycle and for the IFA to further build and sustain our visibility and credibility on Capitol Hill, we will respectfully, but consistently, remind all segments of our industry that a stronger FranPAC means we can support pro-business federal candidates in a much wider and deeper way moving forward. Under the steadfast leadership of Shelly Sun, Aslam Khan, Ron Feldman and Lane Fisher, the FranPAC Presidents Council is doing a tremendous job of engaging the industry to better understand the importance of a stronger FranPAC.  

In my mind, anyone who derives a portion or all of their income has a responsibility to support FranPAC at some level. The public policy stakes have never been higher and we must all step up to the plate to do all that we can to promote, protect and enhance our great industry, or the potential, negative costs and long-term ramifications could be huge. Think of the health care law that was passed last year and how that will impact our industry and your businesses, and what we as an association need to do to mitigate the effects of this, still evolving, disastrous law.  

Think of the ongoing and future debates that will take place on tax and immigration reform, swipe fees, economic nexus, independent contractor classification, among other important issues.
 These issues could have devastating effects on the franchise community. We have an IFA Strategic Plan goal to become a $1 million PAC by the 2013-2014 election cycle, but I think if we can galvanize our industry, we can get there in the 2011-2012 election cycle. Going into our June Board Meeting this year, we will have already passed our 2011 goal of $375,000 by having raised over $400,000 in the first five months of this year, so we are off to a great start, but we must remain diligent and focused in order to make the strides necessary to achieve the landmark, million- dollar goal in this election cycle.  

Franchise Congress, the association’s program to develop relationships between IFA members and lawmakers in every congressional district, reminds us how important it is to realize that all politics are local. It is one thing for us to advocate as an association to policymakers in Washington, and we will continue to do so, but equally important is the need for our members to voice the potential devastating consequences to the franchising industry of anti-business, pro-regulatory policies such. We currently have 250 Franchise Congress members in 38 states, but by the end of 2012, we will need to have members in all 435 congressional districts in all 50 states, so that we can more effectively communicate the economic impact of franchising to the nation’s economy, and we will remain diligent in that quest.  

   

FW:

 How does the association align the needs of members who include franchisors, franchisees and suppliers from a wide range of industries? 

   

Caldeira:
 We accomplish alignment through such vehicles as the Franchisor Forum, Franchisee Forum and Supplier Forum in dealing with the worst recession since the Great Depression.
 The recession has also forced franchisors and franchisees to work more closely with their supply-chain partners to reduce cost of goods and improve unit economics.
 The franchisor doesn’t win over the long haul if the franchisee isn’t profitable, so the good work that is being done through Franchisee Advisory Councils and Brand Advisory Councils are one of the positive aspects that has come out of the recession. At the end of the day, it’s all about franchisee profitability and both franchisors and franchisees deserve great credit for working hand-in-hand to maintain this focus.
   

   

FW:
 
Collaboration and communication appear to be integral parts of your management style.
 How have these two characteristics helped you drive the association to become a growing force in Washington and the greater business community? 

   

Caldeira:
 It has allowed me, and more importantly, our talented and dedicated staff, to focus on the key elements in the strategic plan and drive them home to execution. I’ve had a strong track record of building alliances and bringing people together for the good of the whole, while also disseminating the important messages about the importance of the franchise industry to the U.S. and global economies.  

At the end of the day, you’re not going to maximize your potential to advance your agenda if you aren’t consistently collaborating and communicating with key stakeholders both inside and outside the beltway, period.
 Building and sustaining coalitions on important issues, such as the Credit Access Campaign, the Coalition for a Democratic Workforce on card check, immigration reform with the Essential Worker Immigration Coalition, and recently on swipe fees with the Merchant Payments Coalition, are prime examples of successful and strategic collaboration on behalf of our members. There is clearly strength in numbers and partnering with like-minded, pro-business associations and organizations will be critical to our future success in the public policy arena.
   

We have also recently spearheaded benchmarking research for franchise businesses through IFA’s OnTrack-Performance Benchmarking for Franchisors program.
 Further, the association’s economic research has helped our members to better understand the outlook for the franchise industry and has helped us to shape the foundation of how we communicate the impact of the industry to members of Congress each and every day.
    

   

FW:
 
How has a career in the restaurant, retail and hospitality industries aided in your role as IFA President and CEO? 

   

Caldeira:
 I have spent the last 20 years working in and around the restaurant industry, and given that 42 percent of our members are chain restaurants, that experience has provided me with a solid understanding of the needs of not only the largest segment of IFA’s membership, but the entire franchise industry.
 I’ve spent the last year visiting with franchise businesses in over 54 cities and 22 states and have visited my peers in four foreign countries to ensure I have my finger on the pulse of the entire range of businesses IFA represents so that we can best meet the needs of our members by providing the ROI they are looking for, especially in a tough economic climate where every dollar spent matters.
  Without question, we will continue to leverage our increasing relevance and political standing in Washington as a small-business force to protect and advocate for pro-growth policies that advance the franchising industry.
  

Additionally, my experience at the U.S. Chamber of Commerce, National Restaurant Association and at two major corporations, on the operating side at Dunkin’ Brands, and on the supplier side at PepsiCo, have provided me with a very clear understanding of what companies expect and deserve from their trade associations in Washington.  

   

FW:
 
What part of heading the association is most rewarding?
 What is most challenging? 

   

Caldeira:
 The most rewarding part is being able to help lead, guide and learn from a great staff, with terrific support from our Board of Directors, to bring the industry together, particularly as it pertains to understanding the potential impact of current and potential public policy issues.
   

Trying to get the entire industry to understand the potential ramifications of proposed legislative and regulatory activity is not easy, it is quite challenging in fact. There are 295 different business format categories in franchising and each company has a different philosophy, culture and strategic priorities. So while it is certainly a challenge, my job is to ensure all of IFA’s constituencies are educated and motivated to be proactive about what these issues will mean for their businesses today and well into the future.
  

   

FW:
 
What do you believe is a common misconception about franchising held by the public?
 Held by policymakers?
 
  

   

Caldeira:
 I think the public and policymakers look at franchising and they don’t necessarily think local businesses.
 They look at McDonald’s, ServiceMaster, Dunkin’ Donuts, 7-Eleven, Meineke Car Care Centers, Cinnabon, Choice Hotels and say they are big businesses, and they are right for the most part, but what they don’t all understand is that the corporate entities, IFA members, are primarily represented by local business owners that account for 825,000 franchised establishments in all 50 states.
 That is why we did our public policy research two years ago and from that survey we learned that we needed to continue and enhance our media awareness campaign to better educate and share that these iconic (and emerging) American brands are owned by local business people. That is why we created the tagline we use every day in all of our communications and advertising vehicles: Franchising: Building Local Businesses One Opportunity at a Time.
    

FW:
 
What are the priorities ahead for you as CEO and for the organization? 

   

Caldeira: I will continue to remain vigilant in our pursuit to loosen the availability of credit for franchisors and franchisees so that they can continue to grow and expand, whether it is through forging additional relationships with lenders or continuing the drum beat on Capitol Hill and with the administration about the continued need for a pro-growth, anti-regulatory public policy agenda that allows small business to thrive. I will also make sure that we continue to focus on replacing the onerous provisions of the health care law that was passed last year, while also pushing for tax reform that ensures fairness for all segments of our membership. 

I will also continue to be aggressive in communicating the need to grow FranPAC and Franchise Congress, while also ensuring that we drive the key elements of the IFA’s long-term strategic plan, which includes being proactive in creating and developing innovative and compelling programs to provide greater member value.
 I will continue to travel, although not as much as this past year, to speak at important industry-related conferences and conventions (and to meet with the membership) so that I can be the franchising ambassador the board has asked me to be, and that I need to be to best represent and advance this great industry.  

Lastly, and most importantly, I will ensure that we continue to have the best available talent at the staff level, people who are dedicated, motivated, focused and energized on a new, more proactive vision for the IFA and the franchising industry. Clearly, these are not ordinary times in the public policy and economic arenas, and to successfully navigate through choppy waters, we will need to build on the great staff that we have, by continuing to attract, develop and retain the best and brightest talent available as our responsibilities continue to increase as an organization, and you have my unwavering commitment that we will do just that.   

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