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IFA SAYS FRANCHISEES PROUDLY SHOW HIGH LEVELS OF SATISFACTION AND CONTRACT RENEWAL

Franchise Association Rejects a New Labor Union Report as Flawed and Self Serving

WASHINGTON, April 30, 2015 – The International Franchise Association (IFA), the world’s largest organization representing franchise owners, stated that the franchise industry continues to grow faster than the rest of the economy – and that franchisees indicate incredibly high satisfaction rates in independent research and renew their contracts at an extremely high rate according to data required by the Federal Trade Commission (FTC) – both indications of broad satisfaction with the franchise industry by franchisees and their workers.

The assertions come as the Service Employees International Union (SEIU) unveiled a questionable and self-supported new report today that comes to different conclusions. Officials of IFA and its franchisee members disputed the SEIU report, questioned its validity and its motivations, while offering evidence that franchising is a thriving, widely-accepted and robust part of the American economy.

“The SEIU is so desperate to lend credibility in its fledging effort to convince government officials to help it unionize franchise workers that it has ginned up a report that grossly misrepresents attitudes toward franchising,” said IFA President & CEO Steve Caldeira, CFE. “In truth, multiple surveys have showed that growth among franchise businesses outpaces the overall growth of the U.S. economy. That wouldn’t be the case if franchisees were as dissatisfied as the SEIU would like the public to believe. In addition, data consistently have shown that renewal rates for franchisees are 94.2 percent a year, according to a 2014 FRANdata study.”

According to Caldeira, Franchise Business Review, a national franchise market research firm, recently surveyed 25,000 franchise owners over 18 months. The result: 78.6 percent of franchisees said they would recommend their franchise brand to others, 81 percent said their franchisor acted with a high level of honesty and integrity and more than 80 percent rated their franchisor as good, very good or excellent. Additionally, the FTC Franchise Rule gives prospective purchasers of franchises the material information they need in order to weigh the risks and benefits of such an investment. The Rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees to attract the best buyers, but success is not always a guarantee.

“The SEIU is cherry-picking its statistics and examples for a self-serving purpose – to persuade its allies in the federal government and elsewhere to clear an easy path for it to organize franchise workers and, in that way, expand its dwindling membership and treasury,“ Caldeira added. “The SEIU wants to destroy the time-tested franchise model of doing business for its own self-interest; it doesn’t really care what franchise owners or workers think or want. But it was happy to spend a previously disclosed $18.5 million of union-member dues last year to finance its cynical campaign, despite questions within its own membership about the merits of this gross expenditure.”

“Our recent data on franchisee satisfaction uses a benchmarking system that makes the numbers accurate and relevant to today,” said Eric Stites, CEO of Franchise Business Review. “One of the best ways to know if a franchise opportunity is really as good as it appears is to look at its franchisee satisfaction data, and the data clearly shows that there is broad satisfaction within the overall franchise industry by franchisees.”

Franchisees also pushed back on the SEIU conclusions. “I’m extremely satisfied to be a franchisee, work well with my franchise network under the current laws and regulations in place, and would do it all over again in a heartbeat,” said Jeffrey Tews, IFA Franchisee Forum chairman and BrightStar Care, BrightStar Senior Living and Mr. Handyman franchisee.

“The SEIU is out to help itself, not my employees,” said Tews. “Its report is transparently self-interested and paints a very different picture than the one that my fellow franchisees and our employees see. Government officials would be wise to examine the union’s report skeptically, look at the large amount of conflicting data that’s already been produced and come to their own conclusions. If policymakers speak to franchisees like me in their states or districts, it will become abundantly clear that the current franchise system is something that should be embraced, not destroyed.”

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About the International Franchise Association

Celebrating 55 years of excellence, education and advocacy, the International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 780,000 franchise establishments that support nearly 8.9 million direct jobs, $890 billion of economic output for the U.S. economy and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.

1900 K St., N.W., Suite 700 Washington, DC 20006 USA

Phone: +1 202/628-8000 Fax: +1 202/628-0812 www.franchise.org