IFA Responds to SEIU Petition to “Manufacture A Crisis” in Franchising

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Matthew Haller, 202-662-0770

Jenna Weisbord, 202-662-0766

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@franchising411


IFA RESPONDS TO SEIU PETITION TO “MANUFACTURE A CRISIS” IN FRANCHISING


WASHINGTON, May 18, 2015 – International Franchise Association President & CEO Steve Caldeira, CFE, released the below statement following the filing of a petition by the Service Employees International Union (SEIU) with the Federal Trade Commission (FTC) to investigate alleged abuses by franchisors against franchisees and develop reforms for the franchise industry.


“Once again, the Service Employees International Union is manufacturing a crisis as part of its increasingly expensive public relations campaign, now estimated to be more than $33 million, to destroy the time-tested franchise model in order to fill its own depleted membership,” said IFA President & CEO Steve Caldeira. “America’s 780,000 franchises make significant contributions to the U.S. economy, growing faster than the U.S. economy for five consecutive years and employ nearly 8.9 million workers. The SEIU’s petition amounts to nothing more than asking the FTC to develop a solution for a problem that doesn’t exist.”


For nearly forty years, the FTC’s Franchise Rule has been a strong defense against abuses that may occur in pre-contractual disclosure to prospective franchisees. Extensive pre-sale disclosure mandated by the FTC in the 1970s and reexamined in 2007 ensures franchisees have ample time to review a franchisor’s financial statements and leadership, as well as over twenty other areas of disclosure information before entering into a contractual agreement to purchase a franchise.


A recent independent survey of franchisees by Franchise Business Review found that nearly 80 percent would recommend their franchise brand to others and nearly 75 percent would “do it all over again” knowing what they know today about the business model. And more than 80 percent of franchisees said they would rate their franchisor highly, enjoy being part of their franchise network and believe their franchisor acts with honesty and integrity.


“Franchisees are highly satisfied, they have a high level of trust in their franchisors and they know they have remedies in places through their mutually-agreed upon contract, through the courts and through many state laws if and when issues may arise between two parties. That wouldn’t be the case if franchisees were dissatisfied or there were systemic abuses as the SEIU would like regulators to believe,” added Caldeira. “The SEIU can claim to be looking out for franchisees, but it is really motivated by its own bottom line, otherwise they wouldn’t be spending over $33 million the past two years.”


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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

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