IFA Releases 2017 Policy Platform to Accelerate Job Creation in Franchising

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FOR IMMEDIATE RELEASE


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Jenna Weisbord, 310-995-0839

jweisbord@franchise.org

@franchising411


IFA RELEASES 2017 POLICY PLATFORM TO ACCELERATE JOB CREATION IN FRANCHISING


WASHINGTON, Feb. 28—The International Franchise Association released its 2017 Policy Platform in advance of President Trump’s address to Congress. The platform makes policy recommendations to the administration and Congress and will help guide lawmakers and policy makers as they address the many challenges facing small business owners.


“Tonight, local franchise business owners across the country will be looking for the President to recognize the important economic contribution they make and hope he will offer an agenda that fosters franchise small-business growth,” said IFA President & CEO Robert Cresanti, CFE. “We applaud the Administration for taking initial steps to advocate for reform, such as executive orders examining the impact of regulations. However, there are still significant regulations threatening to undermine franchise businesses. The IFA stands ready to work with both branches of government to ensure America’s economy continues on the path of recovery.”


Cresanti also said there are several steps Congress and the Administration can take to reduce the burden on franchise small business owners. These include enacting legislation that stops the National Labor Relations Board (NLRB) from advancing an agenda that severely threatens the time-tested and proven franchise business model. The NLRB is pushing policies that would reverse decades of legal precedent, holding franchisor brand companies liable for charges against local franchisees and threatening to dismantle the franchise relationship that has allowed hundreds of thousands of new businesses to open and millions of jobs to be created. But Cresanti first called on Congress to approve President Trump’s nominees, which will help the Administration to do its job.


“Policymakers should take action to protect local franchise small business owners by rejecting politically-motivated re-alignment of traditional and well-established employment structures,” Cresanti added.


The platform, which was delivered to the White House and sent to all members of Congress, outlines seven policy priorities that, if implemented, could accelerate job creation by franchise businesses:


Preserve the Franchise Business Model: The “Joint Employer” Standard


Local franchise owners take great pride in running their businesses, contributing to their communities, and providing employment and training to more than 7.6 million employees across the U.S. Unfortunately, the National Labor Relations Board in 2015 issued Browning-Ferris Industries of California, Inc (BFI), the decision which overruled more than thirty years of bipartisan employment law precedent. The NLRB replaced the predictable and clear “direct and immediate control” standard for determining joint employer status with a vague test based on “indirect” and even “unexercised” control over workers’ terms and conditions of employment. The decision exposed franchise businesses to workplace liability for another employer’s actions and for workers they do not employ. Specifically, franchise owners are facing more operational and legal costs, decreased business values, less compliance assistance from franchisors, less growth and fewer jobs as consequences of the new joint employer standard.


Encourage a Market-Based Approach to the Health Care System


As franchise small businesses across the country experience challenges in offering health care assistance to their employees and face rising costs, IFA believes steps should be taken that will offer flexible and affordable solutions for employer-sponsored health care assistance. A market-based health care system would provide universal access to health insurance, rather than guaranteed or mandated coverage. Steps should be taken to promote cost-containment, such as promoting association-sponsored health programs as viable mechanisms for pooling risks and increasing market leverage for small employers. In addition, Congress should simplify and streamline reporting requirements for employers and allow for more flexibility in providing benefits to workers through expanded health savings accounts (HSAs) and health reimbursement arrangements (HRAs).


Reject Restrictions on Franchise Business Agreements


In recent years, several states have proposed legislation to limit the right of franchisees and franchisors to negotiate business contracts by placing unreasonable restrictions on franchise agreements. Many seek to prop up under-performing franchisees to the detriment of the entire system, and particularly disadvantage the high-performing franchisees that go to great lengths to maintain operational standards, product quality and brand reputation. Prospective franchise owners are already protected by the Federal Trade Commission (FTC) franchise rule, extensive federally-mandated disclosures, and additional state disclosure and registration statutes, while responsible franchise sales practices have become the industry rule, not the exception. Lawmakers should exercise restraint in passing new legislation that over-regulates the contractual business relationship between franchisees and franchisors so that franchise opportunities remain available for aspiring entrepreneurs in every state.


Apply New Wage Laws Fairly for All Small Businesses


Many states and cities have considered proposals to increase the hourly minimum wage within their jurisdictions. However, some of these proposals aim to require franchise businesses of all sizes to implement the wage hikes on the same schedule as large corporations, while “independent” non-franchise small businesses are allowed more time. Some policymakers are under the mistaken impression that franchise owners receive financial support from their franchisors to implement wage hikes, but this belief reflects a fundamental misunderstanding of the franchise model. Policymakers should take steps to implement new wage laws evenly and fairly, and without putting franchise businesses owners at a competitive disadvantage compared to businesses of identical size.


Promote Franchise Growth through a Revised Tax Code


America’s tax code is not working for the economy – small business owners get lost in the complex web of credits and deductions, while astronomical corporate tax rates send some businesses looking for new headquarters overseas. For years, tax reform has only been considered from the viewpoint of large corporations. However, given that 80 percent of franchise owners file their business income on their individual tax returns, individual tax rates need to be addressed to unlock the potential of America’s locally-owned small businesses. Comprehensive tax reform is still needed to ensure parity of corporate and individual tax rates.


Enhance Access to Credit for Franchise Businesses


Even though the improving economy has increased the flow of credit to small businesses in recent years, the U.S. Small Business Administration (SBA) loan guarantee programs still provide a significant source of financing for new franchise units. They are a lifeline to many small business owners in the franchise community when these small businesses cannot acquire loans.


Increase Hiring and Entrepreneurship for Veterans


It is both a moral and economic imperative to integrate the approximately one million returning military veterans and their families into the civilian economy and serve them as honorably as they have served us. As part of IFA’s Veterans Transition Initiative, or VetFran, nearly 5,200 veterans have become new franchise owners since Veterans Day 2011, and over 150,000 veterans have started careers in franchising. Congress should offer increased incentives for companies to hire military veterans while also offering assistance to veterans to continue to serve their communities as local entrepreneurs.


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About the International Franchise Association

Celebrating 56 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 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 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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