Franchisee Town Hall Recap: The Federal Trade Commission’s RFI Launched Against Franchise Businesses

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Would you rather work with your brand and franchisor? Or have the federal government get involved in how you run your business? This is what’s at stake with recent actions from the Federal Trade Commission, other federal agencies, and state legislatures.

To help educate franchisees on the Federal Trade Commission’s (FTC) regulatory authority and how to best and quickly respond to the recent Request for Information (RFI) from the agency, IFA held a Town Hall meeting to unpack what all this means.

As the questions in the RFI imply, itis designed to harm franchising, seeking only complaints rather than an accurate picture of the business model, so the FTC can impose more regulations that will impact businesses’ bottom line and destroy hard-earned equity.

This town hall event seeks to inform  the  franchise community about the potential impact of the FTC’s regulatory actions,  how they affect your businesses, and why every voice in the franchising community is essential.

During the town hall, Michael Layman, Senior Vice President of Government Relations & Public Affairs at IFA hosted a robust discussion with Svetlana Gans – former Chief of Staff to an FTC chair, Tam Kennedy –Taco John’s owner, and Sarah Bush – IFA’s General Counsel. All panelists emphasized the need for franchisees to submit RFI comments, which are due June 8. Several top line points raised during the town hall are listed below:

  • Svetlana discussed the significant and recent shift in the FTC’s approach to policy changes and rulemaking and explained that the Chair has more power than before. She said the agency’s historical purpose was to protect consumers, and that has shifted under recent leadership to instead focus on labor issues and rulemaking – rather than enforcement of existing law. She says that the FTC now has no qualms about burdening legitimate business activity.
  • Svetlana went on to say that the FTC is intent on unraveling the franchise relationship, hence the negative tone of the RFI. She underscored that the FTC is not going into the RFI with an open mind, and public comments are needed to convince the agency not to carry out burdensome rulemaking – and provide a record of how the business model actually works.
  • From a franchisee perspective, Tam shared that franchising is a partnership in the truest sense of the word, and the FTC and federal government do not fully understand that concept. She urged franchisees to submit comments to the RFI to ensure the FTC receives a balanced and accurate understanding of the true franchising landscape. 
  • Sarah expressed the critical need for franchisees to tell their origin story and explain how the current franchise landscape is vital to protect small businesses, build owners regional reputations’, while also supporting their local communities.

It is vital the FTC hears about what’s working in franchising and positive franchise stories to prevent a one-size-fits-all rulemaking that could jeopardize the entire business model.  

We encourage brands to work with their franchise advisory councils, franchisee associations and franchisees to ensure the record accurately reflects the current state of franchising and not the perspective of a small minority of franchisees. They do not have to be long or answer every question, and we have a provided a toolkit with more information for franchisees on how to respond here.

In short, we recommend that franchisees write a brief submission that addresses these four points:

  1. Introduce your business/explain why franchising makes sense for you
  2. Write about how your brand communicates effectively between franchisee and franchisor to resolve issues positively and innovate to remain competitive in your industry
  3. Write about why franchisees want to remain autonomous as an employer
  4. Write about how you don’t want government negatively affecting the equity of your business

Click here to submit short comments and protect the franchise business model.

Please take the time to submit a comment to the RFI, and thank you for your engagement to help protect the franchise business model and businesses across America.

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