Protecting the Future of Franchising Today: IFA’s Global Mission
By Robert Cresanti, CFE
Though franchising in its modern form originated in the United States, the business model has become a truly global phenomenon, spreading entrepreneurial opportunity, economic growth and the values of the small business community around the world. The economic, personal and supply chain ties bring countries closer together and build cooperation and understanding between people — from U.S. franchisors creating a new class of small-business owners, to social franchising in emerging markets, to enterprising Asian brands bringing new products and ideas to Western markets. The positive trajectory of franchise growth shows no signs of stopping; on the contrary, globalization is here to stay.
The success of franchising is closely tied to the success of the middle class, which forms the backbone of the customer base for many franchise brands. Moreover, the employment opportunities the sector creates are a reliable ladder to the middle class for millions of employees. Here too, global trends bode well. The Brookings Institution projects that a tipping point will be crossed over the next three years, with more than half of the world’s population living in middle class households for the first time in history. The rate of increase in the growth of the middle class worldwide is near an all-time high. Like the franchise sector itself, the middle-class market is consistently growing faster than global GDP.
This is undoubtedly an exciting time for franchising across borders. It is also a time of growing challenges, and vigilance and advocacy for the franchise business model remain at the core of IFA’s international work. The threats that have arisen in the U.S., such as the National Labor Relations Board’s revised joint employer doctrine, are popping up around the world, supported by the Service Employees International Union and other actors whose ulterior motives are indifferent to the job losses and economic damage that accompanies misguided regulations.
In 2017, franchising has found itself on the defensive in places like France, Australia and Canada, and IFA has worked closely with its international counterparts, as well as the World Franchise Council, to provide support and advocacy. In France, the “El Khomri Law” briefly included a provision treating franchisees and franchisors as a single entrepreneurial unit, creating a joint employer threat in the country for the first time. Joint employer is also under consideration in the Canadian province of Ontario, which accounts for 65 percent of Canada’s franchise units. Finally, proposed legislation in Australia, ostensibly aimed at reinforcing adherence to labor law, risks undermining the franchise sector in a country where franchising accounts for a greater share of GDP than anywhere else — a whopping 8 percent.
Read about the many developments, trends and best practices in international franchising throughout the pages of this issue. Pay special attention to IFA’s GO International program on page 16, as well as survey findings from the World Bank Group on page 18 and an inside look at franchising in Brazil on page 24.
Searching for additional resources? Look no further than IFA’s International portal at www.franchise.org/international. There you’ll find the International Toolkit, country profiles, global franchising opportunities, market reports and other information on international laws, events, research and articles. I’d like to extend a heartfelt thank you to the efforts of all the members of IFA’s International Committee and its Chair, Matthew Patinkin of Double P Corp./Auntie Anne’s Pretzels. The committee’s work with the U.S. Department of Commerce’s Commercial Service and other organizations continues to strengthen the ability of franchise companies to expand into new markets.
As the calendar flips into the second half of 2017, IFA remains fully engaged, vigilant and working closely with our international partners and members to protect and promote franchising around the globe.
Robert Cresanti, CFE, is the President and CEO of the International Franchise Association.