(WASHINGTON, MARCH 2) – The International Franchise Association (IFA), along with twelve other franchise business groups, today delivered a letter to Congress noting major problems with the Protecting the Right to Organize Act, or PRO Act.
Due to its national application of the “ABC Test” to the franchise business model, the PRO Act could effectively classify franchise owners as employees of the brand from which they franchise – upending the business model and dramatically restructuring the franchise sector with its roughly 800,000 small businesses.
The letter notes the immense harm that the PRO Act as written will pose to our country’s economic recovery following the COVID-19 pandemic.
Excerpts from the letter follow:
“Due in large part to its treatment of franchise small businesses, the PRO Act puts the national economic recovery at risk. As written, the PRO Act would harm current franchise owners through a potential massive expropriation of equity. It would harm potential franchise owners through a limiting of economic opportunities available to them. It would harm franchise employees through a sudden change of their places of work away from their communities and into a large corporation. Finally, it would harm franchise brands by upending the business model that they use to grow and expand in communities across the U.S.
“Franchises also play an outsized role in generating wealth creation for minority communities, especially those who have been left unbanked or underbanked during the pandemic. Minorities have too frequently been denied equal opportunity in business, but franchising has helped thousands of our entrepreneurs overcome common societal obstacles. Over 30% of franchises are minority-owned, compared to 18% of non-franchised businesses. Rather than hinder the ability of new entrepreneurs to generate wealth and support their local communities, Congress should strongly support the franchise business model.
“…we strongly urge Congress to avoid major legislative changes like the PRO Act that would severely disrupt the franchise business model and impede new business formation and job growth during the economic recovery.”
The full letter is available online here: https://www.franchise.org/sites/default/files/2021-03/PRO%20Act%20Franchise%20Coalition%20letter.pdf
The full list of letter signatories is below:
American Hotel & Lodging Association
Asian American Hotel Owners Association
Coalition of Franchisee Associations
Franchise Business Services
International Franchise Association
National Association of Women Business Owners
National Council of Chain Restaurants
National Franchisee Association
National Restaurant Association
National Retail Federation
Small Business & Entrepreneurship Council
U.S. Chamber of Commerce
Workplace Policy Institute
Celebrating 60 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.