Franchise Groups Oppose PRO Act

March 02, 2021

(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

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About the International Franchise Association

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.