How the IFA Plans to Combat the Top Five Issues Facing Franchising in 2017

At a time when franchising is often misconstrued, the new year means a new opportunity to change the common misconceptions facing the industry. Between proposed minimum wage legislation, the evolving definition of a full-time employee and the impending impact of the National Labor Relations Board rewriting joint employer law, the culmination of these things—and more—revealed that the very branding of franchising was being challenged. That’s why, over the past few years, The International Franchise Association (IFA) has vowed to protect an industry that more than nine million people have come to rely on.  

1851 Franchise connected with IFA President & CEO Robert Cresanti to hear his thoughts on the top five issues facing franchising this year, and how the IFA plans to combat them.

Widespread Misunderstanding

Throughout the years, the idea of franchising has been misconstrued. It is often associated with corporate fast food chains that populate neighborhoods and have a negative impact on community members.

“There is a widespread misunderstanding among the public and even elected officials about what franchising is and how it actually helps local communities,” said Cresanti.

To reverse this common misconception, the IFA set out to change the narrative by launching the @OurFranchise campaign. This initiative tells the stories of local franchise owners, employees, and the communities they have a presence in. Since the launch, the campaign has reached seven major cities, and throughout 2017, the IFA will continue to tour the United States and emphasize how franchising positively impacts the economy and local communities.

Rejecting the NLRB New Joint Employer Standard

“The new joint employer standard could  hold franchisors liable for franchisees’ employees, completely changing the proven franchise business model that has always provided franchisees the autonomy to run their own stores,” said Cresanti.

Because of the burden this will put on the franchisor, making them liable for all of the employees in the entire franchise system, franchises are currently operating in a state of uncertainty. As a way to combat this proposed bill, they are engaging Congress and encouraging them to make franchises a priority in the new year.

Growing and Strengthening the Congressional Franchise Caucus

The Congressional Franchise Caucus (CFC) is actively trying to help raise awareness and provide education regarding both the economic and community benefits that franchises offer.

“The goal of the CFC is to emphasize policymakers and the public that America’s 733,000 franchise businesses play a vital role in our nation’s economy and every congressional district,” said Cresanti.

As the CFC grows stronger, the IFA plans to illuminate the benefits of franchise businesses, including the familiar logos and trusted brands, by telling the pesonal stories  of the franchisees who are helping create economic opportunities in their communities.

The Overtime Rule

With the recently proposed overtime rule, the effect it will have on small business owners is extremely clear.

“Doubling the salary threshold for exempt employees undeniably affects the bottom line of franchise small business owners who operate on tight margins and have significant labor costs,” said Cresanti. “By increasing labor costs in such a dramatic fashion, business owners will be forced to either demote exempt employees, who are often managers, to hourly employees with less responsibility and limit their hours.”

To bring awareness to the negative effects the overtime rule will have on franchising, the IFA partnered with Compliance HR and developed an affordable, easy-to-use, web-based Overtime Compliance Tool to help franchise business owners. Whether the regulation stands or not, the tool will help franchise businesses keep up with developing federal, state and local wage employee classification laws.

Engaging the New Administration to Support a Pro-Economic Growth Platform

This year provides a new opportunity  for franchisees to get their stories heard.

“The IFA stands ready to work with congressional leaders and the new White House administration to bring the country back together by developing a pro-growth economic platform that balances growth in wages for employees and reduces the regulatory burdens placed on small business franchises,” said Cresanti. “Moving forward, we have to find the third way, not the Republican way, not the Democrat way, but the American way.”

While the outcome of 2017 remains unknown, the uncertainty provides opportunity for both franchise small business owners and the IFA to join forces and combat issues that are currently facing franchising.

“There’s so much success out there in this industry. It’s our job now to give it a voice and a forum to speak,” Cresanti added.