Holmes Beach, Florida Proposes Ban on Franchising

According to the International Franchise Association, there are more than 780,000 franchise establishments throughout the United States. Together, they support nearly 8.9 million direct jobs and generate $890 billion of economic output. In Florida alone, there are more than 49,000 franchises—a vast network that has created more than 563,000 Floridian jobs. All told, franchises have come to play a vital role in the U.S. economy.

But yet, despite these numbers, Holmes Beach, Florida, a small town of nearly 5,100 people, is moving forward on a decision to prohibit franchises from coming to their city. In a unanimous vote held June 14, the city commission of Holmes Beach agreed to proceed with plans to temporarily ban franchise and chain businesses from opening in the city. The moratorium, if approved, could last at least eight months (click here to read the official ordinance).

According to Judy Titsworth, chairwoman of the city commission, discussion surrounding the moratorium began when a local entrepreneur approached city officials with a strong complaint—both a Dunkin’ Donuts/Baskin Robbins and a Smoothie King were scheduled to open in a shopping center, and as the owner of a small ice cream parlor, he felt these large chains posed a threat to his local mom-and-pop shop.

“In Holmes Beach, we pride ourselves on having this character of locally-owned small businesses. In fact, fewer than 10 percent of franchises make up our town right now—places like CVS, Walgreens, Publix and Domino’s,” Titsworth said. “This moratorium has less to do with banning franchises and everything to do with making sure these large chains aren’t changing the charm of Holmes Beach that residents expect.”

During the temporary ban, city officials will research ordinances in other cities that dealt with a similar issue. In doing so, Titsworth hopes they will come out of this six month trial period with an idea on how to best craft the wording of its potential moratorium. For example, Titsworth said that a few neighboring cities require that new franchises conform to a town’s aesthetics. This means that chains like McDonalds, recognized by its iconic red roof, would adjust its design to portray a less-obtrusive coastal vibe. Others would approve or disapprove of franchises setting up shop by determining if their services are actually needed in the community or if they simply duplicate the work of existing store fronts.

“We still have a lot of homework to do. In our opinion, this time will be spent getting a handle on if and how we will let franchises into our town going forward. I think the most important thing that we need to do is start taking a harder look at whether or not there’s a real need for these businesses and if they’ll cause direct competition to the small businesses that have always been a part of our town,” Titsworth said. “We’re not trying to send a negative message to entrepreneurs. Instead, we’re trying to protect that quaint feeling that makes Holmes Beach unique.”

In response to the proposed ban, on June 27, the International Franchise Association sent a letter to Titsworth and the rest of the city commission expressing their concerns.

“Like any other small business, a franchise’s success depends on the franchisee’s own capital, hard work and long hours. Like any other enterprise in Holmes Beach, a franchise operating there pays taxes, is involved in supporting community activities and creates economic opportunities for employees and suppliers who directly benefit from the existence of the enterprise,” said Jeff Hanscom, director of state government relations for the International Franchise Association. “Indeed, franchise businesses successfully coexist in many historic or traditional business districts alongside locally founded ‘mom-and-pop’ establishments. I urge you to reconsider your proposed moratorium on franchise businesses. Such drastic steps not only harm your community by weakening its economy, but are contrary to the most basic tenets of American entrepreneurship and fairness.”

Franchises with locations in Florida—and beyond—have also started speaking out against the ban. The Cleaning Authority, a residential cleaning franchise, currently has more than a dozen locations throughout Florida. And according to Heather McLeod, the director of marketing for the brand, this decision shows a lack of understanding about what the franchising industry as a whole really stands for.

“Sometimes, people see a business coming to town with a recognizable brand name and think it’s a threat to local businesses. But what they don’t see is that these franchised businesses are owned and operated by a local member of the community. These franchise business owners put in hard work to keep their business up and running,” McLeod said. “While I’m sure that a city like Holmes Beach has the best intentions in preserving their community, it’s unfortunate that they can make a decision to keep franchises from coming to town. Instead, let the people decide by putting their money into the local businesses, franchised or not, that they want to support.”

Josh York, the founder and CEO of GYMGUZ, an in-home mobile personal training franchise with nine locations in Florida, agrees.

“It’s scary—and almost unbelievable—to think that a town could make a decision like this. These businesses are the livelihood of hundreds and thousands of entrepreneurs,” York said.