The State of Franchising and Politics

The political landscape in the U.S. right now feels more volatile than it’s ever been. It is aggressive and topics frequently get pulled to extreme ends of the spectrum. This has also been true when talking about the franchise industry in relation to politics.

Recently, the International Franchise Association (IFA) announced that Robert Cresanti has replaced Steve Caldeira as the president and CEO of the organization. One of the strongest reasons for choosing Cresanti is his strong tenure working in government relations.

Currently, the entire franchising industry is at odds with the National Labor Relations Board (NLRB) on a number of publicly debated topics such as the minimum wage, the overtime threshold for hourly employees and joint employer status. According to Cresanti, the franchising industry is facing a significant and profound challenge going into 2016.

“The NLRB, in a real sense, is a judge, jury and executioner. There are no real checks on them except by the Supreme Court,” said Cresanti. “They are an independent agency so their activities are hard to control. Long term, yes, I think we are on the right side of these issues, but in the meantime, until the Supreme Court finally takes a look at these things, we will continue to fight for franchising and small businesses.”

It should be reassuring to the franchising world that their new lead is confident and optimistic about overcoming these challenges.

Cresanti pointed to the Browning-Ferris decision as a critical turning point in this fight that not only had great implications on franchising, but on business as a whole. The joint employer ruling says that if more than one employer has the authority to control key employment circumstances, like salary and working conditions, they are considered that worker's employer. This is significant in franchising because it makes a franchisor liable even if a franchisee also qualifies as an employer of that same worker. This undermines one of the fundamental reasons franchising works.

“The Browning-Ferris decision is the thing that's really changed the landscape of these issues,” said Cresanti. “Franchising has been early to this fight, but now all of the industries are in the pot and we're not alone anymore. Every business in one form or another is significantly impacted by this decision; every corporation large and small, even mom and pops, need to ask themselves what is fair and can we continue to be in businesses with unfair regulations. People are beginning to recognize this.”

These disputes affecting the franchising industry will play a key role as we enter an election year in 2016.

“The biggest issue is going to be fairly clear. The economy, jobs, growth and everything that falls underneath that will define 2016 and the upcoming elections,” said Cresanti. “We have a lot of challenges on the global stage. The candidates that will win will be talking about the economy, work, quality of life and the American dream.”

So the real question in all of this is can franchising win? Who among the potential presidential candidates understands franchising and will be able to effectively continue to grow the economy? While Cresanti and the IFA have not made a decision on who they are backing, he did point to Marco Rubio as someone who has recently touched these topics.

“We've had some very good comments come out of Marco Rubio's camp,” said Cresanti. Marco Rubio knocked the ball out of the park with his answer in a recent talk he was a part of. I haven't heard or seen from any other candidate yet, but I feel if given the chance others could speak well to these issues.”

More questions will continue to pop up as we finish out 2015 and enter 2016. According to Cresanti, it’s a pretty cut and dry solution to propel the economy.

“It’s a pretty simple elevator speech: No employers, no jobs,” said Cresanti. “If you want jobs you have to be here for us as a candidate, for a robust economy. If you don't have a robust economy, if we have the same kind of anemic recovery in the middle, we can’t win.”

While there might not be a clear candidate for franchising, it is evident that the IFA stands behind businesses and the economy to be the deciding factor in the 2016 presidential election.