What's Ahead in 2023: Legislative threats to franchising abound
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What's Ahead in 2023: Legislative threats to franchising abound

What's Ahead in 2023: Legislative threats to franchising abound

When it comes to public policy, nobody understands better than you that the odds are stacked against franchised businesses. Singled out because so few truly understand the franchise business model, lawmakers often unfairly target franchises as “big business” rather than the local businesses they are. That’s why the IFA exists: to protect your business while enhancing and promoting the entire franchise sector.

With members as our chief advocates, we work for you to provide the platform, resources, and connections necessary to reach the lawmakers and influential figures who can move the needle on policy priorities in Washington, D.C., and in individual states. In 2022, the IFA worked to stop some of the most serious threats to franchising to date—achieving an historic year for advocacy wins in favor of franchising, while keeping our focus on legislative and regulatory challenges that may take shape in 2023 and beyond.

At the start of 2022, when the federal government remained under one-party control, the IFA prepared for potential headwinds armed with new research, powerful member stories, and the strategic vision to stop whatever challenges might arise.

When David Weil was nominated in January to serve as administrator of the Labor Department’s Wage and Hour Division, a position he held in the Obama administration, the IFA immediately stepped into action to prevent his confirmation. Based on his previous tenure and anti-franchising book, The Fissured Workplace, Weil can be viewed as the human embodiment of the joint-employer standard and other policies that pose a direct threat to franchising. To stop the nomination, the IFA brought together powerful coalitions of business leaders and activated membership to reach out to their lawmakers so they understood how damaging his confirmation would be.

Thanks to this advocacy, Weil was the only nominee during this administration to be defeated on the Senate floor—and on a bipartisan basis. “The nearly yearlong opposition campaign from the business community was spearheaded by the International Franchise Association, which blasted Weil as the ‘intellectual godfather’ of so-called joint employer rules that seek to hold corporations accountable for franchisees’ labor practices,” noted Politico. 

Although Weil’s nomination no longer posed a threat, the NLRB proposed a joint-employer standard that would resurrect the harmful 2015 standard, which cost franchises billions of dollars, hundreds of thousands of jobs, and led to a 93% increase in litigation. The IFA continues to apply pressure urging the NLRB to withdraw this rule, and has gathered a bipartisan group of U.S. House and Senate members to oppose the rule, along with a broad cross-section of third-party groups that includes the national Black and Asian American chambers of commerce, and more than 3,000 franchises to weigh in on the harm this would bring to their businesses.

Also on the regulatory front, we have worked to ensure that the FTC Franchise Rule, the chief regulation governing franchising, is preserved in substantially its current form during its decennial review. Prioritizing the issue at the Franchise Action Network (FAN) annual meeting, IFA members held more than 200 meetings with members of Congress, resulting in bipartisan letters from 67 House members and 14 senators to the FTC, which acknowledged it will take the concerns of the franchise community into consideration when reviewing the Rule.

The issues didn’t stop at the federal level in 2022. In California, the IFA focused on the existential threat posed by the FAST Recovery Act (AB 257). Affecting QSRs, the bill would have created an unelected council of political appointees to set labor standards for the sector, as well as create a joint-employer standard that would erode franchising in the state. Thanks to the IFA and coalition efforts, the bill was amended to strike the joint-employer provision, lessen the number of affected restaurants, and give businesses more of a voice on the council. However, with the bill’s overly broad language, concerns remained about the authority of the council over business owners. Thus, after the bill was signed into law, the IFA immediately led a coalition to petition and gather signatures to take the measure to voters. With 1 million Californians weighing in over the course of a few weeks, the FAST Act has been stopped until voters have a say in November 2024.

In addition to the FAST Act, franchise relationship bills popped up in New Jersey, Oregon, and another in California. All were defeated, at least for now. What these bills and this past year have shown us is the importance of our members and the entire franchising community using their voices to educate lawmakers about franchising and how the policies they put forth affect businesses and the people they serve and employ.

After the active legislative year of 2022, and with the midterm elections in the rearview mirror, 2023 will bring a divided Congress—and the final rejection of the Protecting the Right to Organize (PRO) Act.

Looking ahead to 2023 and beyond, the IFA will continue to advocate for Congress to stop regulatory overreach of the administration and ensure that bills such as the FAST Act don’t spread.

It is our hope that with your help our elected leaders will come together, work in a bipartisan manner, and support their local franchise businesses and all they do for the communities they serve.

Matt Haller is CEO and president of the IFA.

Published: March 13th, 2023

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Franchise Update Magazine: Issue 1, 2023
Franchise Update Magazine: Issue 1, 2023

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