Franchising is a huge economic engine in California and the industry has thrived under the current regulatory climate. The franchise industry, and IFA’s members, collectively employs nearly 1 million workers at over 82,000 franchise locations and generates over $94 billion in economic output in California annually. This site aims to highlight IFA members and franchise small businesses in California and discuss some of the most important issues they are facing, which may impact their ability to continue growing in the state.
IFA’s mission is to protect, promote and enhance franchising, both for franchisors and franchisees. In essence, we work to preserve the franchise business model. From quick-service restaurants and hotels to home health care and tax preparation services, our members represent the breadth and depth of the franchise economy. The overwhelming majority of our member companies are franchisees and our franchisor members represent 70 percent of all registered franchise companies in the United States.
How is IFA working to protect franchising in California?
IFA ensures an ongoing, constructive dialogue between our leadership and federal and state regulators and policymakers; the IFA has continually worked for improvements to pre- investment franchise disclosure and franchise relations.
Through the considerable and continuing efforts of our association and its members, the IFA has contributed to the growth and stability of franchising in California. IFA and its members continue our efforts to improve pre-investment disclosure and advance beneficial franchising practices, as franchising is one of the most important vehicles today for the creation of small-business ownership and jobs in the United States and in California.
IFA has a very active Government Relations and Public Affairs team which advocates on behalf of the industry nationwide at both the state and federal levels. Aside from powerfully providing a voice for franchising to the state legislature in California, IFA also brings members together to determine best practices and facilitate innovation and also operates a number of education, veterans’ outreach and philanthropic efforts.
What legislative issues is IFA currently working on in California?
The franchise community encompasses hundreds of different business sectors. The legislative issues facing the industry are as diverse as the industry itself. In California, our efforts have focused on opposing unnecessary and burdensome franchise relationship bills which would intrude into private franchise agreements and negatively impact the California economy, existing franchisees and the future of franchise development in California.
Why should both franchisors and franchisees oppose franchise relationship bills?
Franchise relationship bills like we’ve seen in California, carry numerous unintended consequences that would weaken the franchise model and the standards upon which it is built. The proposed law often contains provisions that effectively allow the renegotiation of franchise contracts through legislation, unilaterally changing terms relating to product pricing, store hours, operating standards, contract renewal or transfers.
Although this might appear favorable to franchisees on the surface, these potential changes would undermine the standardization at the core of the franchise relationship. A loss of network uniformity would weaken the equity that franchisees have in their businesses. Bad actors would be able to use inferior goods, products and business methods which would reflect negatively on the entire brand, franchisors and franchisees. Furthermore, proposed legislation includes vague language and unreasonable new regulations, increasing the incentive for litigation and making franchisors less likely to invest in California.