government relations
IFA’s First 100 Days Working With the New Administration

Through ongoing initiatives including IFA’s Franchise Action Network and campaigns such as @OurFranchise, IFA members and franchisees throughout the country can stay active in the process to protect, promote and enhance franchising.

 
 
By Ryan Kennedy
 
The first 100 days of the Trump Administration have not been without fanfare and fireworks in Washington, D.C. With regular unpredictability and shifting winds in Congress, the International Franchise Association has forged ahead with its major policy priorities for 2017 and made headway on issues at both the federal and state levels. 
 

Joint Employer

IFA has remained committed to protecting the interests of the franchise business model on Capitol Hill during the opening four months of the new Administration. With an optimistic outlook for pro-business victories in Congress, the IFA Government Relations Department continues to prioritize the reversal of the National Labor Relations Board’s August 2015 ruling which replaced 30 years of bipartisan employment law precedent concerning the direct and immediate control standard for determining joint employer status. For decades, the joint employer standard has protected small businesses from liability arising from actions involving contractors over whom they have no actual or direct control. Unfortunately, in its 2015 decision in the Browning-Ferris Industries case, NLRB upended this existing standard in favor of an unlimited, impractical new standard based on "direct," "indirect" and even "potential" control. Such a vague liability standard threatens the future of small business in America, and franchises in particular.
 
The confusion regarding this new policy exists not only among the small business community, but also at the highest levels of government. One of former President Obama’s appointees to the D.C. Circuit Court of Appeals, Patricia A. Millet, said in February during proceedings in the federal court challenge against the new standard that NLRB had “dropped the ball” in its BFI decision. Small business owners feel the same way.
 
The House Education and the Workforce Committee kicked off its workforce agenda by featuring two IFA witnesses at consecutive hearings in February. First, the committee heard testimony from home care franchisee Reem Aloul of Arlington, Va., who described how NLRB's joint employer standard disrupts the way small businesses operate. Later that week, IFA member Rhea Lana Riner, CEO and Founder of Rhea Lana's Children's Consignment Events of Conway, Ark., testified that franchise businesses need relief from overreaching federal regulators. Both women served as compelling witnesses, and showed how powerful Franchise Action Network members can be when they work closely with IFA to engage policymakers.
 
IFA amplified Aloul and Riner’s testimonies by sending a letter to Congress explaining the state of the joint employer issue that was signed by 52 trade associations. The letter called on Congressional leaders to pass legislation to provide relief on joint employer, which is solidifying its place as the preeminent workforce issue facing Congress this year.
 
IFA is further leading the charge to return the joint employer standard to its previous form by working closely with U.S. Reps. Tom MacArthur (R-N.J.) and Henry Cuellar (D-Texas), who submitted a letter asking leaders of the House Appropriations Committee to support locally owned businesses by including a “joint employer” policy rider in the Fiscal Year 2018 Labor, Health and Human Services, Education and Related Agencies Appropriations bill. This provision will provide for a temporary, one-year hold on NLRB’s new joint employer definition. 
 

Congressional Franchise Caucus

To continue the process of strengthening relations on Capitol Hill and advancing the interests of franchising, IFA coordinated a Congressional Franchise Caucus kick-off event on Tuesday, Jan. 24. IFA joined Illinois Rep. Rodney Davis (R-Ill.), co-chair of the bipartisan Congressional Franchise Caucus, to ring in the new Congress. The event was catered by IFA members Dunkin’ Donuts and Chick-Fil-A. 
Approximately 65 attendees, primarily Congressional staffers, joined an hour-long program detailing the newest franchise economic impact data as well as profiles in franchising from two industry speakers. Moderated by IFA President and CEO Robert Cresanti, CFE, the Caucus kickoff event celebrated the massive opportunities of franchising while also sharing practical and informative data for the policymaker audience at the event. The event also featured two impressive franchise speakers: Founder and CEO of SOLDIERFIT, Danny Farrar, who spoke about the transformative role that starting a business has played in his life, and Vinay Patel, President and CEO of Fairbrook Hotels, who is also a leading voice in the Asian American Hotel Owners Association. 
 

Research Supporting Franchising

During the Congressional Franchise Caucus kick-off event, IFA also unveiled its new Franchise Business Economic Outlook: 2017 report, which along with other new resources at
www.franchiseeconomy.com features economic impact data on the national, state and Congressional District levels in addition to the 2017 economic forecast and public polling on franchising. According to the data, 66 percent of voters would like the Administration and Congress to focus on policies that support local ownership of stores and restaurants while 74 percent have a favorable opinion of franchise businesses in their communities. With the support of policymakers such as those leading the Congressional Franchise Caucus, franchise owners across America stand to benefit from smarter and simpler small business policies.
 

Working With the Executive Branch

Elsewhere in the first 100 days in the new Administration, IFA successfully saw the U.S. Small Business Administration revise the franchise review process for 7(a) and 504 loan programs. The revisions are a result of IFA advocating directly with current and former administration officials regarding concerns with the revised procedures released late last year. In 2016 alone, SBA backed loans to franchise businesses totaled $770 million and were used in the financing of over 5,500 franchise businesses. For every $1 million in franchise lending, an estimated 40 new direct and indirect jobs are created. Cresanti stated: “With SBA’s announcement that it will allow franchisors to either certify that they are using previously approved 2015 and 2016 SBA addendum or sign the new addendum released in December 2016, the SBA is demonstrating it listened to the small franchise businesses it serves and is alleviating some of the unintended negative consequences of the new procedures.”
 

Offense and Defense in the States

In addition to promoting franchising’s interests on Capitol Hill, IFA has been active in protecting the model across state capitals as well. Although not anticipated, IFA successfully defeated an aggressive and irresponsible franchise relations proposal in Tallahassee. The business-friendly Sunshine State is not a typical breeding ground for this kind of franchise legislation, but nonetheless this case required a strong response from a united franchise community. The misleadingly named “Protect Florida Small Business Act” sponsored by Republican state senator, Jack Latvala, would have been disastrous for franchising in Florida if allowed to pass. IFA met with many Florida-based franchisors and franchisees about the proposed legislation, formed a coalition of opposing stakeholders, and staved off the latest example of attempted government overreach involving the private contracts between brands and their owners. Though victorious in fighting back this proposal in 2017, IFA members should anticipate a renewed effort by Latvala and allies in the 2018 session. IFA will be prepared once again to defend franchising in Florida. 
 
Despite being called to defend the model in a traditionally friendly state capital, IFA has made significant progress in passing proactive legislation in numerous states across the country this year. With six bills still moving in state capitals from coast to coast, IFA is poised to grow the number of states with joint employer protection before the end of the state sessions. Gov. Asa Hutchinson's signature in mid-April added Arkansas to the list, increasing the total to 15 governors who have signed legislation to restore the traditional definition of joint employer since 2015. Of the remaining active legislation in the states, the most likely bills to cross the finish line this year are Alabama and New Hampshire. 
 

Ambitious Agenda Ahead

With an ambitious policy agenda in 2017 put forth by the controlling Republican party, IFA will look to capitalize on favorable odds for its landmark issues federally and in the states. Through ongoing initiatives such as the Franchise Action Network and campaigns like @OurFranchise, IFA members and franchisees throughout the country can get involved and stay active in the process to ensure protecting, promoting, and enhancing franchising remains a top priority in Congress and the White House this year. 
 
 
Ryan Kennedy is Manager of Public Affairs and Grassroots Advocacy for the International Franchise Association.