New Year Requires United Effort to Challenges Facing Franchising

Those attacking the franchise model do not understand it, may not realize the ramifications of their approach.

By Tariq Farid, CFE

I don’t remember a time in my 15-plus years in franchising when the business model has faced so many challenges. Almost weekly it seems that we learn of a new political or legal challenge at the local, state or federal level. While the International Franchise Association, with the help of some franchisors and their franchisees, has done a tremendous job of fighting back these challenges so far, it can’t —and shouldn’t —carry the burden alone. Every franchisor and franchisee should be a part of this effort in 2015. Those of us involved in franchising are part of one of the greatest and most inclusive business models ever created. It is also one worth preserving. While the global and economic impact of franchising has been well documented, to me, the true impact is at the individual level.

Realizing the American Dream

I can’t think of another business model that has done so much to give so many opportunities to realize the American Dream. Thanks to franchising, one person’s idea for a new business can be shared by many in a relatively short period of time. Think of all the franchisees who have experienced financial and professional success thanks to the opportunities created by franchising. Think of the worldwide wealth created by franchising. I am not just referring to the mega-franchise chains such as McDonald’s and Subway. The impact comes from chains with 1,000 locations, with 500 locations, with 100 locations and the start-ups. Even as I write this, there are very likely hundreds, if not thousands, of entrepreneurs working on the next “hot concept”with the dream of ultimately turning it into a global franchise. We have created a business sector whose GDP is approaching $500 billion that is not driven by a few corporate executives. Rather, it is driven at the grassroots level by thousands of small-business owners. More importantly, this is an industry driven by people we know —our friends and neighbors —who own or operate the very franchises that provide for almost all of our daily needs. The bottom line is that the creation of these small-business opportunities has put wealth in the hands of many and is at the heart of almost every local economy.

On the Frontlines

Which is why, when this industry is at risk, we all have no choice but to join together to protect it. These are not issues that can —or should —be left for lobbyists, lawyers and politicians to decide. They have a role to play, of course, but I believe the most important groups, the ones who will ultimately decide the fate of the franchise model, are those of us on the front lines of franchising —the franchisor, the franchisee and even our customers. All who believe in the promise of franchising and the role it plays in the economy need to be at the forefront of this effort. We have to be. We have to remember that our franchisees are the ones responsible for our successes. They have joined us in taking the risk that is business ownership and their success is our success. That needs to be protected. We need to educate our neighbors that although a franchise chain may appear to be a large global operation whose reach extends around the world, the reality is that franchise networks are made up of hundreds and thousands of small-business owners;many of them are their neighbors. When our Edible Arrangements franchisees unlock their doors each day, they are competing head-to-head against other small businesses in their markets. At the same time, we need to get our franchisees involved in the effort as well. They are the ones most at risk and, better than anyone, can speak to the impact of franchising at the local level. They are the ones with the real “American Dream”stories. They are the ones who started out behind the counter or making deliveries while still in high school, and today have their own successful business. It is no exaggeration to say that if many of the challenges to the franchising model are successful, the franchisees who in many cases have risked their savings to go into business may have no choice but to close their doors.

Joining the Effort

There are many ways we can all join in this effort, beginning with participation in the IFA’s Franchise Action Network. The FAN is focused on bringing franchisees and franchisors together as one consistent and collective voice on behalf of the industry. Edible Arrangements and Naranga are supporters of FAN and we are asking our franchisees to help by signing up as well. FAN provides the tools and guidance needed to take the message to individual markets, educating franchisees, franchisors and suppliers in each state on issues in their areas. They provide guidance on how to contact and work with officials in local, state and federal governments. They also provide guidance in how to work with the news media to get our message out. But this is just one way to get involved. What is important is that we join together collectively with a unified voice in this effort. I know those who are attacking the franchise model do not understand it fully and may not realize the ramifications of their approach. Many of the issues that have been raised deserve serious consideration, but not at the risk of a business model that has done so much for so many. The New Year is typically a time for resolutions. This year we should all resolve to join together —franchisors and franchisees —in taking a more active role in this effort to protect the business model that has given us all so much. If we don’t do it now, we may not have another chance.

Tariq Farid, CFE, is founder of Edible Arrangements and the newly-launched Naranga which provides technology solutions for franchisors and the franchisees.