IFA Vice Chair Testifies on Importance of Small Business Access to Capital

During congressional testimony, Neighborly COO Mary Kennedy Thompson reiterates role franchising plays in achieving American Dream

WASHINGTON, March 12, 2024 – Mary Kennedy Thompson, vice chair of the International Franchise Association (IFA) and Chief Operating Officer of Neighborly, today appeared before Congress to discuss the impact of alternative areas of financing on small businesses, especially franchisors, franchisees, and their employees. Testifying before the U.S. House Small Business Subcommittee on Oversight, Investigations, and Regulations, Thompson discussed her more than three decades in franchising as both a franchisee and franchisor.

Thompson, who also served eight years as an officer in the U.S. Marine Corps, emphasized two key points to lawmakers:

• IFA support of efforts to streamline government-supported lending program, such as the Small Business Administration (SBA), who along with its lending programs, are a major part of the franchise success story. About 20% of SBA lending goes to franchising. In 2022, about 7,000 loans were approved in the 7(a) and 504 programs representing more than $5 billion of loan volume and supporting more than 100,000 jobs. IFA supports the intent of eliminating the principle of affiliation by control in the SBA size standards, which in the case of a franchise is currently based on franchise agreements. Those determinations required, by their very nature, subjective assessments of contract language. As such, consistency of those determinations, delays in approvals created by occasionally lengthy reviews, and the back and forth with franchisors to reach acceptable agreement language all were impediments to franchisees being able to access the capital they needed to grow.

• The importance of alternate forms of capital, including private equity, to help franchise businesses grow. In the era of bank consolidation and mega-mergers, capital at reasonable interest rates has been harder to find, especially for franchise owners unfamiliar with the language of high finance. Private equity networks extend beyond financial backing. They open doors to our franchise owners and help connect them to potential clients, suppliers, and other businesses within their portfolio. These relationships can super charge growth in terms of new partnerships, joint ventures, and new market opportunities, as well as attract top talent.

Thompson stated, “I’m no shill for private equity, I am a Marine. But I have lived the American Dream of being an entrepreneur and helping grow and scale businesses. This would not be possible without alternative forms of capital. Private equity has been a catalyst for growth for me and many of Neighborly’s franchise owners.”

A full copy of Thompson’s testimony is available HERE.

Neighborly is a parent company of home services companies with more than 5,800 franchise locations serving more than 12 million customers in six countries that specialize in repairing, maintaining and enhancing homes and properties worldwide. 

Entitled Navigating Regulations: Alternative Pathways To Investing In Small Businesses, the hearing took place only days after a federal judge in Texas struck down the National Labor Relations Board’s (NLRB) expanded joint employer rule. Thompson urged Congress to reject this unnecessary and over-reaching rule by supporting H.J. Res. 98, legislation to overturn the rule through the Congressional Review Act.

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