"What's often overlooked is that franchisors are basically small businesses. There are only 100 franchisors with more than 500 franchises."
The IFA calls itself "the voice of franchising," though it has represented the franchisor perspective since its inception. Several years ago the organization opened its doors to franchisees and consultants. Membership now includes some 29,000 franchisees, 800 franchisors and nearly 300 consultants.
When the U.S. House Judiciary Subcommittee on Commercial and Administrative Law met in late June to hear testimony concerning proposed franchise regulations, the IFA sent both franchisor and franchisee representatives. All spoke out strongly against government intervention.
Much of the current discussion has centered on the Small Business Franchise Act of 1998. Introduced by Rep. Howard Coble (R-NC) and Rep. John LaFalce (D-NY) late last year, the bill never made it to a vote. But Coble has promised to introduce a similar bill before Congress convenes for its August recess. That doesn't sit well with franchisors.
"We all want the same thing; we want franchising to operate in a fair manner," says DeBolt. "I don't think we can guarantee that through federal legislation." The IFA has five general objections to the Coble-LaFalce bill:
1. Franchising is a method of doing business, not an industry. The bill's "one-size-fits-all" approach won't work.
2. Franchising is based on the uniform delivery of products and services. The bill would make it impossible for franchisors to enforce the standards necessary to accomplish this.
3. Franchising has created thousands of successful businessmen and women. The bill would discourage franchisors from extending this opportunity to new franchisees.
4. Franchising works because businessmen and women made sound business judgements. The bill replaces that judgement with uncertain contracts, confusing operations and increased litigation.
5. Franchising rights are already protected. Presale disclosure requirements currently in force are more than adequate.
As far as DeBolt is concerned, franchisees have misrepresented such issues as encroachment, transfers and the purchase of supplies. Franchisee advocates talk about encroachment - the establishment of a franchised unit within an "unreasonable proximity" to one from the same system-as the biggest problem in franchising. DeBolt says this is simply not the case. "While from time to time there have been encroachment issues, and nobody is going to deny that, it's not the overriding issue," he says. "There's absolutely no opposition on our part to something [about encroachment] in a contract. There's a lot of opposition to the federal government getting involved."
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