Summer of Franchise Discontent

Small business franchisees to put human face to cost of regulation

Dunkin' Donuts
May 5, 2015

The International Franchise Association plans on flooding Congress with small business owners over the summer to remind lawmakers about the consequences of regulatory targeting.

Several IFA staffers explained the organization's plan to counter the narrative proffered by influential unions and labor regulators at the group's annual Legal Symposium on Monday.

IFA has created a coalition of 21 business associations and recruited 300 franchisees to tell their stories to Congress. The goal of the coalition is to convince lawmakers to pass legislation protecting the franchise model from the National Labor Relations Board.

"The NLRB wants to demote [independently controlled] franchisees to assistant manager for the purpose of unionizing America against its will," said Michael Layman, IFA vice president of regulatory affairs.

Franchisees are generally small business owners that pay corporations to operate under the corporate brand. While the menu at one Dunkin Donuts may look the same as any other, most are independently controlled and run by franchisees.

Layman told the conference that lawmakers often do not understand the nuance of the franchising model. The key to winning over support is to have franchisees tell their stories to Congress. Politicians, he said, need to understand that such an entrepreneur "went into business for himself, not by himself."

IFA showed a video presentation to demonstrate its messaging. The 30-second spot features Gerald Moore, who operates five Little Gym franchises in the Carolinas and Virginia. Moore explains how he has dedicated his life's work to being his own boss and faces an uncertain future if the National Labor Relations Board moves forward with policies holding corporations liable for its franchisees.

"The last 19 years of our lives could be lost all because of a [NLRB] ruling," he says.

Robert Cresanti, an executive vice president at the association, said the group has met with many lawmakers and the feedback has been productive.

Cresanti said the chief obstacle is the amount of money unions have poured into Democratic coffers. Blocking the NLRB would hinder union attempts to recruit from 8 million franchise workers; fewer dues dollars for groups such as SEIU means fewer political donations for their allies in the Democratic Party.

"This problem has turned [the issue] from a policy discussion to a political discussion," Cresanti said. "This is a win or lose proposition ... it is a business issue for [unions], and it is a political issue for Democrats."

IFA has already tested the waters of introducing lawmakers to local franchisees from political districts at the state level. Jeff Hanscom, the director of state government relations, credited IFA mobilization with a Tennessee law signed in April that protects local franchisees. That legislation is now making its way through Oregon, which is controlled entirely by Democrats.

"We've made remarkable headway," Hanscom said.

Winning bipartisan support will be essential to heading off NLRB action. Congress passed resolutions in March designed to block new NLRB rules speeding up the union election process in favor of labor groups. The votes followed party lines and President Obama vetoed the resolutions; the new NLRB rules went into effect in April.

Layman said franchisees may be able to avoid a similar fate once lawmakers meet the small business owners face to face.

"The message is that government is overreaching in small businesses," he said.

Published under: NLRB , Unions