Franchising in USA


How is franchising in USA situation? In business for over 50 years, the International Franchise Association is the oldest and the largest organization in the world that represents franchising. Among the strengths of the US association there is an intense political activity, with a primary goal: to improve access to credit for the operators. Based in Washington, the International Franchise Association was founded in 1960 and it is the oldest and largest organization representing franchising worldwide. “IFA’s goal,” it is said in the web address of the association “is to protect, enhance and promote franchising through government relations activities, public relations and educational programs.” Today, sixty years later, in the United States, home of the franchise and, in some ways, of the entrepreneurship, the most urgent issue to be addressed is, as well as in Europe, the credit access for entrepreneurs in general and for those who choose franchise in particular. If the evil is common, there is overseas a different way to deal with it, where the contact between the representation of the sector (the only one in the US) and the political institutions is directed, or rather, is an integral part of the association, as said to us Alisa Harrison, Senior Vice President, Communications & Marketing at IFA.

Which is the main political activity of IFA?
In order to represent and defend the franchise interests, we follow three different channels. First, we have a very large base and of our members ability to “educate” in their own constituency members of the Congress about the importance of the franchise: it’s called “Franchise Congress” and plays a key role in the success of our program, which supports the franchise formula.
The second channel is the political action committee, “FranPAC” (Franchise’s Political Action Committee)
, where we collect money in order to put in candidates who wish to support our business. The fund raising for the committees of political activity is regulated by the federal government. We have achieved an unprecedented 1.2 million dollars. In the elections of 2012, we supported 151 candidates pro-growth and pro-franchise, and eighty percent of them has been elected. The third channel is our team, which is exclusively dedicated to the activity of lobbying, based in Washington DC, who works daily with members of Congress and their respective staffs and with industry groups in order to support policies that promotes growth. In addition, we work in different institutional levels.

How do members respond to your involvement request in political issues?
Our members are very active in our political activities. As I mentioned above, our program, Franchise Congress, contemplates the opportunity for our members to get involved in the political process. Often associates invite members of Congress to take part in their business operations, in order to make them understand the franchise business. IFA’s members testify in front of the Congress and work to elect candidates in favor of the growth. In September, we organize our annual conference in Washington about topical issues and nearly 500 members come to town to do lobbying on issues important to the franchise business representatives directly to elected representatives. The amount of 1.2 million collected by our committee puts us in the top 25 of the committees of political activity related to business and this level of involvement of our members shows that give value the media role in our association.

What are the main requirements that are paying to the policy?
Currently, our priorities include the immigration reform and a comprehensive tax reform, since these are the issues on which Congress is working today. We are also working to improve the regulation of the health service, to facilitate the franchisors in order to make them to respect it, and we are also working on labor issues that have an impact on our members.

Access to credit or full transparency in contracts by the franchisor: which is the main difficulty that a potential franchisee meets today?
It is expected that the franchise industry will record a lower growth rate this year. We believe that it would be much higher if credit were more accessible. Recent figures show that lending to franchise businesses in the United States are the highest since the recession: 23.9 billion dollars to support 53,900 franchise operations, but this figure will not be enough to meet the demand. The demand for credit from the industry to boost the growth soared in 2013, reaching 10.6 per cent on 2012. So, even though lending has increased, remains a deficit of 9.7 percent, amounted to $ 2.6 billion, including the demand growth from the franchise and the banks’ ability to meet the demand.

IFA (International Franchise Association) was formed in 1960 and it represents an industry in the United States with over 825 thousand of franchisees, 18 million jobs and more than 6 billion of economic output. Franchisees (over 10 thousand) and suppliers of products, services and support systems in the franchise industry can be associated with IFA franchisors (more than 70 percent of the networks recorded in the US).


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