Franchising industry outlook: the International Franchise Association's Board Members share their thoughts on the coming year and insights on the issues that could impact franchising during 2017 and beyond.

Position::FEATURES: IFA's 2017 Board Member Perspectives
 
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Questions:

[1] What is your outlook for your business and the overall franchise industry heading into 2017?

[2] What are the top issues facing your business for 2017?

What operational changes, if any, will you be making in 2017?

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TOM BABER

Franchisee

IHOP and Money Mailer

[1] Regardless of personal political preferences, it is very likely the election put small business owners, specifically franchisees, in a more hopeful mood. The National Labor Relations Board as well as the overall climate under the past administration was not pro-business nor was it pro-franchising, to say the least. The obstacles facing small business, and most especially franchising, reached a level I believe stunted growth significantly. While there is not room here to discuss the myriad issues a business owner may face, the government, well-meaning or not, created many obstacles in addition to the normal issues an owner would face. Uncertainty over healthcare, minimum wage (especially uneven playing fields), unionization, access to capital (although the U.S. Small Business Administration deserves praise for the work it did), and the general seeming disdain for business owners reached levels I cannot recall in my lifetime. I may be biased, but small business (including franchising of course) is the backbone of the American economy and a path to the American Dream and if fostered fairly, will contribute in a major way to our economy. I hope the government does its part to make this a reality.

[2] Until the new administration starts to gel and the tone and path toward small business becomes clear, uncertainty, albeit with hopefulness, will still dominate decisions. Business plans are difficult to write without numbers and numbers are difficult to assess without knowing the rules. Still, hopefulness that small businesses have not felt in a while, that now exists, will drive growth. Personally, I will likely look to expand and hire as I have held back the last few years on both counts. There is already a difference in the collective angst of business owners I work with daily and I am quite hopeful this again leads to growth. On the consulting side of my business, I just met with a franchisor to consult on a new corporate location to anchor an expansion in a new territory. It is very early, but the early returns are strong.

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JANIA BAILEY, CFE

CEO

FranNet

[1] Even with the uncertainty and continued efforts to undermine the franchise model by certain groups, I couldn't be more excited about the outlook for franchising and FranNet specifically. We continue to assist hard-working, focused individuals who find the franchise business model as appealing as we all know it is and always has been. We experienced a record year for FranNet in 2016--and it's because we continue to focus on doing the right thing for our clients, our franchisor partners and our FranNet consultants. In order to more fully integrate our services to support multiple franchise platforms, we launched the Pinnacle Franchise Development Group in 2016. There are some incredible emerging brands that need the expertise that FranNet's 30 years of experience brings to the table, and we want to help those franchise systems grow the right way, and work to ensure they'll continue franchising's impressive run. Combine Pinnacle and FranNet with Proven Match, FranchiseWorks. com and our international expansion into Germany, FranNet is primed for another strong 30 years.

[2] Many of the issues FranNet will face in 2017 will be uniformly battled across the nation by the franchise community--how to combat the NLRB joint employer judgment; how to address the minimum wage inequities in many communities; and how to better educate the general public on the ways in which franchising can change communities and change lives. Only by actively involving ourselves in initiatives like FranPAC can we hope to successfully arm our legislators with the appropriate and correct information about the ways harmful politically-driven, anti-franchising policies could damage our industry. However, we also know FranNet will continue to change lives for the better as we look to build on a record 2016 and seek to control those items that we can directly control. I think it's really why 2016 was as successful as it was for FranNet in spite of what was widely considered a volatile election year--we focused on the basics. We focused on providing outstanding counseling to our clients while constantly seeking new opportunities for our franchisor partners. We added more consultants into cities across the country to drive that face-to-face interaction between our clients and consultants. And that focus paid big dividends for us across the country, and we'll continue to reap those benefits for years to come.

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CHARLES E. CHASE

President and CEO

FirstService Brands

[1] With the continued slow economic recovery, franchisees in 2017 (of all systems) will continue to grow faster than their markets. The political need to tax and control small business won't undermine the agility, determination and tenacity of franchisees. The franchise business model allows for a wonderful degree of localized adaptability and leadership. This has allowed franchisees to continuously outperform their competitors.

[2] In 2017 the focus is simple: execute on the promise of our brands.

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MITCH COHEN

Franchisee

CEO, Management 360LLC

[1] I am very optimistic for the outlook in the franchising industry for 2017. Having a change in the administration should be a positive to franchising in general. I recently sold the business my partners and I owned for more than 30 years. It was not planned but one of the things I considered was that there was no light at the end of the tunnel with all the expected regulations. My company is now ready to open two of five Jersey Mike's Subs in Long Island. N.Y. Understanding the regulatory landscape is changing but we believe in the interest of small businesses.

[2] One of the top issues we are concerned about is the uncertainty about the overtime rules and how that will affect us going forward. As of now it's on hold but a lot of our competition for employees has already complied, which could affect our employee wage policy. Operationally we have a blank slate. We will work to continue to train our employees to be the best they can be as employees and citizens. We believe in giving back to the community and our employees will take part in those activities as well.

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JERRY CRAWFORD, CFE

President and CEO

Jani-King International

[1] This is an exciting time for Jani-King. Heading into 2017, we're implementing new technology and strategies that will continue to help our franchisees grow their businesses. We see opportunity in so many places, not just in our opportunity for revenue and earnings growth, but in how we connect with franchisees, how our franchisees connect with customers, and how we can educate and train our employees to improve our brand. Commercial cleaning has proved to be one of the most consistent, reliable businesses to operate through any .type of economic climate. Currently, in many markets new commercial buildings are being constructed and older buildings are being renovated and expanded. Businesses looking to save money are choosing to outsource their cleaning services instead of employing full-time staff. For Jani-King, our success has always been about the opportunity we provide to our franchisees. As for the franchise industry as a whole, there is no question that franchising is the backbone of the economy and a catalyst for entrepreneurs to be successful in a proven business model. We are confident in this business model and firmly believe that franchisors improve the global economy each day with new jobs, products and services.

[2] Uncertainty. That's a common theme in an election year, but government plays an ever-increasing role in all of our businesses. After eight years of the most recent administration, we're about to experience what most people anticipate will be a great amount of change. We really have no ability to predict the extent of these changes and the impact the new administration will have on our business in the days, months and years ahead. Taxes, healthcare, labor laws, and small business lending regulations, among others, are all important to how we are able to manage and grow our brand. I'm confident that our business will continue to thrive, but there's always some degree of uncertainty going into a new year with a new U.S. president. Operationally, we continue to adjust our business model to overcome the unprecedented challenges faced by the franchise industry. However, these business model adjustments are also one of the things I am most excited about because they are also in response to new opportunities that have never been available for our brand. Generally, we are focused on increasing the size and business sophistication of our franchisees, so they can meet the demands of customers that have larger operations with more exacting cleaning requirements. I believe that finding and retaining the right people is still and will always be the key to the success of any business, especially in the service industry. We're recruiting franchisees that we feel will make successful business owners.

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RICK DAVIDSON

President and CEO

Century 21 Real Estate

[1] As we often tell the affiliates across the Century 21 system, the market and or the industry we are in does not dictate our success.... we do. We believe the same holds true for the overall franchise industry heading into 2017. There is lots of great opportunity if you are focused on the objective and diligent in your approach and execution. As we know, there are a few important legislative issues which will impact our industry if not handled appropriately and as such, uncertainty will remain as we welcome a...

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