Protecting the franchise model: the role suppliers play defending the industry.

Author:Cunningham, Ryan

Critical issues are facing the franchise industry today. The time to act is now!

As chairman of the International Franchise Association's Supplier Forum Advisory Board, I work with a group consisting of 21 suppliers who represent the interests of the IFA supplier community. Annually we request nominations from supplier members to join the board and help shape the direction of the IFA and the franchising industry. The SFAB's mission is to support our supplier members by providing industry education, creating opportunities to interact with franchisors and franchisees, and presenting leadership opportunities within the association.

There are 680 supplier members in the IFA, contributing 36 percent of the association's annual budget; 44 percent participate in the IFA's lobbying effort, FranPAC. Four suppliers, current and former SFAB members serve on the IFA Board of Directors and, through the committees of the SFAB, suppliers play a role in organizing the annual convention, providing expertise for the educational sessions throughout the year, and supporting the association's efforts to "protect, enhance and promote franchising."

There are many threats facing the franchise industry today. One of the SFAB's undertakings this year is to provide members with information to better understand these threats and provide the means to support the IFA's drive to turn the legislative tide facing the industry today. Here is a summary of the critical issues franchising is facing today:


The U.S. National Labor Relations Board (NLRB) and the U.S. Department of Labor (DOL) have drastically increased their efforts and budgets to enforce the belief that franchising violates U.S. labor laws and that our business model should be shut down. The NLRB and DOL believe franchisors and franchisees should be jointly liable for their business. This would eliminate the independence franchisees seek when opening a franchise and would destroy the franchise model. If the NLRB is successful, a franchisor would be held liable for all of the actions of its franchisees and their employees.


DOL released its new proposed rule for overtime regulations, which will double the minimum salary level for exemption from the current $23,660 to $50,400. Future increases will be tied to inflation so annual increases are also expected. DOL is also contemplating making the "duties" test more stringent so fewer managers will be...

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