QSR & Pizza Fueling Franchise Growth

Fast-Food-2Each year the International Franchise Association commissions a study from PwC (PricewaterhouseCoopers) on the economic impact of franchising in the U.S. Highlights from that study include the following:

  • Taking into account the indirect impact of franchised businesses, business format franchises support more than 13.2 million jobs, $1.6 trillion in economic output for the U.S. economy, and 5.8 percent of the country’s GDP.
  • Franchise businesses provided more jobs in 2016 than wholesale trade, transportation and warehousing, nondurable goods manufacturing, and information (including software and print publishing, motion pictures and videos, radio and television broadcasting, and telecommunications carriers and resellers).
  • Quick service restaurants (QSR) is the largest category, representing 25 percent of all franchise establishments and 45.5 percent of all franchise jobs.
  • Jobs supported because of franchise businesses were at least 10 percent of the private sector nonfarm workforce in 33 states, and at least 6 percent in every state.
  • The number of people employed by franchises is greatest in California, Texas, Florida, Illinois, and Ohio.
  • Franchisees own and operate 88 percent of all business format franchise establishments and franchisors own and operate 12 percent.

Read more…

Quick Serve Franchise Sector Continues to Blaze a Trail for Franchising

There is little doubt that the franchise industry is undergoing significant changes fueled in great part by the success of various PE firms that began in the QSR sector. As other franchise sectors are targeted by PE investors, the competitive environment in those sectors will become more challenging. In order to prepare for these challenges, small to medium sized franchises will need to become successful franchise systems that produces sustained system growth, successful franchisees and an efficient operating system.

Multi-unit franchisee ownership that originated in the QSR sector continues to increase as franchisors seek large multi-unit franchisees that can own and operate more franchise units.This ownership model provides organizational stability, ample financial resources, sustained growth and economies of scale to the franchisee operation.

Read more…

Who’s Winning the Pizza Wars?

Welcome to the pizza wars, where brands big and small, quick-service and fast-casual alike face two choices: pick up the pace and earn relevancy through definitive, clear marketplace differentiation or step aside.

Read more…

 

 

The Changing Franchise Relationship

PAC14_Brochure_cover_small_view“…the summer of 2014 saw two major judgments that underscored the changing times. While these two rulings address different parts of franchise operation, they both serve as actions seeking to level the balance of power between the franchisor and the franchisee.” – Franchise Direct

The quote above was from the beginning of a recent article on FranchiseDirect.com, The Changing Franchisor-Franchisee Relationship. It was for this article that I was asked to be interviewed. I’d like to thank the team at Franchise Direct for the opportunity to share insight and perspective about the upcoming International Franchise Association Public Affairs Conference in Washington DC. As well, I’d like to express my gratitude to IFA Staff for their assistance in preparing responses to interview questions. I believe it’s very important to deliver the correct message on all issues so their assistance and guidance was greatly appreciated. Their professionalism is second to none!

The complete article may be read HERE, but I’ll share my interview below…

Commentary from an Industry Expert

A noted franchise industry expert and speaker, Paul R. Segreto, CFE, was nice enough to answer some questions for Franchise Direct about the legal fight the franchising industry is enduring. Paul is a current member of the IFA Franchise Relations Committee. In addition, Paul is currently the CEO of Franchise Foundry, a franchise development company, as well as the host of Franchise Today on Blog Talk Radio. You can find out more about Paul here.

What will be the main points of discussion at the IFA Public Affairs Conference (September 15-18 in Washington, D.C.)?

The Public Affairs Conference is the best opportunity for IFA members to advocate for their business and communicate to lawmakers the challenges we are facing. In July, the National Labor Relations Board (NLRB) Division of Advice announced that a franchisor could be designated as a joint employer of its franchisees employees. The IFA is fighting this dangerous assertion because it is unlawful and will harm job growth, the economy and locally-owned franchise small businesses in every state. Franchisees have invested their capital in the business and stand to lose equity in their businesses if their franchisors are deemed joint employers. During the Conference, IFA members will take this message to Capitol Hill to fight for franchising and educate those on the success of the franchise business model and the growth that it continues to provide to our economy.

What is the risk to the industry from some of these judgments that have been handed down?

If franchisors are joint employers with their franchisees, these thousands of small business owners would lose control of the operations and equity they worked so hard to build. The jobs of millions of workers would be placed in jeopardy and the value of the businesses that employ them would be deflated.

This recommendation is a drastic and overreaching solution. Ample federal, state and local remedies are available – and are regularly used to enforce current law, including more limited NLRB action, state attorneys, general action and private rights of action – to deal with labor violations of various kinds. Destroying the fundamental tenets of the franchise model would eviscerate the most successful business model in existence.

Why do you believe so many cities and states are reviewing their franchising policies?

The Service Employees International Union (SEIU) is leading organized attacks against franchising and these jobs they create. The labor unions multi-pronged attack at the local, state and national levels, including having the federal government declare entire franchise systems as a single unit rather than the collection of separate, small business owners they actually are. The SEIU wants to undermine the franchise business model so they can more easily unionize entire franchise systems, as it is much more difficult for unions to organize thousands of independent small businesses under the current regulatory system.

What specific actions are the IFA taking, or considering, to protect the rights of both franchisors and franchisees?

With our continued fight to defend the franchise business model, the IFA is ensuring that franchise small business owners are well informed of policies that could alter the way they do business so they are armed with the tools necessary to educate lawmakers. The IFA’s Franchise Action Network is a new strategic initiative that mobilizes franchisors, franchisees and suppliers at the grassroots level. A coalition of the franchise owners, all promoting a single mission, is the best way to protect our industry from an increasingly hostile legislative and regulatory environment at the federal, state and municipal levels.

How does Aziz Hashim’s ascension to chairman underscore the changing relationship climate between franchisors and franchisees?

Aziz Hashim is going to elevate the role of franchisees in everything IFA does. The nature of the game has changed. There has been no more important time for franchisees to be engaged with the IFA on public policy issues. Legislators need to hear the concerns these business owners have about policies that impact their relationship with their franchisor.

Franchises Excluded from Small Business Saturday – AMEX Responds!

Well, I am happy to say that I have been in touch with AMEX as one of their VPs contacted me directly and apologized for their exclusion of franchising. They just missed the boat on franchising being an integral part of small business. They never even considered franchisees as Moms and Pops investing their money in a small business of their own. All their thoughts were focused on the giants of franchising and not the smaller franchises. Although, I did communicate that even the McDonalds franchisees are small business owners themselves. The long and the short is that AMEX knows they committed a huge blunder in excluding franchising.

Rosa Alfonso, the AMEX VP that contacted me directly, wants to set up a conference call next week with several other AMEX VPs to start down the road of getting franchising involved in next year’s Small Business Saturday. I am so excited they took notice and are willing to do something about it.

As much as I would love to be front and center on this, I recognize that it should not be without the IFA. This is about franchising being recognized as an essential component to America’s economic recovery, as IFA President, Steve Caldeira has promoted since leading the IFA. It’s about continuing to educate, not only the masses, but even the giants of business like American Express. I’m sure Steve and his staff could think of many ways this can further benefit franchising.

To that end, I have reached out to Steve Caldeira and will defer to him and the IFA staff in moving forward. Of course, I look forward to being involved as I am passionate about franchising!

Bookmark and Share