Overseas growth, economy top of mind at IFA convention

The opportunities for international expansion and the obstacles of an uncertain U.S. economy were dueling themes of the 53rd annual International Franchising Association convention in Las Vegas this week.

The five-day event drew more than 3,600 members of the franchising community to the MGM Grand Hotel and Casino, where they heard keynote speakers including former U.S. Secretary of State Condoleezza Rice; Andy Puzder, chief executive of CKE Restaurants Inc.; and Rick Silva, chief executive of Checkers Drive-In Restaurants. They also networked, toured the exhibit hall and attended educational sessions on everything from working with celebrities as franchisees to making the most of social media.

Steve Caldeira, IFA’s president and chief executive, outlined the state of franchising on Monday, noting that key issues in Washington this year will be the impending healthcare mandate, taxes and regulation, and immigration reform.

Priorities for the association will be building a “Franchise Congress” with members of the franchise community across the country that are willing to work with lawmakers in their respective turf.

The IFA also has the goal of building financial support for its FranPAC political action committee to $1.5 million by 2014, said Steve Romaniello, IFA chairman, managing director of Roark Capital and chairman of the board of Focus Brands Inc.

And the IFA is working to build its base of franchisee members, he said, hoping to grow the number of multi-unit franchise operators across the U.S. Currently, the IFA represents about 1,271 franchisors across all industries, but only about 300 to 400 franchisees that are actively engaged.

The IFA is projecting modest growth for franchise companies in 2013.

On Wednesday, the association said its Franchise Business Index, which tracks the economic health of the franchising industry, saw an uptick of 0.7 percent in January to 109.7, an increase of 2.1 percent over January 2012.

Steve Caldeira, IFA’s president and chief executive, said the increase reflects pent-up demand for growth felt by many franchisors and franchisees who held back on investments in the second half of last year because of uncertainty over the then-threat of the “fiscal cliff.”

“With permanency in tax rates, albeit higher for some small business owners, and steadily improving credit conditions, combined with low interest rates and less expensive commercial real estate, we expect the franchise industry will add over 10,000 new establishments and 162,000 new jobs this year,” Caldeira said.

Nationally, the estimated 825,000 franchise businesses account for one in eight private sector jobs, according to the IFA. Franchise businesses also contributed more than $460 million in gross domestic product in 2012, or about 3.4 percent of the nation’s total GDP.

“We like to say we’re building local businesses, one opportunity at a time,” said Caldeira.

Rice, in her keynote speech, said the No. 1 priority on the nation’s “to do” list is “getting this economy going again,” and that it will take leadership by the private sector.

What’s needed, she said, is more certainty about the rate of regulation and taxation so that employers can feel more confident about hiring again.