Matt Shay has been president of the International Franchise Association since 2005, but his tenure with the Washington, D.C.-based group goes back to 1993 when he joined the IFA’s government affairs department. Shay, an attorney by training, recently said that he fears his 1,000 franchisor members and 8,000 franchisee members—representing 75 different industries, including foodservice—will face an uncommonly challenging year in 2008.
What federal legislation should franchisors be worried about?
One would think that with major issues facing franchising, such as immigration reform, the lack of affordable health care and the prospect of a softening economy, legislators would be eager to solve some of these pressing problems and shy away from creating additional burdens. But the introduction of a bill that would amend the Federal Arbitration Act threatens to inflict serious harm on the franchising industry if it becomes law.
Why?
Trial lawyers will be the only beneficiaries of the so-called Arbitration Fairness Act, which would deny franchise companies the right to enforce arbitration agreements if they’re entered before an actual dispute arises. Such an idea is purely anti-franchising. IFA plans to strongly oppose this legislation.
Do you think immigration reform will get back on track this year?
It’s going to be hard to get and keep Congress’s attention this year since elections are coming soon. But without comprehensive immigration reform, franchised businesses are going to suffer, and that will be detrimental to our economy since franchising’s contributions are vital. There just aren’t enough workers to fill job openings. Even if the economy softens, as some are predicting, it will continue to be a challenge for franchises, especially those in the hospitality and service industries, to meet their employment needs. Immigration reform is among the most pressing issues that face the franchising industry today.
What if there is a recession?
Some industries will be affected more than others. Consumers will also adjust their spending, but in such an environment, franchises tend to fare better than other types of businesses because consumers are quality and value conscious, thus they turn to establishments where they are confident they’ll find value and consistency.
