Franchise Dictionary Magazine (FDM) closes each year with their 100 Game Changers issue and a few words from Robert Cresanti, president and CEO of the International Franchise Association (IFA). There is no better source on all things franchise than Cresanti and the IFA. As a staunch advocate for this industry, Cresanti speaks frequently before Congress on behalf of franchising, lobbying officials for opportunities and protection for all franchise businesses. FDM asked him to share his wisdom as we close a tumultuous 2020 and embrace better days in 2021. Here is what Cresanti wants you to know.
Undoubtedly 2020 has been a challenge. What are some of the takeaways of 2020 that you have experienced?
Throughout this year, the franchise sector has adapted, learned, and grown from adversity. To be sure, franchises have faced very real challenges: issues of liquidity, physical and structural adaptations to their businesses, changing store hours or delivery/pickup methods, and an uncertain landscape of liability concerns. But we have also seen that franchises are inherently adaptable. This should come as little surprise to those who know franchise business owners; they take a proven business model, combine it with an entrepreneurial spirit, and invest in their local communities. We have seen unprecedented innovation from franchise business owners. They have developed new best practices for mobile and contactless goods and service delivery, and in doing so, they have improved their franchise systems more broadly. And the other thing we have seen is that franchises have invested in and committed deeply to their communities. Franchise businesses have stepped up to assist first responders and health care workers and donated to local food banks and hospitals across the country. This just goes to show how franchises are vital members of the communities they serve.
The IFA is the driving force representing all franchises before Congress. Is there anything that happened during the 2020 pandemic franchises need to know going into 2021?
IFA has done an exceptional job representing and advocating for the franchise business model during the Covid-19 pandemic. We have leveraged our relationships in Congress, the administration, and state governments to deliver crucial legislative and policy wins for franchising. In federal relief legislation, IFA ensured franchise eligibility for Paycheck Protection Program (PPP) loans, and we have worked to secure liability protections for small- and medium-sized businesses. IFA was the driving force behind the Department of Labor’s new joint employer rule and the National Labor Relations Board’s new joint employer rule, resulting in pro-franchising outcomes. IFA’s advocacy led to clear, concise guidelines for franchisors and franchisees alike. These new rules will lead to less confusion and litigation on the roles and responsibilities of franchisors and franchisees. Going into 2021, franchise businesses should know that IFA will continue to represent and advocate for the best interests of all of franchising.
What are your thoughts on successfully investing in franchising:
As we look to 2021, I think it is important for entrepreneurs thinking about investing in a franchise to remember the fundamentals of business ownership. Amid investing and ownership uncertainty, entrepreneurs should adopt a clear strategy for their operations. Understanding rent and fixed costs, cash runway, margins, labor needs, and tolerance for risk are vital components of the long-term health of any business.
Most importantly though, do your homework before investing in any franchise brand! Not every opportunity is the right fit. Prospective franchisees should research the system, speak with trusted legal and financial experts, and think seriously about the risks as well as the rewards of business ownership. Franchises remain a strong and solid investment, especially when you approach franchise ownership with clear eyes and strong fundamentals.
The IFA will continue to represent franchising before Congress in the new year to come, 2021. As the world’s oldest and largest organization dedicated to the protection and enhancement of the franchising business model, IFA represents and advocates on behalf of America’s 733,000 franchise businesses who together employ nearly 8 million Americans.
For more than 60 years, IFA has worked with federal, state, and local policymakers to ensure that franchises can grow their businesses, develop their workforces, and give back to their communities. As American small businesses navigate through uncertain times, that work is more important than ever. For more information, visit franchise.org.
– Rose Mango