WASHINGTON, D.C. — Blue MauMau learned that the International Franchise Association (IFA) had informed franchisee members of its stand almost a month after it publicly declared opposition to California's franchising abuse reform bill. Last week on April 11, six days before the public hearing on the bill, Franchisee Forum leaders of the IFA were told via conference about the association's opposition to the state bill.  Yet nearly a month earlier on March 14, the IFA was one of the quickest franchise organizations to publicly state to Blue MauMau its stand against Assembly Bill 2305, California's Level Playing Field for Small Businesses Act.

At that time, various franchise associations, who are known for being champions of legislation to curb the most abusive franchising practices, had struggled to issue a quick response to the introduction of this bill. They rushed to circulate the bill among elected board members, association staff, regional delegates and members to discuss its nuances, debate its ramifications, build consensus and then declare a public position.

Critics of the International Franchise Association say it is simply a mouthpiece for franchisor concerns and that franchised small business owners are bulldozed over. So Blue MauMau sought clarity on the IFA's quick, efficient internal process. Alisa Harrison, vice president of communications and marketing for the International Franchise Association, responded. Here are Blue MauMau's questions and here is the IFA's emailed answers.

BMM: The IFA was swift in reacting to California Assembly Bill 2305, [declaring its position] within a few days of its introduction. You answered me in a few hours.  Some of the other franchise associations took considerably longer. Can you describe the internal process that the IFA uses to take its positions on bills like this?

What involvement did the IFA Franchisee Forum have in the decision making process? When did these franchisees know of the IFA's decision?

Harrison: Our strategic plan calls for us to promote, protect and enhance franchising and it specifically directs staff to oppose bills that are potentially harmful to the franchise model. Since AB 2305 was introduced, our senior team has worked very closely with the IFA Executive Committee, which includes the Chairs of the Franchisor, Franchisee and Supplier Forums, the Board and our Legislative Action Group (LAG) to formulate a proactive position and strategy regarding AB 2305, the "Level the Playing Field for Small Business Act" that was introduced in the CA Assembly by Jared Huffman (D-San Rafael).

This bill will call into question all of the terms of a franchise agreement. If any provision is arguably "unreasonable", "discriminatory "or the franchisor's enforcement would not be "in good faith," the bill would block those provisions. The parties then would have no way of knowing what their rights and obligations are to each other, leading to ongoing uncertainty and significant incentives to litigate. That will drain money and resources from other important business purposes and divert the attention of both franchisees and franchise management. The only winners are the lawyers (on both sides).The inability to enforce the agreement will inevitably lead to damage of the brand. Under-performing franchisees will continue to operate unabated, thereby negatively impacting and diluting the brand and the entire system.

We have also talked with industry leaders from all major segments within our organization for their input and perspective. There is a consensus that having more unnecessary government involvement in franchising is not good for those whose livelihood depends on a strong and vibrant franchise model that allows all parties to enter willingly into agreements that promote a franchise brand.

We work every day at the federal and state levels, as well as in the courts, to ensure that laws do not have unintended consequences for franchise owners. Without question, AB 2305 has damaging unintended consequences that would severely curtail the franchise industry in California, while simultaneously impeding the state's much-needed economic recovery, especially given that the state's policymakers are currently contemplating an increase in both sales and incomes taxes. Put all of these measures together, and they are clearly not a prescription for job creation and economic growth.

We welcome all views and perspectives on any legislation, and our board will continue to follow a deliberative process to map out a path that will benefit the entire industry.

UPDATE

Alisa Harrison emailed the following to Blue MauMau four and a half hours after the original article above was posted

3:50 p.m. EST, Thursday, April 19

Harrison: Earlier today, the IFA Franchisee Forum held a conference call and approved the attached letter from the Forum Chair regarding the California bill.  We are in the process of delivering it to the committee chairwoman.  Please let me know if you have any questions.

Alisa Harrison
Vice President, Communications & Marketing
International Franchise Association

The original letter is attached in pdf. The text is as follows.

April 23,2012

The Honorable Mary Hayashi
Chair, AssemblyBusiness, Professions and Consumer Protection Committee
State Capitol
Room 3013
Sacramento,CA 94249

Re: Opposition to AB 2305 (Huffman)

Dear Chairwoman Hayashi:

On behalf of the International Franchise Association's (lFA's) Franchisee Forum I urge your "No" vote on AB 2305.

I serve as the Chair of the Franchisee Forum of the International Franchise Association. The Franchisee Forum represents more than 12,000 franchisee members of IFA providing input and advice to the IFA Board of Directors. Franchisee Forum members serve on all IFA committees. I also serve on the IFA Executive Committee and Board of Directors, the policymaking body of the association.

While IFA represents a broad cross-section of franchisor, franchisee, and supplier members, small and large businesses, I would like to add that my husband and I are the small business franchise owner of Mr. Rooter of Sonoma County, based in Santa Rosa, California. We have been proudly serving California customers for more than 15 years and in that time we have grown our organization from just the two of us to the current 26 full- time team members serving thousands of California customers monthly.

The Franchisee Forum strongly supports a self-regulatory approach to deal with franchise relationship issues. Having more unnecessary government involvement in franchising is not good for those whose livelihood depends on a strong and vibrant franchise model that allows all parties to enter willingly into agreements to promote a franchise brand.

While no business model is perfect, we believe that franchising over time is getting better thanks in part to organizations like the International Franchise Association. Thousands of volunteers donate their time to work on industry best practices, such as the IFA Code of Ethics, FranGuard (franchise sales management and compliance program), and franchise mediation programs.

While we have many concerns about AB 2305, below are some of the major ones:

• Our franchise systems must have a way to develop and maintain quality standards protect our brand and our customers. This billwould allow sub-standard franchise outlets to continue offering inferior products and services to consumers. Franchisees, franchisors and consumers all have a vested interest in maintaining a franchise's brand integrity.
• The bill requires identical treatment of all franchisees, which is nearly impossible in longterm relationships involving scores or hundreds of franchisees, A perverse effect of the legislation is that it will tie the hands of franchisors from assisting franchisees in many circumstances. Take for example a franchisee who is experiencing temporary cash flow problems. Under the restrictions imposed by the legislation, a franchisor would be prohibited from granting the franchisee an extension on payment of a debt.
• Terms such as "good faith," "unreasonable"and "duty of competence" sound good. However, these terms are so general and subjective that it will result in legal actions to resolve even minor disputes, at great expense to both franchisors and franchisees. Increased litigation and legal costs will be passed on to consumers and franchisees in the form of higher prices. AB 2305 could severely stifle franchising industry growth in California.

• Many franchisees belong to a franchise system because they want to grow their business and expand into new areas, thus creating more economic opportunity and more jobs for everyone. As small franchise businesses struggle to recover from the worst recession since the Great Depression, we would urge you and other lawmakers to look for ways to reduce the regulatory and tax burdens on small businesses.

We are concerned that the focus and debate on AB 2305 - while well-intentioned -  will only serve to divert attention and resources away from much-needed measures to stimulate economic recovery in California and the nation. Therefore, we respectfully request that you vote "No" on AB 2305.

Sincerely,

Saunda Kitchen
Chair, IFA Franchisee Forum
Mr. Rooter of Sonoma County, CA
1025 North Dutton Avenue
Santa Rosa, CA 95401

cc: Assemblyman Jared Huffman
Members, Assembly Business, Professions and Consumer Protection Committee