What killed Alabama’s Fair Franchising bill?
Many of you are probably aware of the news that the Speaker of the Alabama House of Representatives pulled the plug on a new fair franchising bill.
Last month, a bill modeled after the California bill that passed in 2015 moved through the Alabama State Senate. The Coalition of Franchisee Associations (CFA), of which we are a member, helped push for passage of this bill. The Protect Alabama Small Business Act, as it was called, had a Republican sponsor in the House and Senate (Alabama’s legislature is controlled by Republicans.) Yet, despite strong support, the bill was never brought to the floor for a vote. According to the CFA’s lobbyist in Alabama, there were definitely enough votes in the two chambers to pass the bill, but the Speaker didn’t want it. Some speculate he caved to pressure from the International Franchise Association (IFA), which desperately fought the bill after it had cleared the Senate.
We shouldn’t be surprised that the IFA pulls out all the stops to defeat initiatives that would make franchising more equitable for franchisees. After all, the IFA represents franchisor interests; not the interests of franchisees. In Alabama, IFA launched a misinformation campaign, complete with “fake news,” about how unions and trial lawyers were behind the bill and how it would damage franchised businesses in Alabama. The IFA used a franchisee to front the propaganda. David Barr is a Kentucky Fried Chicken franchisee in Georgia and Alabama, but he is not your typical franchisee. He is also the former CEO of Pizza Hut and the second vice chairman of the IFA.
An opinion article Barr wrote for the IFA appeared in the Wall St. Journal with the headline: “Franchisees like me are in union crosshairs.” It said unions back the bill because it weakens the franchise industry.
“The new system would drive up the cost of franchising, making national brands less likely to strike deals with local businesses. Unions imagine these brands would opt to open and operate local stores themselves. This would make employees easier to organize, and give the unions a toehold in right-to-work states like Alabama. More likely, national brands will choose to leave the state, setting Alabama back economically.”
The fact is, that franchisees everywhere are struggling to maintain profits as franchisors pass along additional business costs, in addition to higher cost of labor and supplies. Franchisees are the ones who invest in the brands; they should be treated fairly. What’s more, franchising is a strong and successful enterprise—and remains so in states like California that have already passed fair franchising laws.
The National Coalition supports CFA’s efforts to get more states to consider fair franchising laws, and is hopeful one day the federal government will take the necessary steps to protect people like us to embody the American Dream. What happened in Alabama should serve as a cautionary tale. When franchisees don’t come forward to explain to the public and the legislature why we need laws to restore fairness to the system, we all lose.