It’s rumoured that the reason for Steve Caldeira’s unexpected recent resignation was the IFA Board’s rejection of his million-dollar salary demand. But maybe he was just weary after his five-year battle against what have been called “attacks on the franchise business model”. His successor, Robert Cresanti, seems ready to take up the good fight.


But should the IFA’s approach be less ‘protective’ and confrontational, and more ready to embrace change in franchising?


Franchisors have pretty much had it their own way for sixty years. Franchise agreements have barely changed during that time. Incredibly, franchisees in many systems can still have their franchises taken from them without cause. Even where there is cause, franchisees can have their franchises taken without receiving proper compensation – sometimes without receiving any compensation.



Is that just? Is that ethical?


The International Franchise Association thinks so. It opposed an act, California Small Business Investment Protection Act (AB 525), promoting fairer relations between franchisors and franchisees by preventing unfair termination and ensuring fair compensation. AB 525 (and its predecessor AB 610) was just one of the battles that Steve Caldeira took on during his time at the IFA.


To be fair, many of the others were justified. Caldeira opposed the National Labour Relations Board’s expanded definition of what constitutes a “joint employer” relationship when it brought McDonald’s Corporation to the negotiating table with its franchisees and their employees. He also led the IFA’s efforts to challenge the classifying of franchises together with big business when Seattle decided to raise its minimum wage to $15 an hour, starting with big businesses.


The IFA’s opposition to AB525 seems out of kilter given that its membership is made up of 13,000 individual franchisees and only 1,400 franchises (although these include some of the world’s largest).

California Governor Jerry Brown signed the Bill into law this month. The NLRB went ahead with its expanded ‘joint employer’ definition in August. When Seattle’s minimum wage law came into effect in April, franchises were still lumped in with large corporations. All of which brooks the question:

Did Caldeira step down because he recognised the futility of trying to resist the winds of change in franchising?


“I am very proud of our accomplishments during my tenure to protect, promote and enhance the franchise business model,” he said in his resignation statement. But instead of focussing on ‘protecting’ the model, should he have spent more time on promoting and enhancing it?


But with the appointment of Robert Cresanti as Caldeira’s replacement (no doubt at a more affordable salary), it’s business as usual at the IFA – or should we say, politics as usual?


“The [franchising] industry is under horrific threat,” Cresanti told the Franchise Times earlier this year. “You’ve got minimum wage legislation, 30-hour work weeks, Obamacare—you’re talking about the death by a thousand cuts.”


What Cresanti failed to mention was that all businesses are facing these changes – not just franchise businesses.


I have a client who wants to franchise his successful business. He’s young, he’s dynamic and his business is driven by leading-edge technology. I asked him what made him choose franchising as his business expansion model.


“My business involves technology, but it also involves people,” he explained. “There’s no doubt in my mind that people perform best when they have a vested interest in the business they’re working in. That’s why I believe that franchising and high-technology will be a winning combination for me. Franchising needs to embrace change, not try to resist it, if it’s to stay relevant.”


I couldn't have said it better myself.


 

 




Article by Robin La Pere, No Ordinary Business and Franchise Consultants

Contact me at robin@noordinary.co.nz.





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Robin La Pere of No Ordinary Consultants has been working in franchising and franchise-related industries for many years. He has been a franchise manager and franchisor and believes that to be an effective franchise consultant, as he is now, it helps to have real hands-on experience in running a franchise, as well as strong strategy, analysis, people, system and coaching skills.







 

 

 

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