Franchise expo reflects renewed optimism for industry growth

Four hours after the ribbon-cutting to open the 21st Annual International Franchise Expo, several thousand of tomorrow’s would-be franchisees had already walked through the doors of the Jacod K. Javits Convention Center on the west side of Manhattan, exceeding foot traffic at last year’s expo in Washington, D.C. That is a staggering fact that combined with a near-record 347 exhibitors, reflected a heightened sense of optimism felt by industry executives.

“This is what these shows felt like in 2005,” said Jerry Crawford, President of Jani-King International, who was attending his first franchise expo in years. “Moving the show to New York was a tremendous success,” he said while pointing a swarm of attendees at his booth.

Franchisors pay several thousand dollars to exhibit at the three-day expo, and many said they were pleased with not only the number of attendees at the show, but the quality and seriousness of many prospective franchise investors.

“I was processing 10 leads per hour at the height of the show’s traffic,” said one franchisor in the personal services business line who preferred to speak anonymously.

“There seems to be some pent-up demand for growth by both franchise investors and franchisors,” said IFA Chairman Jon Luther. “There is a shift in the small business landscape, which reflects a growing awareness of franchising as a way to control your own destiny in a still challenging economic environment.”

Luther told FOX Business in a segment on June 14 that the industry is poised for growth of about 12,000 new establishments this year, which would create 177,000 new jobs, according to IFA’s midyear economic forecast. “While not back to pre-recession growth rates, we are forecasting growth across all business lines in the industry for 2012,” said Luther.

Some franchisors said they were using the show as a means to achieve aggressive growth plans they have set forth for this year.

“The IFE was a huge success for us this year,” said John Twist, Vice President of franchise and business development for Batteries Plus. “We were able to connect with multiple candidates who own cell phone stores, hardware stores and restaurants all looking for the next lucrative opportunity to invest in. For most people, the show was their first exposure to our brand and concept, and the reception was extremely positive. We walked away with some solid leads that most definitely will translate into sales.”

 

Others franchise executives used this year’s IFE to gauge the marketplace for future growth plans and get a sense for the type of franchise investors who are out there looking to buy concepts in the current economy.

“When we sell any franchises, especially the first or second one, it needs to be the absolute perfect fit,” said Cheeseboy Founder and President Michael Inwald, who has eight corporate locations in the Northeast and has been testing the waters as his “grilled-cheese to go” concept plans its franchising strategy.

Amendment to Stop Micro-Unions Fails in Committee

Yesterday, Sen. Lindsey Graham (R-SC) proposed three amendments to the 2013 Labor / Health and Human Services appropriations bill that would overturn recent National Labor Relations Board (NLRB) decisions involving union elections.  Most notably, one amendment would have prohibited NLRB from using funds to enforce the Specialty Healthcare rule, in which NLRB opened the door for the creation of micro-unions.  The amendment failed by a vote of 15-15, while amendments to prohibit “ambush elections” and card-check elections also failed by votes of 13-17 and 14-16, respectively.  Read the press release from Sen. Graham’s office here.

Sen. Lindsey Graham (R-SC)

On Wednesday, Sen. Graham joined several associations on a media call to discuss how the NLRB micro-union decision will create division in the workplace and undermine job creation.  Saying that “The NLRB is the Grim Reaper of job creation”, Graham discussed the amendments he would introduce the following day in the Appropriations Committee to restrain the NLRB.

The Coalition for a Democratic Workplace, of which IFA is a member, submitted an amicus brief to the National Labor Relations Board regarding a representation case involving the department store Neiman Marcus, where a bargaining unit of sales people in the women’s shoe department was found to be appropriate by an NLRB Regional Director.  This is a perfect example of how the new micro-union standard in Specialty Healthcare is being applied to representation cases.  Read the amicus brief here.

House Committee Debates Temporary Business Tax Provisions

The House Ways & Means Subcommittee on Select Revenue Measures held a hearing today on the Framework for Evaluating Certain Expiring Tax Provisions.  The Members of Congress questioned several economist witnesses on how to best analyze the value of expiring tax provisions, and by which metrics they should be judged.  Alex Brill, a Research Fellow at the American Enterprise Institute, urged the committee to consider how a certain provision affects the economy as a whole as opposed to only examining the direct impact on the provision’s targeted industry.

The witnesses were unanimous in their dislike of temporary provisions, arguing that they create uncertainty for businesses.  Dr. Jim White of the Government Accountability Office advised the subcommittee to clearly define the goals of each program to determine its permanence.

Aaron Goldstein, the Undersecretary for Housing and Community Development in the Commonwealth of Massachusetts, expressed the importance of continuing many credits before tackling tax reform, as they have a profound impact on the lives of many.  He cited the development of a new hospital in Holyoke, MA that has created many jobs and is an important factor in the revitalization of the city.

Members of the Subcommittee emphasized the need to analyze programs pragmatically and empirically, and stressed the gravity of their task in the greater context of comprehensive tax reform and tackling the budget deficit.

New Poll Reveals Broad Opposition to Health Care Law

More than two-thirds of Americans hope the Supreme Court will overturn some or all of the 2010 health care law, according to a new poll conducted by The New York Times and CBS News.  Just 24 percent said they hoped the court “would keep the entire health care law in place.”

The poll reinforces findings from IFA’s 2012 Member Survey, in which franchisees listed health care as their top economic concern. Concerns about health care mandates and regulation dimmed the business outlook for franchisees — the industry’s major employers — just 22 percent said they expect the economy to be “better” in 2012, compared to 47 percent one year ago.

In the CBS News/New York Times poll, there was greater Republican opposition to the law than Democratic support. About two-thirds of Republicans in the recent survey said the entire law should be overturned, while 43 percent of Democrats said all of the law should be upheld.

In a key finding, more than 70 percent of independent voters said they wanted to see some or all of the law struck down, with a majority saying they hoped to see the whole law overturned. Twenty-two percent of independents said they hoped the entire law would survive.

The Supreme Court is expected to decide on a challenge to the law by the end of this month.

 

Are You Ready for Private Equity?

With growing interest in franchising, private-equity investors are signing up for the first-ever “Private Equity and Franchise Finance Bonus Session” during IFA’s International Franchise Expo, Thursday, June 14, 1p.m.-5 p.m. at the Javits Center in New York City. The session will offer a preview of private-capital opportunities and a networking session with investors.

Investors from The Riverside Company and TZP Group, as well as experts from The McLean Group and DLA Piper, will preview private-equity opportunities and trends. Then, Franchise Times Publisher Mary Jo Larson gathers franchise leaders to review the latest trends and options in franchise finance from senior debt to SBA loans, including: Continue reading

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