The International Franchise Association (IFA) has strong connections in Washington D.C. Their CEO and President, Robert Cresanti, CFE, states in his LinkedIn profile that he worked on Capitol Hill in key positions for almost a decade.
“In his nearly decade-long service on Capitol Hill, ranging from Committee Chief of Staff in the Senate to Legislative Counsel in the House, he handled legislation before the Banking the Banking, Judiciary, Commerce, Government Affairs and Finance Committees.”
Between 2009 and 2014 when he was hired by the IFA, his job title was VP of Corporate Affairs and Government Relations. The IFA clearly hired a leader who could help them in Washington.
Screenshot taken August 12, 2019:
The IFA is currently lobbying against Senator Cortez Masto’s new SBA Franchise Loan Transparency Act. If passed, the bill would protect taxpayers and would take a small step towards protecting franchciSEES from fraud endemic in the franchise industry.
FranchiSORS don’t want any change to the status quo because they’re using franchiSEES’ money to expand their businesses without any risk. FranchiSEES take the entire risk and often lose everything — including their homes.
The IFA’s decision to lobby against the new bill contradicts their public claims regarding their commitment to improving pre-investment disclosure.
“Through the considerable and continuing efforts of our association and its members, the IFA has contributed to the growth and stability of franchising in the United States. It is because of the historic and continuing efforts of the IFA and its members to improve pre-investment disclosure and advance beneficial franchising practices that franchising is one of the most important vehicles today for the creation of small businesses ownership and jobs in the United States.”
According to numbers recently released by Franchise Grade, somewhere around 78% of the new franchise locations opened between 2010 and 2018 are not longer in operation. It’s not too far of a leap to presume that 78% of the 456.9 billion that franchiSEES invested in the United States franchise industry is now in someone else’s hands.
That calculates out to be $357,100,000,000. That’s a lot of zeroes folks!
And franchiSEES are pretty dang mad about that. Rightfully so. Wouldn’t you be mad if you had been defrauded into making an investment that caused you to lose not only a hefty initial fee (the franchise fee), but to sign SBA loan documents and a franchise agreement with a personal guarantee?
A significant amount of franchiSEES’ $459.6 Billion (yes with a ‘B’) went to the franchiSORS who used the franchise system to defraud them.
And now, when the franchiSEES try to pass legislation that would begin the path of reform and fraud protection, the IFA lobbies against them.
Chances are that the IFA will win. Franchisors have a lot more money to invest in lobbying than do franchiSEES. And they’ve won before. In 2017, a Fair Franchise Act was introduced to the house. It would have significantly reduced franchise fraud and may have leveled the playing field in the franchise industry. It didn’t get anywhere.
We can assume the franchiSORS lobbied against it, too.
The IFA claims that it is committed to “truth, trust and honesty between franchisors and franchisees.”
“The public image and reputation of the franchise system is one of its most valuable and enduring assets. A positive image and reputation will create value for franchisors and franchisees, attract investment in existing and new outlets from franchisees and from new franchise operators, help capture additional market share, and enhance consumer loyalty and satisfaction. This can only be achieved with trust, truth, and honesty between franchisors and franchisees.”
Screenshot taken August 14, 2019:
The franchiSEES aren’t feeling it.
The franchiSORS have the money. The franchiSORS have the power. The franchiSORS have strong connections in Washington, D.C.
And the franchiSORS are lobbying against the franchiSEES and the taxpayer to ensure the status quo doesn’t change so their billions can keep on rolling in.
That’s about the size of it, folks. This is endemic franchise fraud and many many people and organizations are complicit.