It appears that every year or so, franchising comes under attack. In September 2019, this very column discussed: “Is the Franchise Model Under Attack?” And yet, since then, franchising shows no signs of slowing down. Of course, certain franchise areas, in particular, travel and hospitality, saw slower growth, significant closures and layoffs during the COVID-19 pandemic. But other franchise areas saw just the opposite, e.g., commercial/residential services, real estate, and retail food, products and services all saw growth. And projections for franchise growth in 2021 do not indicate any significant slowdown in franchising in 2021 or beyond. FRANdata’s 2021 Economic Outlook for Franchising projects an increase of $100B in economic output from franchising in 2021, as well as an increase of almost 700,000 new jobs.
The most recent threat to franchising could likely be viewed as a by-product of the COVID-19 pandemic. Layoffs and other hardships experienced by many U.S. workers during the pandemic exposed a myriad of wage and labor issues resulting in increased unionizing. And, as a result of increased unionizing activity, employers pushed back. Not surprisingly, there is new legislation being proposed at the state and federal levels that seeks to address these issues. Right or wrong, left or right, blue or red, it’s important to know what the legislation provides, consider the consequences, and determine the manner in which franchising parties may avoid or mitigate them, if necessary.
PRO Act
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