July letter: A celebration of franchising

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by Chip Rogers, AAHOA President & CEO

Franchising has, for decades, been one of the most travelled roads to reaching the American Dream. From Smoothie Kings to Burger Kings and from Hampton Inns to Holiday Inns, entrepreneurs have found the combination of branding and locally owned small businesses to be a winner for everyone involved.

But now, this highly successful model finds itself under attack from bureaucrats in Washington, D.C. In August 2015, the National Labor Relations Board’s (NLRB) upended the long-established definition of the franchisor-franchisee relationship. The new version could put much of a hotel’s daily operations under control of the franchisor. This is the antitheses of the purpose for franchising and something both franchisors and franchisees adamantly oppose.

Sadly, without significant legislative intervention and/or the election of a pro-business presidential candidate, franchising as we know it may come to an end. Despite repeated warnings to lawmakers of the dangerous error in judgement by the NLRB, many members of Congress are simply beholden to organized labor.

This threat to the franchise model is why now is the critical time for hoteliers and small business owners to educate policymakers and American voters on the economic necessity of maintaining a thriving entrepreneurial community. Franchising is a valuable product of free and unfettered markets and of the American drive to create, compete and continually innovate.

The franchise model is arguably the greatest vehicle for success in American business today, and this is especially true among minority business owners. Indeed, it has been the path by which many AAHOA members have experienced their own success within the hotel industry. They chose franchising for many of the same reasons that they chose to come to the United States – the draw of professional independence, the pride of business ownership and the promise that hard work would be rewarded.

Big Labor has been hard at work this past year promulgating the falsehood that the current franchising structure allows – and even encourages – unfair compensation of employees. Despite the absurdity of this claim in a highly competitive marketplace, the message resonates with many who simply refuse to consider the facts. The hospitality industry has given opportunity to millions of first-time employees. It is the birthplace of many careers. And when opportunity is sacrificed at the altar of union wish lists, millions will be locked out of a starting shot.

In fact, this government regulation is further evidence of the strange misunderstanding of how business actually works. The relationship between satisfied employees and a profitable business is so well-documented it has become conventional wisdom. No one – least of all franchisees – stands to gain when employees are unhappy. Anyone who claims otherwise has a fundamental and very serious misunderstanding of how business actually works.

I urge everyone who cares about our national economic future to stand with AAHOA’s 15,000 members in support of franchising – a business model that has, for decades, consistently led to job creation, economic growth and fulfillment of the American Dream. If we allow misguided bureaucrats to chip away at the economic structures that make our country the Land of Opportunity, we will wake up one day in a place we no longer recognize.

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