A lifetime Las Vegas resident, Senator Catherine Cortez Masto (D-NV) is understandably familiar with the countless sacrifices made by those in the hospitality industry while also recognizing the trade’s importance in the country’s economy.
As an elected government representative – prior to her election to the Senate, she served two consecutive terms as Nevada’s attorney general – she developed a well-earned reputation as an advocate for seniors, women, and children while also championing causes that look out for those in the hospitality and tourism industries. She has been an outspoken voice in the struggle to get the Small Business Administration to take action against harmful practices in the franchise sector, and her office created a report that outlines many ways franchise operators are held at a disadvantage in the competitive marketplace.
We recently sat down with the senator to learn more about the personal importance of this issue, to get her take on the importance of legislation that protects franchisees, and find out what can be done to level the playing field between brand and franchise.
TODAY’S HOTELIER: CAN YOU TELL US A BIT ABOUT WHAT LED YOU TO WHERE YOU ARE TODAY?
SEN. CORTEZ MASTO: I’m a third-generation Nevadan, and my parents were always involved in our community. They taught my sister and me the value of public service. My sister is a school counselor, and I was Nevada’s attorney general for eight years before being elected to the U.S. Senate. It’s the greatest honor of my life to serve Nevadans, and I’m always working for common-sense solutions that will help lower costs, grow businesses, and support families across the state.
[L-R] AAHOA Lifetime Member Maulesh (MP) Patel, AAHOA Vice Chairman Bharat Patel, U.S. Senator Catherine Cortez Masto, and AAHOA Chairman Nishant (Neal) Patel met recently to discuss legislative actions to strengthen the franchisee-franchisor relationship. RAWF8/SHUTTERSTOCK.COME
TH: TELL US ABOUT YOUR WORK AS A CHAMPION FOR SMALL BUSINESSES AND FOR THE HOSPITALITY INDUSTRY.
SEN. CORTEZ MASTO: When our businesses and entrepreneurs succeed, we all succeed. Nevada’s small businesses, especially those relying on our travel and tourism economy, were hit hard during the height of the pandemic. My work in the Senate is focused on creating the economic conditions that help get new businesses off the ground and support the hardworking people behind every successful business.
[L-R] AAHOA Lifetime Member Maulesh (MP) Patel, AAHOA Vice Chairman Bharat Patel, U.S. Senator Catherine Cortez Masto, and AAHOA Chairman Nishant (Neal) Patel met recently to discuss legislative actions to strengthen the franchisee-franchisor relationship.
SEN. CORTEZ MASTO: Hospitality businesses drive our economy and create good-paying jobs, so it was critical for me to ensure they had the support they needed to recover. I worked to deliver relief to support hundreds of thousands of businesses and employees over the past two years, and I pushed for additional, targeted relief for our hospitality industry. I’ve also led bipartisan efforts to both secure the reauthorization of Brand USA through 2027 and provide it flexibility to help the tourism industry recover. Brand USA is a public-private partnership that enhances tourism and job creation across the country. As our economy continues to recover, I’m working to pass legislation that will help lower costs for business owners in the travel and tourism sector, improve our supply chain, and create good-paying jobs in in-demand industries.
SEN. CORTEZ MASTO: Small business owners should be treated fairly and have the support they need to be successful. I was alarmed at what I was hearing directly from franchise owners in my state. I’ve talked to franchise owners who’ve told me that some franchise corporations have given them overly optimistic revenue projections or locked them into unfair contracts. These practices can saddle small business owners with enormous debt and can cause them to lose the wealth they’ve spent a lifetime building. Corporations need to be held accountable for these unfair practices.We all know that owning a franchise business can be a great opportunity, but we need to make sure that bad actors can’t continue to treat entrepreneurs unfairly. Our small business owners don’t expect their businesses to be risk free. But if they purchase a franchise, they absolutely deserve to know what they’re getting into. Right now, that’s not always the case.
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TH: LAST YEAR, YOUR OFFICE RELEASED THE REPORT “STRATEGIES TO IMPROVE THE FRANCHISE MODEL: PREVENTING UNFAIR AND DECEPTIVE FRANCHISE PRACTICES.” WHAT PROMPTED YOU TO WRITE THIS REPORT AND WHAT ARE YOU DOING TO PROTECT FRANCHISEES?
SEN. CORTEZ MASTO: I’m focused on this issue because small businesses are at the heart of our local communities. When franchise businesses struggle, the neighborhoods they’re located in suffer, too. Workers lose jobs, and neighborhoods lose access to the services and economic activity those businesses provided. And let’s not forget, when the Small Business Administration (SBA) has to cope with high defaults in the franchise sector, it has to charge higher interest rates to other businesses, like hotel owners. That’s why my report calls for common-sense legislative, regulatory, and business reforms that will increase transparency and oversight within the franchise industry while enabling small business owners and franchisees to prosper.
At the end of the day, the ball is in franchise corporations’ court. In the interests of their own business model, they should work to ensure fair practices that let all franchisees succeed.
And I’ve done additional work to support franchisees. Just this year, I testified in front of the Small Business Committee about actions the SBA should take to prevent harmful practices in the franchise sector and increase transparency for prospective franchise owners. I’m proud that the FTC established a franchise complaint portal to help franchise owners express concerns, and they’re considering public comments for changes to the franchise rule right now.
At the end of the day, the ball is in franchise corporations’ court. In the interests of their own business model, they should work to ensure fair practices that let all franchisees succeed.
TH: AS A SENATOR, WHAT WOULD YOU LIKE FOR AMERICA’S HOTEL OWNERS – 80% OF THEM FRANCHISEES – TO KNOW ABOUT GETTING INVOLVED IN GOVERNMENT AND HOW THEY CAN HAVE AN IMPACT?
SEN. CORTEZ MASTO: I’ve worked in the Senate to support the hospitality industry and all the small business owners who keep it running. I always want to hear from the small business owners in Nevada and across the country about the challenges they face and ways the federal government can help address them. This is the time for franchise owners to reach out to their members of Congress and educate them about challenges in the franchise industry. And I hope the hospitality sector continues to collaborate in pushing for meaningful change and support for your vital industries.
