On Wednesday, March 16, 2022, Authority Brands attended a U.S. Senate Small Business Committee hearing titled Small Business Franchising: An Overview of the Industry, SBA’s Role, and Legislative Proposals. The International Franchise Committee (IFA), who was asked to provide an expert witness on this topic by Committee Chair Sen. Ben Cardin of Maryland, selected our very own Chief Operating Officer of The Cleaning Authority, Leanne Stapf. As a franchise owner herself, Leanne spoke before the Committee to offer her expertise and experience of the way franchising changes lives and entire communities. We are proud to share her verbal testimony with you today.
I am both a franchisor and franchisee, and I appear before you today on behalf of the International Franchise Association.
In our view, at this stage of the economic recovery, the state of franchising has never been stronger. While our businesses need more workers, today franchisee satisfaction has never been higher. According to Franchise Business Review, 88% of franchisees say they enjoy operating their business.
Franchises have led the economic recovery, with the highest growth rate since we have been tracking data, reaching nearly 775,000 total franchise establishments in 2021 and achieving an astounding 16.3% growth in output.
Mr. Chairman, franchising remains the ultimate, hybrid business model between standalone small businesses and big corporations, and this model continues to empower people from all backgrounds to achieve their dream of business ownership more than any other format in America.
I have seen firsthand how franchising can change lives and change communities. Franchising democratizes business ownership for people of all backgrounds.
To be clear, I would not own a business if not for franchising. And according to recent research by Oxford Economics, 32% of all franchisees report they would not own a business if they were not franchisees. This proportion is even greater among both female owners and owners for whom a franchise was their first business (39%). Franchising also boasts a higher ownership rate by People of Color than among non-franchised businesses.
There are so many of us that have an entrepreneurial spirit, but don’t necessarily have the expertise to be efficient at all aspects of running a business. A franchise offers that structure, that framework, to save massive amounts of time, money and frustration.
I came into franchising after starting my career in computer programming. I was looking for the next step in my career and ready for a lifestyle change that allowed me to be with my family more, and I found a job description matching my technical expertise that came up for The Cleaning Authority. Soon afterwards, I was hooked.
I am so proud of what The Cleaning Authority has accomplished for the more than 200 communities we operate in. Through our TCA Cares program, which was designed by franchise owners and facilitated by the franchisor, we have had 12 food drives, collecting over 1 million pounds of food—equal to 894,000 meals to over 600 food banks within our communities.
Last year, our first coat and outerwear drive last year we saw almost 10,000 articles of clothing donated. We also award ten $1000 scholarships to employees and their dependents of The Cleaning Authority to align with our mission to positively impact the quality of life of the people we employ.
Our story is not unique. The Oxford Economics research referenced in my testimony showed that some 65% of franchisees give to local charities, and they donated a total of $1.5 billion to charities last year. In addition, franchisees purchase significant percentage of their inputs from local suppliers, thus contributing to their local economies through their supply chains. Without franchise small businesses – if franchises were replaced by big corporations on Main Street – all of this community investment goes away.
I want to close by noting that IFA is very supportive of SBA loan programs. These loan programs are essential to giving opportunity to those who may not have access to capital.
IFA is also very supportive of the FTC Franchise Rule, which provides the guidelines for the disclosure the majority of franchise brands provide to empower franchisees.
You might have heard an old saying: If you want to go fast, go alone. But if you want to go far, go together. I believe America needs to go far. I believe we need to go together. And I believe we can do it by keeping franchising alive and well.
We hope senators will continue to support the franchise businesses in the states, and I would be happy to answer any questions you may have. Thank you.
Read Leanne Stapf’s full testimony.