Ruling follows IFA challenge arguing noncompete ban exceeds FTC rulemaking authority; Protects franchised business operations

WASHINGTON – Following a decision from the United States District Court for the Northern District of Texas ruling that the Federal Trade Commission (FTC) exceeded its legal authority in issuing its sweeping ban on noncompete agreements, the International Franchise Association (IFA) issued the following statement:

“We applaud the decision by the Northern District of Texas vacating the FTC’s unlawful noncompete rule,” said Michael Layman, IFA senior vice president of government relations and public affairs. “Using the precedent from the Supreme Court decision overturning the Chevron doctrine, the ruling not only delivered the death knell to the FTC’s attempt to expand its rulemaking authority, but also agreed with the arguments raised by IFA in its amicus brief filed in the case that the rulemaking record, fraught with a lack of empirical data, does not allow for such a sweeping rule. The decision is a win for franchised small businesses and their right to independently operate.”

In May 2024, IFA filed an amicus brief challenging the rule arguing, “The FTC’s noncompete rule is arbitrary and capricious, and the FTC did not have the authority to issue the rule at all, much less in the manner it did.”

In April 2023, IFA submitted comments on the proposed rule, urging the FTC to avoid extending the noncompete ban to franchise agreements, saying, “A blanket ban on noncompete clauses in franchise agreements would be extremely damaging to the franchise business model, encourage breaches of contract, and hurt small business owners that depend on the viability of the franchise system to protect their equity in their franchised businesses.”

While the final rule did not apply to franchise agreements, IFA joined more than 280 organizations in opposition to the proposed rule and the FTC’s authority on the issue, saying, “We strongly oppose the proposal because noncompetes serve vital business and employee interests and because the FTC lacks legal authority to issue the proposed rule.” 

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Awards “Friend of Franchising” bipartisan endorsements in Michigan, Missouri, Hawaii, and Minnesota 

WASHINGTON, August 6, 2024 – The International Franchise Association (IFA) today endorsed seven bipartisan candidates ahead of their August primary elections, applauding their leadership on pro-business policies supporting America’s locally owned franchise small businesses. Named a “Friend of Franchising,” IFA endorsed candidates in Michigan, Missouri, Hawaii, and Minnesota.

“These candidates have proven that they are champions for America’s local franchise small businesses,” said Michael Layman, IFA senior vice president of government relations and public affairs. “In a political environment where franchises are under siege from misguided federal regulations, we need leaders like these who will prioritize policies to protect local entrepreneurs and all the good they do in the communities around them. Support for small business crosses party lines, and we are proud to support anyone who stands for our priorities.”

Below is the full list of August endorsements:

Michigan (August 6)

John James (R-MI-10)

Hillary Scholten (D-MI-03)

Tim Walberg (R-MI-05)

Missouri (August 6)

Jason Smith (R-MI-08)

Hawaii (August 10)

Ed Case (D-HI-01) 

Minnesota (August 13)

Tom Emmer (R-MN-06)

Pete Stauber (R-MN-8)

In addition to the these states, IFA has endorsed candidates in Georgia, Kentucky, Oregon, West Virginia, Indiana, Pennsylvania, California, North Carolina, and Texas this year.

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About The International Franchise Association: 

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 806,270 franchise establishments that support nearly 8.7 million direct jobs, $858.5 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and supplier companies that support the industry.

Labeling her “no friend of franchising,” IFA calls for bipartisan coalition to instill “fresh, commonsense” leadership at NLRB

WASHINGTON – The International Franchise Association (IFA) today released the following statement after the nomination of Lauren McFerran, Chairman of the National Labor Relations Board (NLRB), passed the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) along a 11-10 party line vote:

“As the architect of the ill-advised, expanded joint employer rule, Chair Lauren McFerran has proven she is no friend of franchising, and the defeat of her nomination is mission critical for the future of our business model,” said Michael Layman, IFA’s senior vice president of government relations and public affairs. “Just as common sense prevailed when a bipartisan, bicameral coalition of lawmakers joined together to stop her job-killing joint employer rule earlier this year, we call on members of both parties to halt her nomination and pave the way for fresh, commonsense leadership at the NLRB, not someone committed to the agenda of powerful special interests and union bosses. Our model is the best vehicle for upward mobility small business formation on Main Street, and it cannot exist with an expanded joint employer rule and an otherwise hostile NLRB.” 

McFerran’s current term is set to expire on December 16. In May 2024, President Joe Biden nominated her for a third five-year term, meaning if she is confirmed, the five-member board would continue to have a Democratic majority until August 2026.  

Last week, IFA signed a letter urging senators to reject her nomination in light of the mismanagement of the Board during her tenure, citing her, “malfeasance and mismanagement of the Board and her extreme policy agenda.” 

Issued in October 2023, the expanded joint employer rule would deem franchisors and franchisees jointly liable, taking away the independence of franchise owners – the hallmark of the franchise business model. When a similar rule was issued in 2015, it cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits. 

Earlier this month, the NLRB withdrew its appeal of the March 2024 ruling by the Fifth District Court of Texas that struck down the joint employer rule.

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IFA’s Open for Opportunity Roadshow amplified the economic benefits of franchising with top elected leaders and business owners at Little Caesars and Goldfish Swim School Franchising headquarters 

DETROIT – The International Franchise Association (IFA) brought its renowned Open for Opportunity Roadshow to the Detroit area this week, illustrating the countless benefits that the franchise sector provides to Michigan communities. On July 18 and 19, local franchise owners, franchise executives, elected officials, including Lieutenant Governor Garlin Gilchrist II and several Members of Congress, gathered for conversations on the generational wealth and upward mobility that franchising provides for people of all backgrounds.

“It’s no coincidence that Detroit is home to so many iconic and emerging brands creating small businesses in communities across America and around the world,” said Matt Haller, President and CEO of the International Franchise Association. “Our Open for Opportunity Roadshow brought together business owners from all backgrounds for conversations with lawmakers to discuss franchising success stories and the policies at the federal and state level needed for franchising to continue to open doors to small business ownership.”

“We were thrilled to host the Open for Opportunity roundtable at our headquarters and discuss our franchising success story that began with a single location in Detroit and grew to the third largest pizza chain in the world,” said Dave Scrivano, CEO of Little Caesars. “Combined with our innovation and high-quality ingredients, franchising has powered our growth and momentum and is a business model poised to continue its momentum well into the future.”

“Since opening our first franchise location in 2009, we have remained committed to going above and beyond for our franchisees in over 170 communities,” said Chris McCuiston, CEO and co-founder of Goldfish Swim School Franchising. “We are living proof to not only the testament of the model, but also the fact that franchising expands to all facets of life. Wherever franchising goes, economic success follows, and that success, in turn, supports our city, communities and neighbors.”

“With humble beginnings in the city known best for its association with the automobile, Ziebart has grown from one location on Harper Avenue 65 years ago to more than 400 franchise locations across 37 countries today,” said Larisa Walega, senior vice president and Chief Growth Officer for Ziebart. “We are living proof of the power of franchising, the doors it opens and the opportunity it provides. Our company and name may be all over the world today, but we’ve never forgotten where we came from, and are proud to provide complete car care solutions and exceptional workmanship to customers around the world as only a Detroit based company knows how to do.”

In 2023, more than 23,000 Michigan franchises provided more than a quarter million (252,414) jobs.

Detroit was the third stop of the 2024 Open for Opportunity Roadshow, following events in Phoenix and Atlanta. Since 2022, Open for Opportunity has visited Chicago, Minneapolis, St. Paul, Newark, the Meadowlands, Las Vegas, Dallas-Fort Worth and South Florida, among others. 

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About the International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 806,270 franchise establishments that support nearly 8.7 million direct jobs, $858.5 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.

About Little Caesars®:

Headquartered in Detroit, Michigan, Little Caesars was founded by Mike and Marian Ilitch in 1959 as a single, family-owned restaurant. Today, it is the third-largest pizza chain in the world, with restaurants in each of the 50 U.S. states and 28 countries and territories.   Known for its HOT-N-READY® pizza and famed Crazy Bread®, Little Caesars uses quality ingredients, like fresh, never frozen, mozzarella and Muenster cheese and sauce made from fresh-packed, vine-ripened California crushed tomatoes. The brand is known for innovation and is home of the exclusive Pizza Portal® pickup, a heated, self-service mobile order pickup station. Little Caesars is also the Official Pizza Sponsor of the National Football League.  An exceptionally high-growth company with over 60 years of experience in the $145 billion worldwide pizza industry, Little Caesars is continually looking for franchisee candidates to join the team in markets around the world. In addition to providing the opportunity for entrepreneurial independence in a franchise system, Little Caesars offers strong brand awareness with one of the most recognized and appealing characters in the country, Little Caesar. Little Caesars is proud to be part of the Ilitch Companies family of businesses.  

About Goldfish Swim School: 

Founded in 2006 by husband-and-wife team Chris and Jenny McCuiston, Troy, Michigan-based Goldfish Swim School provides swim lessons and water safety instruction to infants and children aged 4 months to 12 years. Classes are led by specially trained instructors in a safe, child-friendly environment using a research-based philosophy called The Science of SwimPlay®. Since opening its first franchised location in 2009, the brand has grown to more than 170 schools in over 30 states, with an additional 150+ in development. Goldfish is ranked No. 74 overall in Entrepreneur’s 2024 Franchise 500® and has been recognized as the No. 1 swimming lessons franchise for eight consecutive years, was named to Franchise Times’ Top Brand to Buy in 2024 and is rated as a Top Franchise by Franchise Business Review for 2024. Goldfish Swim School is currently in the process of expanding franchise opportunities throughout North America. For franchising information, go to www.goldfishswimschool.com/franchise-opportunities.

Stresses the need to remain vigilant to future NLRB threats of joint employer; urges Senate to reject the nomination of NLRB Chair Lauren McFerran

WASHINGTON – The International Franchise Association (IFA) today released the following statement after the National Labor Relations Board (NLRB) withdrew its appeal of the March 2024 ruling by the Fifth District Court of Texas that struck down the NLRB’s joint employer rule:

“This announcement means that the latest attempt to implement joint employer is finally finished and represents a landmark victory for franchise small businesses in communities across America,” said Matt Haller, IFA president and CEO. “The franchise business model is the best vehicle for American workers to generate upward mobility and create small business ownership from all walks of life. Make no mistake: while today’s news means the current threat is behind us,IFA will remain vigilant against any attempts to target the franchise model or our members.”

The expanded joint employer rule, issued in October 2023, would deem franchisors and franchisees jointly liable, taking away the independence of franchise owners – the hallmark of the franchise business model. When a similar rule was issued in 2015, it cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.

Haller also called for the Senate to reject the nomination of NLRB Chair Lauren McFerran, one of the architects of the proposed expanded joint employer rule, for a third five-year term. If McFerran is confirmed by the Democratic-controlled Senate, the five-member board would continue to have a Democratic majority until August 2026 when the term of Biden appointee David Prouty expires.

“We intend to work shoulder-to-shoulder with our bipartisan coalition of allies and champions in the House and Senate to prevent the NLRB from implementing the expanded joint employer rule by other means.”

In their ruling, the Fifth District Court ruled that the NLRB exceeded the scope of its authority and violated the Administrative Procedure Act (APA) by failing to respond to comments regarding the rule’s harmful economic consequences.

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MILWAUKEE – The International Franchise Association (IFA) today released the following statement on the selection of U.S. Sen. J.D. Vance (R-OH) as the Republican vice-presidential nominee:

“We applaud the selection of Senator Vance as President Trump’s running mate and are grateful for his support of the franchise business model and the nine million workers our members employ in every community across the country,” said Matt Haller, president and CEO of the International Franchise Association. “Senator Vance has stood up for franchising in the Senate, including opposing harmful regulations advanced by the Biden Administration, such as the NLRB’s expanded joint employer rule that would destroy America’s 800,000 local franchise small businesses.”

In April 2024, Senator Vance joined 49 other senators in voting for the bipartisan Congressional Review Act (CRA) resolution, H.J. Res. 98, overturning the National Labor Relations Board’s (NLRB) expanded joint employer standard. The bill passed the House and Senate on a bipartisan basis. When an expanded joint employer standard was implemented during the Obama Administration, it cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.

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Calls for FTC to Adopt IFA’s Responsible Franchising principles

WASHINGTON – The International Franchise Association (IFA) released the following statement in response to the Federal Trade Commission’s (FTC)’s actions today impacting the franchise business model:

“IFA agrees with bipartisan leaders in Congress that franchising democratizes the American Dream of business ownership,” said Matthew Haller, president and CEO of the International Franchise Association. “The FTC’s actions today are contrary to the reality that the vast majority of franchise relationships are working and that franchising continues to grow each year. We have long supported greater transparency and visibility in the franchise sales process, and IFA encourages the FTC to focus on improving the Franchise Rule by adopting IFA’s 2024 Responsible Franchising policy recommendations, which seek to empower prospective franchisees with the best information possible and clarify both parties’ obligations as part of a franchise agreement.

“Since the FTC issued its March 2023 RFI and IFA released its May 2024 Responsible Franchising platform, IFA has further urged the FTC to avoid broad, sweeping changes that do not consider the diverse nature of the business model. The FTC’s guidance today regarding fee disclosure in franchise agreements stands to unnecessarily restrict franchisors’ ability to innovate and evolve their system and damage the equity of franchisees for whom these FTC actions are purportedly taken.

“IFA will continue to work with the FTC to improve the model for all parties involved and the customers they serve.”

In May, IFA released a series of policy recommendations for franchisor, franchisee, and supplier members to strengthen the franchise relationship through improved pre-sale disclosure. These recommendations are the result of over a year of working group discussions comprised of representatives of the key stakeholders in franchising—franchisors, franchisees and suppliers working to improve the pre-sale process for all parties involved. 

In response to the FTC’s March 2023 Request for Information regarding the franchise relationship, IFA, along with thousands in the franchise community, responded to that request citing how the franchise relationship works as it is designed, while also suggesting commonsense updates to the Franchise Rule in line with IFA’s Responsible Franchising recommendations. 

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Leads coalition of 15 organizations in support for language in FY25 Appropriations bill; Provision would “prevent implementation of the NLRB’s onerous rule and protect small businesses and jobs across the country”

WASHINGTON, D.C. –The International Franchise Association (IFA) today led a group of 15 organizations in applauding appropriators in the U.S. House of Representatives for including language in the 2025 appropriations bill that would prevent federal funds from being used to administer, implement, or enforce the National Labor Relations Board (NLRB) expanded joint employer rule.

“By including language to defund the NLRB’s onerous joint employer rule, lawmakers have done a great service to small business and jobs everywhere,” said Michael Layman, IFA senior vice president, government relations and public affairs. “We applaud the Committee for prioritizing franchised businesses and urge all members to support this bill so that entrepreneurs can breathe easier knowing that joint employer won’t be implemented anytime soon.”

The letter, addressed to Appropriations Committee Chairman Tom Cole (R-OK) and Ranking Member Rosa DeLauro (D-CT), was issued ahead of the U.S. House Appropriations Committee Markup of the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act for fiscal year 2025. 

Read the full letter here.

Issued in October 2023, the NLRB’s joint employer rule would deem franchisors and franchisees jointly liable, taking away the independence of franchise owners – the hallmark of the franchise business model. When a similar rule was issued in 2015, it cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.

Bipartisan legislation to overturn the rule passed the U.S. House in January 2024 and the U.S. Senate in April 2024. In March 2024, the Fifth District of Texas struck down the rule following an IFA and coalition-led lawsuit, taking aim at the NLRB for exceeding the scope of its authority and violating the Administrative Procedure Act (APA) by failing to respond to comments regarding the rule’s harmful economic consequences.

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Ruling narrows “Chevron deference,” reining in excesses and overreach of federal agencies like NLRB and FTC and their ability to put forth policies impacting franchising

WASHINGTON – The International Franchise Association (IFA) today issued the following statement in response to the U.S. Supreme Court ruling in Looper Bright Enterprises, et al. v Gina Raimondo, Secretary of Commerce, et al., regarding the “Chevron deference” impacting an agency’s interpretation of federal statutes:

“This ruling will rein in the heavy hand of government agencies, which for too long have been left unchecked in their ability to make new laws outside the federal rulemaking process and around the will of Congress,” said IFA President and CEO Matt Haller. “Members of the franchise community applaud this ruling which will extend to policies coming out of the NLRB, Labor Department and Federal Trade Commission – agencies that have recently and consistently exceeded their authority.”

The ruling involves the application of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., or the “Chevron deference,” which has allowed federal agencies, such as the National Labor Relations Board (NLRB) or Federal Trade Commission (FTC), to operate outside of existing precedent and statutory authority, expanding the ability of an Administration to make new laws through the executive branch. In recent years, federal agencies have interpreted the Chevron doctrine to expand their authority and disregard precedent where the then-current Board majority disagrees, causing a flip-flopping of policy with every Administration change. This unpredictable change in policy has been at the detriment of franchised businesses which need certainty to operate.

On July 24, 2023, IFA joined an amicus brief from the U.S. Chamber of Commerce seeking limitation of the application of the Chevron doctrine to reduce the ability of agencies like the NLRB to continually change its position.

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