2 0 1 0 A n n u A l R e p o R t - International Franchise Association

Tax Relief
IFA joined other business groups
in supporting the extension of expiring
pro-growth tax relief enacted in 2001
and 2003. President Obama extended
the tax rates in December 2010. IFA’s
priority is to ensure fair tax policies for
small businesses. IFA is also focused
on achieving meaningful estate tax relief
for small businesses and reforming
the ability of states to tax out-ofstate
franchisors under the theory of
economic nexus.
Consumer Financial Protection –
FTC Rulemaking Authority
President Obama signed sweeping
new legislation to provide increased
oversight over the financial services
sector in July 2010. The IFA worked
tirelessly with a broad coalition of
industries to ensure that reforms to the
financial services sector did not spill
over into franchising. IFA defeated
a provision in the House version of
financial services reform containing a
damaging proposal to lift the decades
old Magnuson-Moss rules on FTC
rulemaking authority. Congress
specifically enacted the Magnuson-
Moss Act to restrain the over-reaching
FTC of the 1970s that had infamously
become the “nation’s nanny.” The
threat from this House language
remained viable until the final hours of
conference committee consideration
when a bipartisan group of senators led
by Sen. Chris Dodd (D-CT) defeated
the last of several amendments in the
Conference Committee process from
the House that would strip out the
Magnuson-Moss provisions.
arbitration fairness act
In the only federal legislative battle
directly impacting franchising in 2010,
the IFA fought House and Senate
legislation to enhance the ability of trial
lawyers to bring franchise disputes
to court rather than arbitration. The
Arbitration Fairness Act (H.R. 1020/S.
931) was introduced in Congress by
Rep. Hank Johnson of Georgia and
Sen. Russ Feingold of Wisconsin to
establish that agreements to arbitrate
employment, consumer, or franchise
disputes will not be enforceable if they
are entered before the actual dispute
arises.
As the House Subcommittee was
preparing for a markup of the Arbitration
Fairness Act, the IFA was able to
secure commitments from committee
leaders for a proposed amendment
that would have dropped franchising
from the bill’s provisions. Although the
bill’s consideration was subsequently
postponed, it was an important victory
to secure language for a possible
amendment that would protect
franchising.
state legislative activity
Independent Contractor/
Massachusetts
Following a March court ruling
that dealt a negative precedent for
franchising, IFA has redoubled its efforts
to amend state law to protect franchising
in Massachusetts and two dozen
other states regarding the definition of
independent contractor status. IFA is
coordinating a multi-front educational
and advocacy effort to illustrate the
important role of the franchising
Page 11
business model in small-business
ownership, and IFA aims to clarify
through the legislative process that the
franchisor-franchisee relationship is not
an employment arrangement. This tactic
proved successful in 2010 in Oklahoma,
and IFA will devote significant time and
resources to replicating that success
elsewhere in 2011.
Georgia
In November 2010, Georgia voters
overwhelmingly approved a constitutional
amendment on the treatment of noncompete
agreements in the state.
Passage of Amendment 1 will resolve
a long-standing issue of how to treat
competitive contracts for franchise
companies and employers in Georgia
and bring the state into alignment with
most other parts of the country.
IFA and its Franchise Congress
program played a leading role in the
Georgia-based Jobs of Tomorrow
coalition (www.jobsoftomorrow.org) to
promote enactment of the ballot question.
North Carolina
Two pieces of legislation were
considered in the North Carolina
House of Representatives this summer
that would have given the franchise
community reason for concern. The
North Carolina Franchisee and Business
Opportunity Purchasers Protection Act
(H 2036) was introduced on May
25, 2010 by Rep. Darrell McCormick
(R-Winston-Salem). This legislation
would have created new filing
requirements for franchisors in the state,
and would have provided a new private
right of action for aggrieved franchisees.
The IFA worked tirelessly with a broad coalition of industries to ensure that reforms
to the financial services sector did not spill over into franchising.
IFA 2010 Annual Report // 50 Years of Excellence, Advocacy and Education
11