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International Franchise Association

Founded in 1960, the International Franchise Association (IFA) acts as a service and membership organization for franchisors, franchisees and suppliers, in representing growing business strategies. Franchising acts as a method of distributing products and services that involves a franchisor who lends its trademark and business system to a franchisee that pays a royalty for the rights of usage.

The many benefits of operating a franchise include added security, levels of independence, established brand name benefits recognition, association with a proven product and method, product quality and consistency, training, financing (if applicable), operational assistance, as well as increased spending and access to bulk purchasing.

According to studies, franchising has seen a steady growth over the past two decades, notably with franchise concept diversification and an explosion of entrepreneurial growth and development. Brands are growing in the United States and this can be attributed to the ability of a franchise to aggressively pursue respective markets, such as a shift toward information-based service, a growing demand for specialized services and an overall increase in minorities entering franchising. Inflation and access to capital also notably increase the feasibility for franchising.

To achieve an overall positive business climate, franchisors and franchisees commit to supporting and promoting the initiatives of the IFA and advocating adherence to the membership’s code of ethics, which provides a set of core values that are the basis for the resolution of the challenges that may arise in franchising relationships.

Accordingly, franchising typically emphasizes strategic policies in government relations, public relations as well as educational and professional development. The IFA places value on integrity by infusing high ethical standards into all organizational efforts and, by protecting, enhancing and promoting franchising, the IFA provides beneficial franchising information to all involved parties. Government relations of the IFA promote franchising growth through a regulatory climate that promotes and enforces legislative government in order to educate all levels of policymakers.

Dubbed as a strategic success for business growth, those involved in franchising acted in open communications to ensure best practices and solidification of public image and reputation, a method which can attract continuous and new investment and market share through serviceable outlets. The IFA encourages open communications for internal dispute resolution. As such, the IFA Ombudsman program is an able arbitrator that serves in assisting franchisors and franchisees in facilitating dialogue to resolve any potential dispute for an overall goal of ensuring best practices, trust and uninterrupted business growth.
According to the IFA, franchising serves as a unique model of a business relationship, allowing high levels of mutual independence to both parties, one of the most crucial pieces in establishing a franchise operation. Open and effective communication is a prime factor in the utilization, development and success of any franchising relationship to achieve essential consensus, collaboration, resolution, progress and overall innovation.

In financing a franchise, lenders seek strong business plans, while the franchisee is typically expected to provide a share of the necessary capital to begin the arrangement, through savings, stocks, capital, bonds, etc. Expectedly, the global economic downturn has made it difficult for franchises to create sustainable jobs and increase economic output. According to the IFA, healthcare reform, potential tax increases, pro-union organizing bills, energy regulations, immigration reform and a federal deficit means the franchise industry could face the most anti-business regulatory environments. During this recessionary period, loans and credit have remained tight, especially in the American economic landscape, but as financial conditions improve, its economic improvement can then measured over a period of following years, with recovery seen as gradual. According to the IFA, franchisees typically have an easier time securing bank loans than independent business owners as they are supported by an established trademark and the marketplace experience of their franchisor.

According to the IFA, the success of franchise systems depends on both franchisors and franchisees attaining set goals. IFA’s members believe that franchisors cannot be successful unless their franchisees are also successful and, on the contrary, that franchisees will not succeed unless franchisors are also successful. Mutual and fair commitment is a necessity from both sides. IFA members believe that franchisors and franchisees share the responsibility for improving the franchise system in rewarding both the franchisors and franchisees. According to the IFA, this level of commitment is fundamental to enhancing the franchising business environment.

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