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Ten Most Powerful Franchise Associations

When it comes to industrial might and lobbying power, the franchise industry is lopsided. A few big groups have the lion's share.  Blue MauMau attempts to rank the ten best-known and influential associations.

Franchise Association

Revenue ($1000)

PAC (x$1,000)

Paid Members

Auto Dealers (NADA)

$45,000

$5,100

       17,000

Franchising Firms (IFA)

$10,578

$315

         2,238

Hotel Owners (AAHOA)

$6,200

$300

       10,216

7-Eleven (NCASEF)

$4,000

$2,500

         3,500

Burger King (NFA)

$1,200

$200

         5,200

KFC Franchisees (AKFCF)

$1,100

$150

             600

Subway (NAASF)

$650

$0

         4,000

Franchisees & Dealers (AAFD)

$300

$0

             400

Coalition of Franchisee Assns

-

$20

                 8

International Assoc. (IAFD)

-

$0

                 3

It is not a complete list. Although 130 of an estimated 250 franchisee associations in the U.S. are listed in Franchipedia, a social media-based wikipedia for the franchise industry, many remain in the background, unnoticed by almost all.

Survey sources

The Asian American Hotel Owners Association (AAHOA) and the International Franchise Association (IFA) provided numbers to Blue MauMau. A representative for the National Automobile Dealers Association (NADA) provided guidance. The numbers for all other groups were much harder to obtain and are this journal's best guess, with the help of group and industry insiders. The revenues and paid members are for 2009. PAC money is for the end of the last election cycle, 2008.

Franchise associations range from representing franchising firms, like the International Franchise Association largely does, to those who solely represent owner-operators under a single brand, like the National Franchisee Association, which represents Burger King franchisees.

Source: Blue MauMau estimates

Who has the most clout on Capitol Hill?

Does the amount of money that an association gathers determine power? Is it the size of their PAC funding, the political action committees organized by associations to elect candidates and push for political legislation? Or is it the active members that the association represents, particularly those who vote in a congressional district?

Small business strategy consultant Peter Birkeland, Ph.D, observes, "At the congressional level, members of congress want votes." He says that if you want to know which trade association has the most influence, look for the association who can claim the most active small business members at the heart of a congressperson's district. "A savvy representative of an association will try to convince legislators that 98 percent of their members want to, say, keep minimum wage at its current level," declares the franchisor advisor and author of Franchising Dreams. Birkeland thinks that a show of activism in a congressional district is key in getting congressional support for a franchise issue.

The absolute mightiest by a large margin, no matter how you slice and dice influence, is the National Automobile Dealers Association, which represents 17,000 franchises.

NADA championed the "Cash for Clunkers" law from the Hill. And just this month, NADA worked closely with the Committee to Restore Dealers Rights in successfully pushing Congress to pass a new arbitration system regulating how carmakers decide to close dealerships. The dealers had a year-long battle with franchisors General Motors and Chrysler, which received tens of billions of dollars in bailout money, while attempting to close more than 2,000 dealerships across the country to restructure their franchise systems.

The group raised $5.1 million for political activism in 2008. OpenSecrets.org, an independent site that tracks influence peddling, ranked NADA in 2008 as the sixth biggest PAC contributor of all, not just franchise-related, in its top 20 list. It received $45 million in revenues, despite 2009 being a terrible year for auto dealerships. Established in 1917, NADA is the oldest franchise association in the United States.

Source: Blue MauMau estimates

That title ruffles the feathers of those who would like to lay claim to it. Some argue that automobile dealers are not business-format but rather product distribution franchises, much like a Coca-cola or Budweiser bottler that packages and distributes beverages. Critics imply that being a product-distribution franchise association would disqualify NADA as a true franchise association (translation: business-format).

 But the Coca-Cola bottling model does not accurately describe the modern automobile dealer. Attorney Robert Purvin, founder and chair of the American Association of Franchisees and Dealers, reminds franchise watchers and experts that over the past forty years, "Auto dealerships both new and used (e.g. CarMax) have clearly evolved to present a business format associated with a brand." Their franchisors, the automakers, focus on the entire business-format of each dealer, including marketing, selling, space layout, design, finance and operations. Failure to meet business standards can end in termination of the dealership.

Established in 1960, the International Franchise Association lobbies that both ends of the franchise spectrum have a voice in its organization, the franchising firms that sell franchises and the franchisees who are sold those licenses. Out of 3,500 estimated firms that sold franchises domestically in 2009, some 1,070 were paid members of the IFA. Another 535 members were vendors selling products and services to those chains and 633 paid members were franchise owner-operators.

Source: Blue MauMau estimates

The National Coalition of Associations of 7-Eleven Franchisees successfully lobbied Capitol Hill this month to lower increasingly high merchant fees when customers swipe their credit cards to pay for goods.

Besides the few powerhouses, the bulk of associations are poor. Yet, what these associations lack in capital, they make up for in raw membership numbers.

Trade group coalitions

Others are umbrella groups, also known as federations of associations. These are the American Association of Franchisees and Dealers, the Coalition of Franchisee Associations, and the newly formed International Association of Franchisees and Dealers. These groups, geared to assist and train independent franchisee groups to be better associations, are among the poorest.

Strictly by the numbers, none of the umbrella organizations on the bottom of the table should be ranked in the top ten. There are many franchisee associations that have considerably higher revenues and more paid members. It is often an existential challenge for these federations of franchise associations to meet administration expenses. It is this journal's estimate that these federations did not reach $200k in revenues in 2009.

The year 2010 looks to be even tougher. The indebted AAFD had to cancel its spring convention this year because it was mired in financial problems and disagreements with members. Leaders and independent franchisee associations left the group to form the International Association of Franchisees and Dealers. Despite extreme poverty, these umbrella associations are a vocal lot, with their wealthier franchisee associations exerting strong influence. But neither the AAFD nor the IAFD have any desire to get involved with lobbying.

On the other hand, the impecunious Coalition of Franchisee Associations, with its eight trade group members, does lobby. The Washington D.C.-based group pushed successfully for the Rhode Island Fair Dealership Act. Despite the Goliath-like International Franchise Association's attempts to stop the bill, the franchise relationship bill became state law in 2008, the first bill of its kind since Iowa's in 1992.

Sources: Members or staff of trade associations / PAC numbers are publicly disclosed and were searched at FEC.gov and OpenSecrets.org


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Staff reporter for Blue MauMau