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The International Franchise Association Convention in San Antonio Feb. 20 to 23 foretold a bright future for franchising, but with storm clouds on the horizon.

By Joel Buckberg

So many great ideas and business models jostled for a solid spot on the track for success at the International Franchise Association Convention in San Antonio Feb. 20 to 23. The marketplace for service providers to the franchise space was equally robust, as a marketplace with more than 800,000 business units, 9 million employees and nearly $1 trillion in gross sales merits attention.

The concerns of labor unions seeking to expand membership without regard to adverse economic consequences drive the federal regulatory apparatus into a higher gear. The issue of the joint employer definition under various federal labor and employment laws, and whether franchisors will be legally responsible for the workplace decisions of their franchisees, hangs over the franchise space like an ominous dark cloud over a picnic. Unfortunately, no one is sure where the shelter is or what it looks like, so uncertainty prevails.

The buzz about the non-regulatory environment was typically optimistic for this high-spirited entrepreneurial group. The NextGen program offered encouragement about millennials as business creators and developers, blending science, technology, customer service and a little moxie into a great recipe for success. One idea spoke loudly – the next generation is not like its predecessors. Service offerings will need to be more efficiently distributed, more personal and more user-friendly, at a competitive price.

General Stanley McChrystal offered great insights into adaptive organizations. He discussed why hierarchal organizations are fading in a world dominated by decentralized thoughts and actions, spawned by instant communication between people who have never met and share no common interests except in one product, service or idea.

Today, people who are connected by the services they deliver are empowered to be aggressive, bold and innovative on behalf of a larger cause. This phenomenon may present the most significant challenge to the franchise model, as product consistency and uniformity of expectations may give way to the exact opposite consumer preference. Will franchising survive the challenge? The convention and its attendees say, "Yes, we will adapt and survive."

Joel Buckberg is a shareholder with Baker Donelson’s Nashville office, where he leads the firm’s Commercial Transactions & Business Counseling Group and co-chairs its Hospitality Industry Service Team. His experience includes strategic planning and counseling clients on business transactions and operations, particularly in hospitality, franchises and distribution. He may be reached at 615-726-5639 or by email at jbuckberg@bakerdonelson.com.


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