By Matt Haller and Danny Seiden
February 21, 2024
This column by International Franchise Association President and CEO Matt Haller and Arizona Chamber of Commerce & Industry President and CEO Danny Seiden originally appeared in the Phoenix Business Journal.
If America is the Land of Opportunity, then Arizona is opportunity’s leading outpost in the Southwest. Entrepreneurs and startups are flocking to Phoenix, Tucson, and other cities across the state, attracted by warm winters and a welcoming business climate.
In fact, the Grand Canyon State is consistently rated highly as a business investment destination, including a Top 5 Best States for Business ranking for 2023. Arizona notched 4th place in the nation last year for small business growth and has consistently been one of the top states for franchising.
According to the International Franchise Association’s newly released Franchising Economic Outlook, it is projected that 425 new franchised businesses will open in Arizona in 2024, creating over 5,500 new jobs. That means over 200,000 Arizonans will be employed by 18,559 franchise small businesses in the state.
What better place for IFA to launch its 2024 Open for Opportunity Roadshow than in Phoenix, America’s “opportunity capital.” Business and community leaders gathered this month at the Arizona Chamber of Commerce & Industry to discuss the importance of the franchise business model and the need to preserve, support and expand this vital sector of our economy.
Franchising is one of the greatest pathways to entrepreneurship. It allows an individual from any background to enter business for themselves, but not by themselves. Franchise owners enjoy all the independence of leading their own company, but also benefit from an established brand and a network of other entrepreneurs who operate their own establishments under the same umbrella.
The franchise business model is unique but often misunderstood. That can lead to unwarranted attacks on these local businesses, whether from lawmakers in Washington or our own state Capitol.
What more people need to understand is that franchised businesses are locally owned and independent, just like any Main Street mom and pop. Many people grab a morning coffee at Dunkin’, for example, without knowing it is owned and operated by a neighbor – probably right around the corner – who worries and strives to make that business a success. Franchises are also much more than just fast food. They’re everything from tutoring to car repair to home health care and more.
Franchising provides a pathway to business ownership for people who have historically faced significant barriers to entrepreneurship, including veterans, women and people of color. Black franchises earn 2.2 times more, on average, than other Black-owned businesses, and veterans comprise a stunning 14% of franchisees, although they comprise only 7% of the U.S. population.
Because these entrepreneurs come from the community, they understand local needs and give back through philanthropy and job creation. In 2023, the industry put more than $5.5 billion in Arizona workers’ paychecks, generated $19 billion in economic output, and contributed $8.2 billion to the gross state product. Looking forward, Arizona is predicted to be 8th in the nation for franchise business growth.
That’s why franchised businesses must be protected. On the national level, the entire franchise model is at risk from a new joint employer standard put forward by the National Labor Relations Board, which is set to take effect at the end of the month. As Arizona Sen. Kyrsten Sinema said when urging to overturn the new rule, “The proposal would expand and change the joint employer standard in a way that makes participating in the franchise model more difficult and more expensive. If enacted, it could lead to fewer small businesses and hurt job growth in Arizona and throughout the country.”
Once people open their eyes to franchising, they’ll see franchises everywhere – providing key products and services, employing their neighbors, and sponsoring the kids’ sports teams. The franchise model is a core reason that America is Open for Opportunity, and we’re sure that you, too, will support policies that help keep it that way.
Danny Seiden is president & CEO of the Arizona Chamber of Commerce and Industry; Matt Haller is president & CEO of the International Franchise Association.
