2021 IFA Annual Report

2021

AN N U AL RE P ORT

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“

2021 was a year of rebuilding for the organization and our members, but also a year of reflection and a chance to look at what lies ahead.

Together, our future is bright.”

- MATT HALLER President & Chief Executive Officer

A NOTE from the CEO 2021 saw a strong rebound for franchising and the International Franchise Association. The resilience of the business model, and especially those who comprise it, drove the year and the strength behind it.

After navigating one of the most challenging years in our nation’s history, we have seen record-setting growth, including over 660,000 new jobs in franchising in the U.S., nearly 22,000 new establishments, and growth in every sector (p. 2-3).

The International Franchise Association also felt this resurgence, with an 81% member retention rate at the end of the year. During the height of the pandemic and lockdowns, franchisors and franchisees alike quickly realized the value in having their voice heard in Washington (p. 6). After fighting to ensure franchises were included in the original 2020 round of the Paycheck Protection Plan, IFA kept up the fight to include businesses—like ours—that were disproportionally affected in any additional legislation.

With the new year brought a new Administration and a new Congress, all under the control of one party. This meant a change in the direction of policies from the previous four years, as well as new proposals and nominees that could adversely impact the business model. Because of IFA’s intentional approach and your support, we were prepared for this change. For example, on the federal level, we successfully fought back the nomination of David Weil to lead the Wage and Hour Division of the Department of Labor. On the state level, we prevented the FAST Recovery Act in California from coming to a vote in 2021(p. 8).

While learning and professional development has always been central to the organization, we made big moves to reimagine the Certified Franchise Executive (CFE) program, transitioning the program from the IFA Foundation to IFA and placing it at the center of the member value proposition. We expanded several partnerships, including Franchise Update Media and MFV Expositions, to streamline events and bring members the content they want, when and where they want it (p. 10).

We also held our first virtual annual meeting. While it wasn’t the same as being together, we had 2,183 attendees, 93 exhibitors, and some great discussions about the uncertain times we have been facing.

We look forward to being back in person in February 2022 in San Diego.

One of the key highlights of the year is the launch of the Open for Opportunity campaign (p. 4).

Developed to increase understanding, support for and interest in franchising by highlighting the stories of franchise owners around the country, the campaign officially kicked off in September on Capitol Hill and will embark on a roadshow to convene and educate local influencers early next year. One of the centerpieces of the campaign is our new report The Value of Franchising that shows the strength of the business model, the opportunities it provides to underserved communities, and its performance with better wages, benefits, and growth as compared to independent businesses.

2021 was a year of rebuilding for the organization and our members, but also a year of reflection and a chance to look at what lies ahead. After a decade in service to franchising, it has been an honor to lead the organization on our journey to protect, enhance and promote franchising in partnership with you.

The programs, stories and wins cataloged in this report are just the beginning. Together, our future is bright.

Sincerely,

Matt Haller President & Chief Executive Officer

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BY the NUMBERS The pandemic and the economic recovery that followed showed the strength of the franchise business model and the value of franchised brands. Franchising helped lead the economic recovery in 2021, and IFA membership reflected that strength – with new members, strong retention, and increased revenue and engagement.

2021 MEMBERSHIP at a GLANCE 81%

FRANCHISOR RETENTION RATE

77%

SUPPLIER RETENTION RATE

1,100 SUPPLIERS 560 NEW MEMBERS 52 BRANDS

(28 franchisors and 24 suppliers)

30,000

IFA is how we learned to build a great brand.”

- JEFF DUDAN Founder & Chief Executive Officer AdvantaClean

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VIRTUAL MEETING ATTENDEES

100,000+

FRANCHISE ACTION NETWORK MEMBERS WITH 30,000+ LEGISLATOR CONTACTS

775,000

8.2

ESTABLISHMENTS

2.8

MILLION JOBS

%

FRANCHISING in 2021

FRANCHISE GROWTH RATE

3

%

OF GDP

16.3

788

%

$

OUTPUT GROWTH

BILLION IN OUTPUT

Source: IFA 2022 Franchising Economic Outlook

9.2

%

WAGE & SALARY

FRANCHISE WORKERS GAINED

4.7

%

HOURLY EARNINGS

Franchisee satisfaction is at an

ALL-TIME HIGH 88% of franchisees have a favorable approval rating of their franchisor - Franchise Business Review

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OPEN for OPPORTUNITY Launched in September 2021, the Open for Opportunity campaign tells the story of franchising through the individuals who make it happen.

The campaign, coupled with the release of new research from Oxford Economics called the Value of Franchising, seeks to change public perception of franchising – showcasing the stories of individuals and the impact they are making in communities around the country. The multi-year, multi-channel campaign focuses on four pillars – workforce, community, diversity, and veterans – and the opportunities franchising has created in each of these areas. Open for Opportunity will hit the road in 2022 – touring key U.S. markets and visiting with the individuals who bring these opportunities to life to share their story elected officials, business groups, academics, and all those whose influence touches the franchise business model.

FRANCHISING IS DIVERSE Franchising is not just, or even primarily, fast food. Only 1/4 of franchises are quick service restaurants.

FRANCHISES ARE GOOD FOR WORKERS Franchises offer pay, benefits and training that are equal to or better than comparable non-franchise small businesses.

FRANCHISES MEAN OPPORTUNITY Franchising offers a wider and safer path to entrepreneurship for all Americans, but especially to new entrepreneurs, communities of color, women and veterans.

FRANCHISES ARE LOCAL 4

Franchises are locally owned, keeping resources in the community and making franchise businesses more likely to give back

U.S. Rep. Kevin Hern (R-OK) and former McDonald’s owneroperator speaks to attendees at IFA’s Leadership Summit reception on Capitol Hill.

Learn More. Get Involved. Visit openforopportunity.com 5

PROTECT

After advocating for much-needed COVID-19 relief including the Paycheck Protection Program (PPP), the Employee Retention Tax Credit (ERTC), the GYMS Act, and other programs, IFA showed why having a seat at the table is critical during times of crisis. Leading into 2021, IFA continued to ensure the fair treatment of franchises in relief measures, such as securing full deductibility of business expenses on forgiven PPP loans for both “first” and “second” draw loans, and ensuring franchise restaurants were included in the “restaurant revitalization fund.”

FEDERAL

After advocating for much-needed COVID-19 relief including the Paycheck Protection Program (PPP), the Employee Retention Tax Credit (ERTC), the GYMS Act, and other programs, IFA showed why having a seat at the table is critical during times of crisis.

With the Biden Administration vowing to be the most prolabor in history, IFA led the effort in Congress to defeat labor’s number one priority, the Protecting the Right to Organize (PRO) Act, which, among other things, would codify an expanded joint employer rule and an expanded independent contractor test in federal labor law.

The new Administration also nominated Labor Studies Professor David Weil, an unabashed critic of franchising, to return to his Obamaadministration post at the Department of Labor, which IFA successfully stalled for the year. IFA also engaged in litigation to preserve the narrow joint employer standard implemented in 2020.

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Dunkin Donuts franchisee Jerome Johnson and California Closets franchisee Joe Lindenmeyer participate in a Franchising 101 and Open for Opportunity briefing on Capitol Hill.

Above left: U.S. Sen. Joe Manchin speaks at the IFA Leadership Summit in September 2021.; Above right: IFA Chair Catherine Monson at the 2021 IFA Leadership Summit.; Right: IFA witness Jyoti Sarolia, President and Chief Executive Officer of Ellis Hospitality, testifies before the Senate Committee on Health, Education, Labor and Pensions on the PRO Act on July 21, 2021.

OPINION

Small businesses that accepted PPP loans are in for a rude awakening come tax season

Background Image: U.S. Reps. Josh Gottheimer (D-NJ) and Brian FitzPatrick (R-PA) discuss their work as part of the Problem Solvers Caucus with IFA President and Chief Executive Officer Matt Haller at the IFA Leadership Summit.

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STATE

On the state level, IFA fought to protect against policies that could not only have an impact in that state but inspire future legislation around the country. For example, in California, IFA successfully stopped the FAST Act (AB257) for the year – which would require a franchisor to be jointly and severely liable for wage and labor violations committed. And in Oregon, we defeated a bill which would have severely harmed franchises operating in the state (HB 2946). We have also been on the frontlines against the push by several states to make PPP loans susceptible to state taxation.

OREGON Defeated franchise relationship bill in committee.

NEW JERSEY NEW YORK ILLINOIS

CALIFORNIA Defeated CA AB 257 (FAST Act). Legislation would have created sectoral bargaining for QSR/counter service restaurants in California w/30+ locations and codified joint employer.

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Prevented the introduction of copycat legislation model on California AB5 – a state-based proposal to codify joint employer.

PROTECT

A billboard in Arizona commissioned by IFA and partner groups outside of key U.S. Senate state offices encouraging a no vote on David Weil.

Washington, DC Mayor Muriel Bowser speaks with 2021 FAN & Leadership Summit meeting attendees.

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ENHANCE 10

Coming out of the pandemic, IFA took stock of what members wanted and how the association team can best deliver value to you. This included reimagining learning and certification to put your continuing education at the center of the IFA value proposition. Through the pandemic, IFA virtual meetings hosted over 30,000 attendees, which showed us what our members value and where there is opportunity for growth to better serve you. We transitioned the Certified Franchise Executive (CFE) Program from IFA Foundation to IFA to expand its impact and invest in new tracks and pathways for learning and certification. We also forged new partnerships, with Franchise Update Media, MFV Expositions, and more, to create new events that offer what members are looking for and reach new audiences with invaluable content.

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PROMOTE 12

A foundational role played by the International Franchise Association is to promote franchising and the value it provides in communities around the nation and across the world.

I N S T I T U T E Accelerating the Mission of Franchising Through the work of IFA and the IFA Foundation, we sought to reach new and underrepresented groups. We launched the Black Franchise I N S T I T U T E Leadership Council as part of the Diversity Institute, a new network for Black franchise leaders from all across the I N S T I T U T E country. VetFran launched 30 Accelerating the Mission of Franchising for 30 to celebrate 30 years of the VetFran program and continue to honor the work of veterans in franchising.

We worked more closely with academic institutions including Georgia State University, University of Louisville, Howard University, and many others to open student’s eyes to entrepreneurial opportunities in franchising.

IFA has also expanded its research, studying closely the impact of the pandemic, the state of franchising, and the value of the sector – using data to tell the story of franchising and bring Open for Opportunity to life.

IFA in the NEWS WHAT SMALL BUSINESSES NEED TO SURVIVE THE CORONAVIRUS CRISIS “As the adage goes, an ounce of prevention is worth a pound of cure. In this pandemic environment, this wisdom is just as much for small business owners as it is for their patrons. Franchising stands to lose 26,500 small businesses due to COVID-19 alone and the wrong legislation will raise the number of closures to 33,000. For small businesses outside of the franchising industry, this number could be even higher.” – Catherine Monson, Chair of the International Franchise Association, CEO of FASTSIGNS International

MYTH VS. REALITY IN FRANCHISING “With more than 730,000 franchise locations, spanning thousands of brands among 230 industries, and supporting more than 8 million jobs, nationwide regulatory policy shouldn’t be guided by a handful of outliers.” – Dr. Aaron Yelowitz

BIDEN’S PRO ENFORCER: WHAT UNIONS CAN’T GET FROM CONGRESS, THEY SEEK FROM LABOR NOMINEE DAVID WEIL “Ideology is one thing, but what these groups consider disqualifying is Mr. Weil’s contempt for the law, his track record of imposing by regulatory fiat what Congress refused to do.” – Kimberly Strassel

BIDEN’S AID PLAN COULD REVAMP ECONOMY, PROMPT GOP RESISTANCE Matthew Haller, head of government relations for the International Franchise Association, noted that $15 wages would be relatively high in parts of rural Georgia and West Virginia, both states that will be represented by Democratic senators. But, more importantly, the coronavirus outbreak has crushed sales at restaurants and small retailers that might be forced to close if they face higher labor costs.

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2021 IFA LEADERSHIP In 2020, the IFA Board of Directors voted to expand the size of the Board to ensure diversity of industry, thought and background among its most senior volunteer leadership team. The expanded Board welcomed 41 new members in 2020 and 2021, for a total of 67 franchisor, franchisee, and supplier members.

EXECUTIVE COMMITTEE & FORUM CHAIRS Catherine Monson

Charlie Chase

IFA Chair

1st Vice Chair

Chief Executive Officer & President FASTSIGNS International

President & Chief Executive Officer FirstService Brands

David Humphrey

David Barr

2nd Vice Chair

Immediate Past Chair

Chief Executive Officer ECP-PF Holdings Group, Inc.

Chairman PMTD Restaurants

Stuart Hershman

Bill Hall

Secretary

Treasurer

Amy Cheng

Azim Saju

Chief Executive Officer Treats Investments, LLC

Partner DLA Piper LLP (US)

Partner Cheng Cohen LLC

Principal HDG Hotels Chair, Franchisee Forum

Chair, Supplier Forum Advisory Board

Steve White

President & Chief Operating Officer PuroClean, Inc. Chair, Franchisor Forum

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2021 IFA BOARD OF DIRECTORS Jerry Akers Franchisee/President

Jay Duke National Managing Partner

Great Clips of Palo, IA

BDO

Tom Baber Franchise Owner

Sean Falk Client Executive/Franchise Leader

Money Mailer of Mercer, Somerset County

Sam Ballas President & Chief Executive Officer East Coast Wings + Grill

Marcus Banks SVP, Litigation, Employment Law & Government Relations Wyndham

Mitch Cohen Franchisee

Sola Salons of New York

Adam Contos Chief Executive Officer RE/MAX, LLC

Randy Cross Owner

Fish Window Cleaning of Grandville, MI

Kimberly Crowell Owner/Operator

Jersey Mike’s Subs of Tallahassee, FL

Troy Dahl Vice President, Corporate Accounts Ecolab Inc.

John Draper Chief Executive Officer

Hylant

Tariq Farid Founder & Chief Executive Officer Edible Arrangements, LLC

Ron Feldman Chief Development Officer ApplePie Capital, Inc.

Lane Fisher Managing Partner FisherZucker LLC

Sherri Fishman President Fishman PR

Greg Flynn Chief Executive Officer Flynn Holdings

Gennan Gent VP, US Government Affairs McDonald’s Corporation

Daniel Halpern Chief Executive Officer & Co-Founder Jackmont Hospitality Inc

Dustin Hansen Chief Executive Officer, Americas InXpress

Viridian Group LLC

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2021 IFA BOARD OF DIRECTORS Steve Hockett Chief Executive Officer

Dan Monaghan Managing Partner

Jim Holthouser Chief Executive Officer FOCUS Brands

Barbara Moran-Goodrich Chief Executive Officer & Co-Founder Moran Family of Brands

Earsa Jackson Member

Dave Mortensen President & Co-Founder

Great Clips, Inc.

Clark Hill Strasburger

Jay Johns IHOP President

Dine Brands Global

Tamra Kennedy Franchisee, Owner - Taco John’s Twin City TJ’s, Inc.

Aslam Khan Chairman

Falcon Holdings, LLC

Todd Leff Chief Executive Officer

Hand & Stone Massage and Facial Spa

Joe Lindenmayer Owner

California Closets of the Gulf Coast

Ned Lyerly Chief Executive Officer

CKE Restaurants Holdings, Inc.

Dennis Maple President and Chief Executive Officer Goddard Systems

Erin Martin Vice President, General Counsel Little Caesar Enterprises, Inc.

Clear Summit Group

Self Esteem Brands

Caroline Oyler Chief Legal & Risk Officer Papa John’s

Matthew Patinkin Owner/Franchisee Auntie Anne’s, Inc.

David Pepper Chief Development Officer

America’s Best Franchising, Inc.

Todd Recknagel Chairman

National Envy Development, LLC

Meg Roberts Chief Executive Officer & President The Lash Lounge

Al Rodriguez Franchisee

Sport Clips of Western PA

Ama Romaine General Counsel & Chief Compliance Officer G6 Hospitality

Chris Rondeau Chief Executive Officer Planet Fitness

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2021 IFA BOARD OF DIRECTORS John Rotche Chief Executive Officer

Mary Thompson Chief Operating Officer

Franworth

Neighborly

Luis San Miguel President and Chief Executive Officer

Carolyn Thurston Founder, Chief Executive Officer

Fresh Dinig Concepts (Aunte Anne’s Franchisee)

Claudia San Pedro President Sonic Corporation

Karen Satterlee Senior VP, Assistant General Counsel Hilton Worldwide

Stephen Shields Franchise Owner/Express HQ PAC Representative

Express Employment Professionals of Joplin, MO

Jeffrey Sopp President & Chief Executive Officer Kensington Hill Partners

Cheryl Stanton Chief Legal and Government Affairs Officer

Wisdom Senior Care

Charles Watson Chief Executive Officer Tropical Smoothie Cafe

Graham Weihmiller Chief Executive Officer & Chairman BNI Global

Wanda Williams Head of Global Franchising Yum! Brands

Tim Williams Director of Operations & Franchise Development Williams Fried Chicken, Inc.

Edith Wiseman President FRANdata

Brightstar Franchising

Jeffrey Tews Multi-unit Franchisee Brightstar Care

Kenny Thompson Senior Director & Head of External Affairs, North America PepsiCo

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2021 IFA STAFF Matthew Haller

Jennifer Brandeen

Mike Williams

Rikki Amos, CFE,

Michael Layman

Bill Meierling

President & Chief Executive Officer

Chief Financial Officer

Senior Vice President, Government Relations & Public Affairs

Chief Revenue Officer

Executive Director IFA Foundation

Vice President, Strategic Communications & Marketing

Catherine Bartley, Director of Board Operations Heather Bartlow, Graphic Designer Benjamin Branch, Vice President, Federal Government Affairs Spencer Brignac, Director, Membership Recruitment & Retention Paul Calkins Jr., Coordinator, Political Affairs & Grassroots Advocacy Alan Catlett, Vice President, Revenue Growth and Operations Casey Cornish, Manager, Development & Programs, IFA Foundation Sandie Curtis, IPMA-SCP, JMT, Vice President, Education Erica Farage, Vice President, Political Affairs & Grassroots Advocacy Madeline Gale, Coordinator, Government Relations & Strategic Planning Jeff Hanscom, Vice President, State & Local Government Relations & Counsel Lynette James, Senior Director, Sponsorships & Exhibits, Sydni Konohia, Senior Coordinator, Member Services Jeanine Littrel, Senior Director, Conferences & Meetings Haider Murtaza, Senior Manager, Government Relations & Public Policy Chalisa Prajanay, Accounting Assistant Paul Rocchio, CFE, Vice President, Development & Member Service Katelyn Russell, Senior Manager, Membership Engagement Marcella Schneider, Senior Coordinator, Digital Marketing, IFA Lauren Smith, Senior Coordinator, Advertising & Sales Sara Williamson, Director, Technology and Operations Carly Wooley, Senior Director, Advertising Chung Yin Yau, Senior Director, Finance

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Join the International Franchise Association Education, networking, advocacy, and franchise growth: IFA supports your franchising needs, and you can be a part of the future of the sector. Franchisor members have access to exceptional experiences, a vibrant community, practical content, and tools that empower. Join your peers in pursuing excellence.

CONTACT: MEMBERSHIP@FRANCHISE.ORG

International Franchise Association 1900 K Street, NW, Suite 700 Washington, DC 20006 www.franchise.org

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