IFA Vice Chair Testifies Before Congress
By: The International Franchise Association
Published: March 20th, 2024
Mary Kennedy Thompson, vice chair of the International Franchise Association (IFA) and chief operating officer of Neighborly, appeared before Congress to discuss the effect of alternative areas of financing on small businesses, especially franchisors, franchisees, and their employees. Testifying before the U.S. House Small Business Subcommittee on Oversight, Investigations, and Regulations, Thompson discussed her more than three decades in franchising as both a franchisee and franchisor.
Thompson, who also served eight years as an officer in the U.S. Marine Corps, emphasized two key points to lawmakers:
- IFA support of efforts to streamline government-supported lending program, such as the Small Business Administration (SBA), which along with its lending programs, are a major part of the franchise success story. Approximately 20% of SBA lending goes to franchising. In 2022, some 7,000 loans were approved in the 7(a) and 504 programs, representing more than $5 billion of loan volume and supporting more than 100,000 jobs. IFA supports the intent of eliminating the principle of affiliation by control in the SBA size standards, which in the case of a franchise is currently based on franchise agreements. Those determinations required subjective assessments of contract language. As such, consistency of those determinations, delays in approvals created by occasionally lengthy reviews, and the back and forth with franchisors to reach acceptable agreement language all were impediments to franchisees being able to access the capital they needed to grow.
- The importance of alternate forms of capital, including private equity, to help franchise businesses grow. In the era of bank consolidation and mega-mergers, capital at reasonable interest rates has been harder to find, especially for franchise owners unfamiliar with the language of high finance. Private equity networks extend beyond financial backing. They open doors to our franchise owners and help connect them to potential clients, suppliers, and other businesses within their portfolio. These relationships can supercharge growth in terms of new partnerships, joint ventures, and new market opportunities, as well as attract top talent.
"I'm no shill for private equity; I am a Marine," Thompson said. "But I have lived the American Dream of being an entrepreneur and helping grow and scale businesses. This would not be possible without alternative forms of capital. Private equity has been a catalyst for growth for me and many of Neighborly's franchise owners."
A full copy of Thompson's testimony is available here.
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