How Election Impact on Small Businesses May Reshape Franchise Regulations in 2024

The upcoming presidential election is expected to significantly impact the franchise industry, particularly through potential changes to key regulatory bodies like the National Labor Relations Board (NLRB) and the Federal Trade Commission (FTC), Entrepreneur Magazine recently reported. The election's outcome could influence the NLRB's stance on the Joint Employer Liability Rule, a regulation that has caused considerable concern among franchise owners.

Charles Internicola, founding partner of the Internicola Law Firm, emphasizes that in times of political uncertainty, franchisors and franchisees should focus on the fundamentals. “Franchisors should be focused on managing their compliance obligations while focusing on the profitability and success of their franchisees,” he said. “Franchisees should be focused on managing their cash flow, maintaining reserves and providing great service.”

Additionally, 2024 has seen significant developments in franchise regulations, with the FTC examining possible updates to the Franchise Rule and new state-level franchise broker regulations being introduced. These changes could lead to more robust protections for franchisees and stricter disclosure requirements, underscoring the need for franchisors to remain proactive in their compliance strategies.

“Franchisors should anticipate the changes ahead and focus on implementing a more thorough FDD [franchise disclosure document] and a more balanced franchise agreement that avoids overreach,” Internicola said. “They should also examine their franchise agreement protections and provisions and evaluate what’s practical and needed to protect their franchise system and what may be unnecessary.”