WASHINGTON — The International Franchise Association is urging Congress to take action to help franchised business owners weather the current economic crisis and help lead the country out of the recession.

In a letter submitted to a House Committee on Small Business forum on the role of small business in stimulating the economy, association President and Chief Executive Officer Matthew Shay outlined the association’s recommendations to Congress that will help franchise businesses recover. These suggestions include steps to promote access credit and capital, provide health insurance for employees and to provide clarity and certainty in small business tax law.

“By identifying and implementing specific strategies for improving the economic conditions for small businesses, IFA believes the entire American economy will reap the benefits,” Shay said.  “To address this and other challenges, IFA has developed an Economic Recovery Plan that outlines short-term strategies for helping all small businesses regain economic vitality.”

The IFA Economic Recovery Plan consists of five key action items: Increase the amount of credit available by strengthening secondary markets; Increase access to capital through changes to Small Business Administration loan programs; Remove tax uncertainties and inequities for small business; Make small business health insurance more affordable; and Support veterans as small business owners.

Shay said that his association strongly supported the Emergency Economic Stabilization Act in September 2008 that Congress eventually enacted as the TARP program. Even though many financial institutions received essential support to save financial systems, these efforts are not making their way to franchised small businesses, he said.

“While the Treasury Department took a significant step in November with the decision to provide liquidity to issuers of consumer asset backed paper and stimulate small business lending, the secondary market for healthy Small Business Administration guaranteed loans remains dysfunctional,” Shay said.

Shay explained that investors who normally flock to the security of federally guaranteed loans are currently seeking investments with higher interest rates. This forces lenders to keep SBA loans on their balance sheets instead of offering them in the secondary market.  “Without a market, lenders are losing a critical source of additional funding to authorize new loans,” he added. 

The franchise association recently released the Economic Forecast of Franchised Businesses, prepared by the economic consulting office of PricewaterhouseCoopers. This report shows that franchising will remain a strong source of jobs and economic output, but franchise business leaders are reporting that the credit market contraction and consumer spending declines are having an impact.

“Particularly in times of economic stress, franchising gives small businesses an extra margin of help through access to training, business methods and marketing support provided by the franchisor,” Shay said.  “Franchising offers the U.S. economy a strong foundation from which to encourage job growth and recovery.  Providing franchised businesses access to capital by improving operation of secondary markets will ensure that these small business entrepreneurs will be positioned to help lead us out of recession.”

The Washington-based International Franchise Association is the world’s oldest and largest organization representing franchising. Approaching a half-century of service with a growing membership of more than 1,250 franchise systems, 10,000-plus franchisees and more than 500 firms that supply goods and services to the industry, the association protects, enhances and promotes franchising by advancing the values of integrity, respect, trust, commitment to excellence, honesty and diversity.