New IFA Head Takes on Washington
The International Franchise Association’s new president has one priority: unfreeze the lending market so you can grow again.
By Milford Prewitt
Steve Caldeira was a little short on time.
Just a few days into his new job as president and chief executive of the International Franchise Association (IFA), he told QSR the interview would be tightly controlled on time as he had a meeting at the White House, with other industry heads and Administration officials, to discuss ways to revive small business.
The agenda of the White House meeting could not have been better timed or more coincidentally targeted to the objectives Caldeira aims to achieve as he takes over the helm of the IFA. The 50-year-old group promotes entrepreneurship through franchising and pushes a pro-franchising legislative and economic agenda.
Composed of both franchisors and franchisees, the IFA’s members represented 850,000 franchised establishments at the end of 2009, 40 percent of them—the most dominant block of its 10 business sectors—in the restaurant industry.
IFA’s members generated $868.3 billion in 2009, a 0.7 percent decline from the year before. Annual combined revenues from members are projected to grow 2.8 percent in 2010.
Franchising can thrive through a tough recession, the financial crisis, and a sputtering recovery if lawmakers and those who control economic policies understand the vital role franchising plays in the economy, Caldeira says.
“Franchising has enormous potential to spur economic growth in the U.S. and around the world,” he says.
“We see that potential demonstrated every day as entrepreneurs choose franchising as a way to grow their businesses—from Boston to Beijing, from Dallas to Dubai, from San Diego to Sao Paulo.
“Our biggest challenge—and our biggest opportunity—is to educate our elected leaders so that they will see it. Our message is compelling, and it’s an urgent one in light of the economy here at home and around the world: Give us the policies that help franchise businesses open their doors, and we will do the rest.”
Caldeira, who has a sterling resume that shows an accomplished 20-plus-year career as a corporate executive in the restaurant industry and leader of diversity as a senior executive of two prominent foodservice associations, was named president and chief executive of the IFA early last month.
Just before the IFA appointment, Caldeira was the executive vice president of global communications and public affairs for Dunkin’ Brands Inc.; cofounder, president, and chief executive of The Elliot Leadership Institute, an influential executive-level-only membership group that promotes and develops leadership principals and best practices in the restaurant industry; vice president of industry relations for PepsiCo; and COO of the National Restaurant Association Education Foundation.
He has also held positions of authority in politics, including a stint with Ronald S. Lauder when he was ambassador to Austria and with former U.S. Sen. Alfonse D’Amato of New York.
One of the reasons the search committee chose Caldeira to replace former IFA president Matthew Shay—who moved on to the National Retail Federation—was his involvement on an IFA task force to educate the U.S. Conference of Mayors—especially those from struggling urban centers—about the power of franchising as a source of urban renewal and employment growth.
Caldeira says that pursuing social and economic policies that conduce banks to begin lending again will be his top priority as he begins his tenure.
“Credit access is currently the top priority for IFA members and we have in place an aggressive two-track approach,” he says.
“We are working with the highest levels of policy makers to demonstrate the connection between franchise lending and job creation and the steps Congress can take to encourage more banks to lend to franchise businesses.
“In addition, we are working at the grassroots level to help banks understand the power of franchising, and to help our members understand what banks are requiring today. A new IFA Credit Access Working Group was recently established to facilitate the development of new tools for our members and the banking community.”
If SBA loan limits were increased to $5 million, we estimate that it could help create 460,000–600,000 jobs.”
He notes, however, that banks reduced their lending to franchised companies by $3.4 billion in 2009, which cost about 134,000 jobs and $13.9 billion in lost revenues.
“We have been working diligently to make sure that Congress has the information they need to fully understand the potential negative ramifications if they do not act very soon on our recommendations,” he says.
“This means we must escalate our advocacy efforts to ensure that our voices are heard even louder so that Congress takes action on the simple and common-sense steps we think will help to create jobs.”
Key to that goal, Caldeira says, is allowing the Small Business Administration to raise the limit of borrowings for small companies from $2 million to $5 million. Although Congress was reluctant to exacerbate the national debt, Caldeira says more access to financing means franchisees can hire more taxpayers.
“If SBA loan limits were increased to $5 million, we estimate that it could help create 460,000–600,000 jobs over the next 12–18 months,” he says.
“We know that when franchisees don’t have the access to capital to expand or remodel, electricians lose jobs, drywall guys have nothing to do, and franchisee don’t hire. We know that $1 million in lending creates 40 jobs.
“That’s pretty impactful.”
Milford Prewitt is a veteran foodservice reporter based in New York.
