IN?A?BOLD?MOVE for a member of the corps diplomatique, United States Chargé d’AffairesBrent Hardt raised the issue of franchising atlast Monday’s Barbados Chamber of Commerce& Industry’s monthly luncheon in the presenceof Barbados’ Minister of Foreign Affairsand Foreign Trade, Maxine McClean.
Although speaking with the finesse expectedof his education and diplomatic position, Dr Hardtdid not mince words or hide his view in woolly diplomat-speak.
He noted that in the case of the recent arrivalof a Subway outlet at the Lanterns Mall in Hastings, “outdated Barbadian franchise regulations, likely intended to discourage competition, made the opening costly enough to discourage other entrepreneursfrom taking advantage of these ready-madebusinesses for Barbados’ benefit.”
In my experience of seeing the franchise law applied over many years under successive administrations, I can say that it seems you are far more likely tobe told no than yes.
This philosophy, originally designed to “protect” homegrown businesses, has long run its course and is a hindrance to the development of the economy. It is time there was the likelihood of a yes with the small possibility of a no, and only then for specific, non-competition-related reasons.
Although the opening of a Hilton Hotel franchise in our year of Independence became the symbol of the new nation’s welcome mat for its emerging tourist industry, local policymakers have long been wary of franchising.
The obvious benefits franchising could bringto a wide range of economic activity were lost in translation and dumbed down to the point whereit became synonymous with fast food
.So effective has been the lobby by the Barbados Workers’ Union and its strange bedfellows, the owners in the fast food sub-sector of the restaurant trade,that today we may be forgiven for equating franchising with job loss, not gain, and certainly no thought about the benefits of capital formation or investing in your own business.
Such myopic thinking may have had its purposes in the 1970s and ’80s as the cry to leave the fast food sector for the locals was at its most shrill. And what has been the outcome of this noble policy to protecta sector from foreign franchises in order to givethe “small man” a chance to benefit?
A handful of fast food giants amid a whole slewof “small men”, the latter earning an itinerant livelihood with their little vans offering hot food in both corporate and public parking lots, but not ableto generate enough turnover to grow their businesses into individual recognizable brands.
The policy has therefore had short-term benefits, you know, the kind politicians love, but not manylong-term ones: we have created sales for car dealers and wholesale food suppliers, but few memorable chains. Even those which have emerged seemto be going nowhere slowly.
We have to get away from this idea that franchising will lead to the opposite of the economic development we all want. For while there may always be a new local idea that is properly financed and leads to a business chain emerging, the market today is not one in which investors may want to take that chance. They would far more likely want to go for a turnkey, standardized, branded solution which can be franchised intothe market.
Appealing to visitors
Bringing franchises into a market like Barbados not only allows smaller would-be investors the opportunity to invest in already up-and-running business models (be it for food, accommodation or other services), but it makes the market more attractive and more familiar to visitors, who can feel comfortable that a service they already know and enjoy can be found right here onthe island, operating to international standards.
Those same visitors will always be on the lookout for local flavour, products and experiences, so it will never be only franchises that they support.
This is true whether you are in New York Cityor Bridgetown. So in my view it is time for the Government to revisit the “No” philosophy underpinning the current Franchise Act.
It is time to make the legislation much more welcoming and friendly, even if a franchise willstill require a majority local investment.
That way we would be getting the best of both worlds: more opportunities for local investors to create new wealth, and the bringing of more recognizable brands into our market, thus benefitting residentsand visitors alike.
Pat Hoyos is a long-standing journalist and publisher of the ?Broad Street Journal.
