How the Disappointing GOP Results Affect Franchising (and Why They Occurred)
Jeff Hanscom of the International Franchise Association and Parker Poling, a partner in the federal government and political advisory firm Harbinger Strategies, sliced and diced the outcome of the U.S. midterm elections during an IFA webinar presented Thursday.
The elections’ red ripple – as opposed to the predicted Republican red wave – was top of mind for Poling’s analysis. Hanscom, IFA vice president for State & Local Government Relations & Public Policy, discussed what the Democratic Party’s unexpectedly strong elections performance could mean to the franchise industry over the next two years.
Before Hanscom and Poling gave their talks, Anna Russell, webinar introducer and IFA manager for political affairs, reminded attendees that IFA had supported a slate of candidates that it determined to be strong supporters of small business. The organization’s political action committee, FranPAC, had contributed $708,000 to 166 franchise-favorable candidates with an average donation of $4,200, Russell said, with the effort supporting winning candidates in 81% of those races.
Agency Level Emphasis
In his presentation, Hanscom said that because the federal government will be divided – the House under GOP control, Senate with a Democratic majority – for at least two years, a legislative stalemate is likely to prevail. So at the federal level, the IFA will concentrate its efforts at the agency level, where the Biden administration controls appointments. In particular, the IFA will try to prevent pro-labor changes to 1) the joint employer rule that the National Labor Relations Board has proposed and 2) narrow independent contractor regulations possible under regulatory modifications at the Department of Labor.
At state and local government levels, IFA will stay very active, Hanscom said. He said the IFA “will work to foster relationships with new governors and new legislators.”
Trifectas and Legislative Challenges
He said the IFA in particular sees threats in the four “trifecta” states emerging from the elections: Maryland, Massachusetts, Michigan and Minnesota. Hanscom said that Democratic control of the state House, Senate and governorship in those states make them more likely to pass pro-labor legislation that would raise operating costs for franchise businesses. Hanscom said the IFA sees continuing challenges in traditionally strong Democratic California, Illinois and New York.
The IFA is keeping its finger on the pulse of “FAST Act 2.0,” he said, referring to a new California law that holds fast-food chains responsible for issues such as wage theft and overtime pay; the law also authorizes a council, with fast-food worker representation, to set workplace rules for fast-food workers. His “2.0” alludes to other states that might pass what he calls “copycat” laws.
He also pledged that the IFA will keep up its fight against sectoral labor bargaining, which is defined as labor negotiations involving a whole sector or an entire industry within the U.S. economy.
What Red Wave?
Poling, who was the first presenter, conceded that her estimates for Republican victories in the House of Representatives were way off. She had expected the GOP to gain 30 House seats as opposed to the 10 to 12 that will be added once final votes are counted.
Poling explained that she and many other election analysts missed with their forecasts because they thought more voters would be pro-GOP because of the economy and high inflation. Instead, she said that this was a “second-choice election,” meaning that voters seemed resigned to the rocky economy and cast their votes based on the issues of crime and abortion.
She credited crime as helping New York Republicans win House seats in a true red wave there. And she said concerns over abortion restrictions boosted Democrats’ victories in states such as Michigan and Illinois.
Fundraising Advantage for Democrats
Poling said that in Senate races in purple Arizona and Nevada, Democratic incumbent Sens. Mark Kelly and Catherine Cortez Masto had fundraising advantages. And Poling pointed out that Democratic candidates more frequently benefit from large donations from wealthy donors and from millions of small contributors (22 million Democratic small donors vs. 7 million for GOP). Republicans have the edge in money “from Super PACs [political action committees], but campaign finance laws restrict how those funds can be spent.”
As to voter turnout, Poling said for the past 10 years, there have been increases. The 2022 elections saw an increase in young voters and Democrat-leaning subgroups, she said.
The Trump Factor
In examining the Trump factor, Poling said his staunch supporters in gubernatorial races, Doug Mastriano (Pennsylvania) and Tudor Dixon (Michigan), simply were not palatable to voters. And she said that overall, strongly pro-Trump candidates lost about 5 percentage points because of the former president’s endorsement as compared to generic Republicans who toned down the rhetoric about him. Poling cited the 5% assessment as originating with the New York Times and said she agrees with it.
Poling said Trump “is no longer the overwhelming force in the Republican Party. A smallish number of politicians have endorsed him.” But he hasn’t experienced a groundswell of support since announcing his 2024 presidential run on Tuesday night.
“Political analysts will be studying the 2022 midterm elections for a long while,” she speculated. Poling added that she doesn’t expect to see major waves in elections anytime soon. As for the 2024 presidential race, “it’s going to be another crazy election.”