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How Regulations Hurt Small Businesses

How Regulations Hurt Small Businesses


Government regulations and rules sometimes
help level the playing field for businesses. But in other cases, unelected bureaucrats
can hurt businesses that are creating jobs for you and me. New rules coming out of Washington may hurt
franchised businesses. When it comes to business ownership, you often
hear the terms franchisee and franchisor. A franchisor is like Subway Sandwiches. They own the brand and license it to small
business people who might own one or two stores. There are literally thousands of franchisors
in many different industries. Currently, if you want to open a franchised
restaurant or retail store, you sign a deal with the franchisor (the company that owns
the rights to the name, menu or products, and business model). The franchisee pays for those rights and agrees
to maintain quality and follow certain standards. However, the franchisee is a separate business
that makes its own decisions on who to hire, how much to pay, and what benefits to offer. This system has worked really well, creating
more than 770,000 small businesses and supporting more than 18 million direct and indirect American
jobs. Importantly, minority franchisees make up
20% of those businesses often locating in minority communities and employing minorities
in those communities. Right now the National Labor Relations Board,
a group of unelected bureaucrats, is trying to redefine the relationship between franchisees
and their corporate partners (the franchisor). The idea is to make the bigger company and the smaller companies jointly liable for employee complaints and other legal issues. If the National Labor Relations Board successfully
redefines the relationship between franchisees and franchisors, there may be far fewer new
businesses and the jobs they create… because franchisors will be much more hesitant to
give inexperienced people a chance at opening a franchise. After all, why would they want to be in any
relationship where they were responsible for thousands of decisions made by smaller companies
every week. And franchisees didn’t risk their life savings to open a business, only to find out they now essentially work for the franchisor. Botton line: this new definition slams the
door shut on one of the proven paths to break into the business world. Make sense? Sometimes Washington needs to understand “if
it’s not broken, don’t fix it.” Now that makes sense.

Comments (100)

  1. I don't tend to agree with Prager U, but I agree with this.

  2. This is b.s.. America doesn't need any more Subways or Dunkin Donuts. Both the franchisee and franchisor should have equal responsibility since they both represent the brand. And so what if they are reluctant to hire inexperienced business owners? Maybe it will reduce the amount of incompetent owners that hire their family to save costs and inadvertently reduce lawsuits from those same franchises.

  3. Liberals say that they are for the fruit while killing the tree. They are too stupid to understand the simple truth: No tree no fruit. It is industry that creates all the jobs and
    all wealth.

  4. Funny, I thought this was appealing to small business as in independent. Nope, this ass kisses franchises. Not even conservatives give a shit about the little guy.

  5. But let's ignore tax deductions and tax write offs, government backed small business loans

  6. "it's worked really well"
    ummmmmmmmmmmmmmm the 9. something unemployment where i live says otherwise.

  7. Pretty one-sided video. Legislators aren't doing things for shits and giggles; there are reasons they want to make franchisees and franchisors jointly liable. Why not at least mention them?

  8. The title is kinda clickbaity because it only talks about one regulation they don't agree with.

  9. So basically if franchisers are held liable for their franchisees screw ups they won't approve franchisees who don't know what they are doing.

  10. Not a single of mention of a reason why regulations were deemed necessary in the first place. If you constantly just talk about the abstract notion of "regulations" and their negative consequences, instead of specific examples, then of course you're just going to reach the conclusion that they're bad and unnecessary. This is propaganda level bullshit.

    A company putting cyanide in their cereal doesn't really have anything to do with profitability, and it's alarming how often people couch ethical and safety concerns in economic language, as if making money is what is "good".

  11. This is only one example.  And not even the best one.

  12. Well, government has to "justify" its existence.

  13. If they want to change it is obvious that something is broken (at least in their minds) they dont just fix things for fun. They are americans and would rather do nothing all day. That argument only works in places like Germany, where tinkering is the national passtime.

  14. I've never understood the "unelected bureaucrats" buzzphrase. If they're busybodies creating onerous, burdensome regulations, "elected" versus "unelected" doesn't make a whole lot of difference.

  15. Nice way to deceptively oversimplify a cherry-picked example to further your dying cause.

    But what else to expect from PragerU?

  16. But if the big businesses aren't liable for small ones…. the professional victims (aka Liberals) cant get big money lawsuits… lol

  17. KEEP THIS ANIMATION STYLE! The more realistic style used in the "How This government Agency Hurts Us All" video is far to realistic and distracting for this channel when the focus needs to be the commentary.

  18. "Sometimes Washington needs to understand if it's not broken don't fix it" you're 150 years late here friend.

  19. Great video as always.

  20. He is incorrect to assert that this new legislation would have a major factor on the opening of new franchisees. This is because several other reasons are taken into consideration when allowing an individual to open a business under their name. The potential effect on PR and image if the business was to fail is key, but new franchisees must also have enough capital in order to open and pay off the rights to become part of the franchise in the first place meaning they must have some financial backing be it a loan or personal resources. Hence there is already a tough process in place because franchisers don't want to waste time and money entering into business with someone who will potentially fail.

  21. Does the franchisee has to answer to the franchisor to keep his job? If so, then the franchisor should be jointly liable, right?

  22. franchise are a bad model.

  23. @0:10

    WOW, they're actually even bothering to ACKNOWLEDGE that "regulation" isn't categorically bad–that's like a 100% improvement on their prior track record!

  24. @1:00

    LOL–I love how even Prager U itself assumes its target/intended audience is so clueless that they need to have an explanation of what "franchising" is–as if it's brand new, and totally unheard of to the "common man/woman." XD

  25. Liberals are so stupid that they actually think the number of regulations has declined since Reagan. They don't even bother to look at the data on this and the 80,000 pages of regulations under Obama.

  26. I agree with the majority of this message; however, considering the restriction franchises place on franchisors, the franchisors do, in effect work for the franchisee.  Also, I think, we need to encourage new small business from new ownership, not franchises.  What we need is to eliminate the hindrances to the market for non-franchise companies.  For instance, lets say you open a sandwich shop specializing in subway type sandwiches.  If you go to Subway, your franchise fee gets you, among other things, a set of construction drawings and specification which are uniformly accepted by City building and permitting department.  If you want to open up a non-franchised sandwich shop, you have to create your own, which is significantly more expense.  My local pub in Houston, TX, which serves Philly cheese steaks sandwiches changed ownership.  The permitting office required new architectural drawing to change the signage costing the new owner $6,000.  The sign consisted of replacing the marine grade plywood, rounded wooden lettering instead of square lettering, and a color change.  This is what hampers small business.  Franchises are great, but they stifle creativity.  The massive restriction being placed on everything at all levels of government, especially the local level, is causing people with good ideas to either give up or buy a franchise.

  27. When a chemical company stores their toxic waste by a river, then it leaks into said river, that's freedom. Feckin' commies don't get it! No moar regulamations!

  28. Before addressing the federal regulations, you have to fix corruption and lobbying laws. Regulate or deregulate, corporate interests will make the laws to help them, not small business owners and workers.

  29. The purpose of all regulations is not for whatever noble or practical purpose.  They are all, yes ALL, intended to make it harder for new and smaller businesses to operate, which results in more of a market share for larger companies who have the money to buy politicians so they can write such regulations.  Welcome to reality, folks:  This is what is known as an OLIGARCHY.

    And we've been one since 1688.  There is no such thing as democracy or republics, there are only oligarchies and monarchies, and oligarchies are invariably worse than monarchies because nobody owns the nation, and as such they turn the nation into pig troughs.

  30. I'm against all regulations. Individual rights both act as the protector of the individual against force and fraud, and they act to ensure our freedoms.

    No need to separate small business from big business. Regulations harm both, and harm us all.

  31. The same video can be made in 2006 about the housing market and the financial industry. Let us wait until 2008 to fix it.The choice is not between regulations and no regulations, but good regulations and bad regulations. This video is an example of overgeneralization and oversimplification.

  32. The problem with Prager U is its so biased to the right, which I suppose is why it exists. But a video like this, where I don't know very much about the topic but the side they are presenting seems to make sense, part of my brain is like 'where is the right wing message?' I could probably do more research and work out whether they are ignoring information but cba Brexit is taking up all of my concentration atm

  33. Unlike another educational small business videos, this video is a political ad aims to secure the special interest for the franchisors. If you have ever watched a political ad before, you know what I am talking about. I want to know how much money has Prageru received from the special interest to make this ad.

  34. Makes a lot of sense.

  35. While that seems like a possibility. I don't think it's necessarily how it will play out. If franchisors are more responsible for the franchises under them. They will have to take a more active role in managing them.That gives employers running them more guidance (meaning they will fail less often). And gives employees more recourse in the case of mistreatment. It should also could mean that restaurants will be cleaner and get away with less corner cutting and shady practices because they will have more oversight. I also don't see what is wrong with raising the bar on how easy it is to get started. There are a lot of terrible restaurants out there because of that bar being so low and there being such little oversight.

  36. Is the Government forcing Religious businesses to drop their faiths?

  37. Are we free to talk about religion in schools even if its just philosophical or theoretical without persecution?

  38. Is it broken though? If only PragerU could elaborate.

  39. The person who animated this must have been hungry.

  40. I'm a random US citizen and I approve this message

  41. keep the deregulation going, like what the Clinton, Bush and Reagan administration did, look what happened in 2008 and you will know how 'good' deregulation is.

  42. Obama was the regulation czar. 4,000 fricking regulations costing $2 trillion in stealth tax killing thousands of jobs, raising prices and destroying the economy. Dumb ass

  43. when you have an ideology everything is broken and needs to be "fixed "

  44. Because of franchises, almost every small town looks the same.

  45. I agree, if it ain't fixed, don't break it

  46. All this is nice but when people advocate regulations they don't want more regulations on small businesses but large once and banks.

  47. Lies lies lies just like Trump.

  48. Washington was taken over by Commies. things don't work because they're not supposed to

  49. Franchise ≠ Small Business.

  50. "If it isn't broken don't kit it." Yeah but the government has a tendency to break something then say they are going to "fix" it

  51. term limits help but lobbying from corporate interest needs to end.

  52. And yet the Left's stance is similar to that host from Young Turks. "Oh you want less regulation and smaller government so you can pay less taxes and lower safety standards!" No…

  53. This regulation hurts small businesses, therefore all regulations hurt small businesses

  54. this is a propaganda film and triggered video don't watch it it's a trap and unsubscribe

  55. Government should stay completely out of the economy. The only time they should get involved in our lives is to protect the people's rights to their own person and property through law enforcement, a justice system, and a military. Everything else should be left to the people to decide for themselves as they see fit. The interaction between franchisors and franchises is none of the government's business.

  56. If it ain't done broke don't fiddle with it

  57. I would fully describe myself as a socialist leftie (from europe), this redefining of franchise businesses sounds just bonus dumb.

  58. The government solution is usually just as bad as the problem itself

  59. the title is misleading. how can you say regulations help but then in the next statement say there bad? regulations are there to protect everyone from being taken advantage of. big and small business come together to make all fields equal and fair taking away the regulation will hurt small businesses. that's why they are there…….go ahead and take away the regulations and you will see everything will fall.

  60. And that is why I hate the government.

  61. This is so clear. Well done

  62. All you uneducated idiots who believe this deserve to work at ihop until youre 65

  63. I see this as more of a good thing, comment on own ideas but what I perceived from this informative video is that this will treat big franchised owned businesses the same as small "family owned" like businesses. As an "employer" or in this case franchisor is responsible for every decision they make whether it promotes their company's idea or burns it to the ground shouldn't this include who they choose to employ or in this case the franchisee to run their locations that they invested in.

  64. I like this video, thanks for the education, but it didn't cover the 'Big Questions'. And those questions are; What politicians are being lobbied with this issue? and Which politician's campaigns are being financed by the NLRB?

  65. Franchise takes would be entrepreneurs and turns them into commissioned employees with their own money on the line. if a real entrepreneur wanted to start an intelligent business based on supply and demand, that owner would see profit based on the quality of the product offered. this measure will diversify business and make the real owners responsible, since you as a franchisee are simply a commissioned employee with heavy investment and full legal responsibility for one specific location.

  66. The question is how many of those so called jobs at those francisees are real jobs that one could live off alone?
    I say almost NONE! Most of those people need a second or even third job to come by.
    And if you say that's normal, I say ONLY in America!

  67. If its not broken, stagnate

  68. Thanks Trump, you win again.

  69. this video is very much card stacked to support the supper conservative view. Being anti government is making corporations bigger and being anti corp is making government bigger. We can control the government but not the corporations. The government is the citizens input to society and how they want society to be ran. Do not be scared of government because the people are the government in a democratic society. vote bernie to end the corporatocracy that is the establishment. Vote justice democrats.

  70. The franchisors aren't good for small businesses anyway.

  71. Socialist born swede. I think this video is great.

  72. does it mean regulations that are needed for public safety are also bad for small businesses?

  73. "If it's not broken, don't fix it"
    I totally agree. If there are no problems with it, don't try to regulate it.
    Although unregulated capitalism is not something that we should thrive for.
    Regulations are good, overregulation is bad, but no regulations are even worse.

  74. I didnt do college. I watch Prager and am well off working.

    Middle fingers up to libtard college kids.
    Shout out to Dave Rubin on being the dopest liberal.

  75. That's right kids, if you hold businesses accountable for poor sanitary standards then you will lose your job.

  76. last time I checked the government is a corporate entity

  77. So it hurts small businesses because you define small businesses as franchises of large multinational corporations? How do the people who believe this not realize the immense resources that corporations can throw behind their franchises? Additionally, wouldn't you rather have these franchisors start their own, independent businesses anyway? It's the franchises that kill REAL small business in the first place!

  78. The problem with the ability to be independent from franchisee decision making is that low level employees are being treated unfairly. If more responsibility is placed on the franchisor, employee complaints will have a higher impact.

  79. Make a video about
    How deregulation hurts my drinking water

  80. franchises are a scam…you don't own the business…just the headaches

  81. For a real understanding of government lunacy try to fly a drone legally for real estate photos.

  82. lies and bs over and over on this channel–why don't you do something smart and get a real education so you can have intelligent and accurate info on your channel—your 'university' is a joke

  83. The US has population cca 320 mil people, total emplyment cca 60%, that is 192 mil people. The total franchise employment according to "franchisedirect" is under 9 milion – that is around 4% of employed? What a great argument (even if it was correct – which it ain't).
    Let's thing about the biggest troubles US economy has been through the last decade that affects everybody:
    Subprime mortgage crisis -result of too little and ineffective regulation
    Deep Water Horizon – result of too little and ineffective regulation
    The Opioid crisis – result of too little and ineffective regulation
    …..in contrast….
    Trump presidency – result of gerrymandering and strong regulation on who is (not) allowed to vote.
    Regulation by itself isn't always evil. It depends on the method and the purpose.

  84. Soooo… don't open a franchise….

  85. I think the operator has to maintain the standards of the franchise and should be trained in to handle the complaints of the customer. If it is a complaint they can not handle the customer most likely is going to go to the franchise. If this is a continuous problem I am sure the franchise would take their license away due to multiple problems with customers and not keeping up with the standards of the franchise. Most franchises are pretty good in training in the future owner of a franchise. If they are not able to keep up with what they were trained to do their franchise rights should be taken away. I am sure everything would be done first in going over the problems to get it up to the standard. Most likely this is a money thing where everybody just wants the most money for the least amount of work. Time to put people first and quality does matter. I am sure this will work itself out when customers decrease and news spreads.

  86. Regulation isn't even in the top 10 reasons Small businesses going bankrupt.

  87. The franchisor has more power in how the franchise runs his business then this video makes out. The responsibility and liability of the business management need to be jointly shared as in any partnership.

  88. Government grown since 1970 , why wages haven't grown private sector

  89. Regulations are meant to protect small businesses and keep rules in the private sector.

  90. not as much as a weak middle class dose( btw thats the class that spends the most money)

  91. Our economy is now booming because Trump is taking down hundreds of business regulations.

  92. just think of how many jobs we could bring back to the US if only we could treat workers like they do in china.

  93. I hate regulations

  94. I disagree with this video and your title is misleading. This video only addresses a very specific issue between franchisees (the local owner) and franchisors (the big corporations). And you are advocating for the big corporation, not the little guy. I like regulations. I like clean water and inspected meats and buildings that have fire exits and bankers that can't cheat. Regulations are laws for corporations. There me be a specific bad regulation, but you should address it and not condemn regulations outright. That's just lawless anarchy.

  95. I want small regulations to be adapted for creators. Less copyright regulations for newcoming creators!!

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