The war in the Middle East has given Sen. Richard Bryan (D-Nev.) the ammunition to reintroduce legislation that would require higher fuel efficiency for corporate automobile fleets.
Bryan will bring the corporate average fuel economy (CAFE) bill, which was stymied in the last session, back to the floor of the Senate within the next two weeks, according to staffers.
Although the legislation had strong support in the Senate last fall, it fell short of the 60 votes needed to defeat the effort to filibuster the bill. “The debate on energy policy will continue because a parliamentary setback cannot change the reality of an increasingly dangerous world,” said Bryan at the time.
“We will be back to deal with improving automobile fuel economy, because the automobile is where the oil is consumed. We presently consume more than 60% of our oil in the transportation sector, and a majority of that oil is consumed by the automobile,” Bryan said. “The truth is simple--to reduce our dependence on foreign oil we must improve our automobile economy.”
The CAFE bill would require automobile manufacturers to improve the average fuel economy by 20% in the 1995 model year, and by 40% by 2001. It would result in new car fleets with an average of 34.4 miles per gallon in 1995 and an average of 40 miles per gallon in 2001.
Not unexpectedly, the bill ran into ferocious opposition from the automobile industry last year, and more of the same is expected when the legislation is introduced again.
“This organization opposes Bryan’s bill because it is extreme,” said Mike Stanton, director, federal liaison of the Motor Vehicles Manufacturers Assn. “The only way to get those 20% and 40% improvements is by taking out weight. And that would take the fleet’s average-size car down to about the size of a Ford Escort.
“Any CAFE legislation ought to be considered as a part of a national energy plan, but alone it will not solve our problems, such as our dependence on foreign oil,” Stanton said. “Its impact wouldn’t even be felt in automobile fleets until the year 2010.”
But perhaps more surprising is the opposition from some of the major environmental groups. Although he said Bryan’s heart is in the right place, James J. Mackenzie of the World Resources Institute said CAFE legislation will not get the job done.
“It just doesn’t deal with the real issues needed to reduce fuel use,” he said. “Ride-sharing, public transportation and fuel pricing would be far more effective. The track record of Europe and Japan indicates that higher fuel prices reduce the use of vehicles.”
A policy to raise gasoline prices would raise a myriad of other issues, of course, such as the impact on lower-income people. Mackenzie said many of those issues could be dealt with by using the revenue raised with higher taxes to reduce Social Security tax for people in need and improve public transportation systems.
But the political reality is that voters hate the gasoline tax more than any other, and few members of Congress would have the stomach for proposing such a change. At the very least, CAFE would remind auto manufacturers of their responsibility for maintaining fuel efficiency, despite the ups and downs of gasoline prices.
Guidelines to Govern Franchise Business
At first glance, it would seem that franchising embodies the American spirit of entrepreneurship. Be your own boss. Set your own schedule. Make lots of money.
More than 3,000 U.S. companies offer franchises in 150 services and industries, ranging from fast food to hospital services, and employ 7.2 million people.
But for years now the Federal Trade Commission has heard a steady stream of complaints about the franchise business. Since holding hearings last fall, the House Small Business Committee has received more than 200 calls and letters that document what Dean Sagar, staff economist, called “widespread and systemic abuse, way beyond what we anticipated.”
For example, a Burger King franchisee in Los Angeles County received a rent increase recently--retroactive for the past 10 years. The bill from Burger King was $80,000, payable immediately. If forced to pay, it will drive the franchisee right out of the burger business. And according to his contract, he can’t litigate with the company, but must instead agree to arbitration--in Miami.
Another franchisee, an ERA real estate broker, wanted to get out of the business. He said he terminated the relationship according to the terms of his franchise contract. He gave the franchiser 60 days notice and continued to pay his bills for six months. Then he closed his office and moved out of town. Two years later, ERA continues to send him bills--the last one for $24,000.
The basic fairness of franchise arrangements in protecting the interests of franchisees, the adequacy of federal laws to protect the legal rights of franchisees and the adequacy of current federal and state regulatory procedures to ensure proper structuring and operation of franchise arrangements are “critical policy issues that have not been addressed in any comprehensive fashion by the Congress since the mid-1970s,” said Small Business Committee Chairman John J. LaFalce (D-N.Y.).
When properly handled, the franchise arrangement should provide advantages for everyone. For the new, small or growing firm franchising provides a systematic and cost-effective strategy for rapid expansion. For the franchisee it offers an opportunity to own and operate his own business, with training, continuing supervision and assistance and minimal financial risk. And for the consumer, franchising provides familiar and tested goods and services.
However, there is a trade-off. In exchange for the management and financial support, the franchisee surrenders some of his independence to his franchiser. It is from this contractual relationship that so many problems have arisen.
A staff report by the House Small Business Committee has suggested the implementation of federal guidelines to govern franchise contracts--terminations, renewals and transfers--is necessary. It also calls for federal guidelines defining what portion of a franchisee’s initial investment should be refunded when the agreement ends.
The International Franchise Assn. and the North American Securities Administrators Assn. oppose federal guidelines.
More hearings were planned for February but have been postponed at least one month because of the Gulf War. The new round of hearings will address whether the abuse is a temporary response to problems in the overall economy, including excess debt, or whether it represents a break from the old team-spirit philosophy.
The hearings and any resulting legislation have important ramifications, because by the year 2000 franchising is expected to be the primary method of selling services and goods in the United States.