A lot of businesses use franchising to expand their reach but rarely has a nonprofit business association tried it – until now. The Los Angeles County Business Federation – a Commerce-based association of business organizations with strong ties to the San Fernando Valley – has over the past year launched its first franchise venture. The organization, also known as BizFed LA, has licensed its name and provided guidance on business structure and operations to a newly formed business coalition called BizFed Central Valley, which started from scratch nearly two years ago. The Central Valley outfit began getting help from BizFed LA last year and formally launched earlier this year. It now has 36 member business organizations in five south San Joaquin Valley counties – Kern, Kings, Tulare, Fresno and Madera. The member organizations combine to represent roughly 20,000 businesses that employ a total of about 300,000 people. BizFed LA has been contributing the services of its chief executive, Tracy Hernandez, and some of its staff to help get BizFed Central Valley off the ground. Terms of the arrangement between the organizations were not disclosed. Valley heritage BizFed LA was established 11 years ago when Valley attorney David Fleming, who now serves as the group’s founding chair, approached Hernandez while she was publisher of the Los Angeles Daily News in Woodland Hills to create a regional business association to serve as a political counterweight to the Los Angeles County Federation of Labor. Some of the organization’s earliest members included the United Chambers of Commerce of the San Fernando Valley and the Valley Industry & Commerce Association. “We wanted to make a difference in public policy in every level of government,” Hernandez said. “It was unusual because we were organizing businesses and business associations that naturally compete with each other.” She added that despite whatever animosities may exist between the business communities in local regions such as the San Fernando Valley and San Gabriel Valley or the Westside and South Bay, she believes BizFed LA has been effective at organizing business groups around a common goal. “The franchise in the Central Valley is a testament to the success in the L.A. region — to put aside that competition and work together,” she said. BizFed LA has no current plans to expand beyond the Central Valley but is open to launching additional franchises if there is interest from business leaders in other parts of the state. The group now has 170 member business organizations, representing 390,000 employers with 3.5 million workers in Los Angeles County. It has lobbied in Sacramento and at city halls throughout the county against bills and ordinances it considered harmful to the local business climate – such as minimum wage increases – and for legislation that might boost the local economy. BizFed LA also has endorsed candidates for local office deemed by the group to be business-friendly. BizFed has racked up some successes, including an effort to keep the lucrative Los Angeles Air Force Base from being shut down. But it failed to stop most of the living wage and minimum wage increase ordinances that have come up in recent years. Regional clout Business leaders in the south San Joaquin Valley have long lamented being overlooked in Sacramento and Washington. The August unemployment rates for the five counties in the area ranged between 6.2 percent and 8.9 percent – significantly higher than the statewide average and L.A. County rate, both at 4.5 percent. “We have seen a lot of decisions being made that impact the businesses in the Central Valley without a strong collective business voice from the Central Valley,” said Cindy Pollard, director of public affairs for Bakersfield-based Aera Energy, one of the founding member companies and chief investors who ponied up undisclosed sums to launch BizFed Central Valley. Three of the other four founding members of BizFed Central Valley also come from the energy sector, not surprising given the prevalence of oil exploration in the region. They include Chatsworth-based California Resources Corp., San Ramon-based Chevron Corp. and the Western States Petroleum Association in Sacramento. Pollard said she was working in her prior post as president of the Greater Bakersfield Chamber of Commerce when the idea of BizFed LA franchising its name, structure and expertise came up. “We figured since BizFed LA was already doing this successfully, there was no need to reinvent the wheel,” she said. That’s the reason behind a trend in the broader nonprofit world toward licensing out business models, according to Regina Birdsell, chief executive of the Southern California Center for Nonprofit Management. “Ever since the Great Recession, nonprofits – especially those in the social service sector – have been willing to pay license fees to use a successful business model that has already been developed,” Birdsell said. Others see a longer track record among nonprofits. “This is a brilliant, time-tested model, adopted by United Way, Goodwill and Boys & Girls Clubs,” said Adlai Wertman, professor of social entrepreneurship at the USC Marshall School of Business. “But the pitfall of an arrangement such as this would be if one of these franchisees does something bad – if there’s embezzlement, for example – it reflects badly on the entire brand.” Hernandez’s current role as chief executive is temporary until the BizFed Central Valley board can choose its own chief executive sometime next year. Lois Henry, BizFed Central Valley’s advocacy director, said the biggest challenge so far has been explaining the BizFed concept of an association of business associations to other business organizations. “Chambers they understand, but this BizFed concept is unique,” she said.
