What would you do if another state barred the sale of your products after having approved them for years and years even though other states allowed the sale of your products?
Depending on the volume and sales of those products you might complain to state officials, contact your Congressional office or even file a lawsuit. And what if you were told that the other state had a right to regulate what products were sold in that state? Surely states can do that. For example, sale of marijuana is legal in Colorado, but not in Mississippi. Doesn’t Mississippi have the right to ban the sale of a product that may be legal in another state? State rights, and all that. Or should not there be uniformity across all states on what products and services can be sold? And what about the interstate commerce clause?
What brought this subject to mind was a situation currently unfolding in California. In 2008, California voters passed Proposition 2, an initiative that requires cages large enough for egg-laying hens to stand and spread their wings. Two years later a law was passed requiring that all eggs sold in California, including those from out of state, meet the state standards. The requirements go into effect Jan. 1, 2015. At least five states have filed suit against California over the requirements.
While it is tempting to get into the issue of caged chickens and eggs and states rights, what came to mind were the pros and cons of expanding a local business to the extent that it becomes so uniform as to have little or no individuality. That thought then led to the idea that many communities are becoming so much alike that there is a shrinking uniqueness going on. For example, big box shopping centers look pretty much the same all over the country. Urban sprawl and rural decay are causing many places to look the same.
The desirable thing about uniformity is that it is consistent, more efficient and predictable. If I go into a McDonald’s restaurant in Boston, Massachusetts I know that I will receive the same food that I receive a a McDonald’s in Jackson, Mississippi. That’s not necessarily a bad thing. But if I do that I may miss out on lobster rolls at the Yankee Lobster Fish Market, a family-run lobster business that’s been around for more than 50 years. And if all neighborhoods become just alike I may not get to savor the flavor of Little Italy.
Where is the line between uniformity and uniqueness? And if a business can expand and have 20 stores that are the same, has it lost its uniqueness. Ironically, sometimes uniqueness is just the thing that leads to uniformity. Someone comes up with a new way of presenting a product or service, it succeeds in the local marketplace and the next thing we know is that it is franchised. Instead of being unique, it’s now everywhere.
A research report entitled, “Franchise Business Economic Outlook for 2014,” prepared by IHS Global Insight stated that there are currently 770,360 franchise establishments in the United States. The International Franchise Association website reports that franchises not only have a higher success rate than other businesses they are predicted to create jobs at a faster rate than the broader economy. It states that in Mississippi alone there are 108,100 direct jobs and 183,900 indirect jobs in franchises, and that franchises in the Magnolia State have a $2.57 billion payroll.
One of the real values of franchises is that their systems have been tried, tested and proven. That is why they lead to uniformity, which then leads to efficiency which then leads to sameness in every location. And if there is national expansion then every product is the same in every state. That is not to say that some franchises do not “localize” their stores. Many franchise restaurants, for example, have photos of local scenes and personalities. Nevertheless, when all locations, processes and procedures are basically the same then a threat to one is essentially a threat to all. It is sort of like an airline that has hundreds of only the same type airplane in its fleet. If that one model aircraft is grounded then the whole fleet is grounded.
And that brings us back to the California situation. Because of uniformity in poultry production, a threat to one process — in this case, the type of cage – by one state could be a threat to the entire industry because of the volume of sales in California. The major suppliers, i.e. those who have a uniform process, will be greatly affected. The small producer, who is unique and can quickly change his process, will be less so.
» Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Pease contact Hardwick at email@example.com.