Municipal Regulation of Formula Businesses: Creating and Protecting Businesses

Abstract:     
People have been trying to exclude chain stores from their communities for decades. This includes "big-box" chains - the behemoth retailers that prefer an architecture of rectangular, single-story unadorned structures reaching 200,000 square feet or more - as well as national and international businesses including well-recognized fast food restaurants, drug stores and clothing retailers. The reasons for restricting these large corporate businesses include concerns over community character and aesthetics, local economics and self-reliance, and corporate ideologies. Over time, many municipalities have been forced to accept that "formula retail" and "franchise architecture" are simply part of the American economy. In many communities, the emphasis has shifted from efforts aimed at prohibiting these retailers to strategies aimed at implementing land use controls and other programs designed to regulate these businesses so as to minimize potential negative community impacts.

Part I of this Article focuses on the reasons why communities attempt to regulate formula based businesses, including concerns over community character, economic and environmental impacts, and social equity issues. Part II explores legal strategies to minimize the negative effects that often result from the location of formula based businesses through a host of local land use controls including comprehensive plans, zoning ordinances, special use permits, size caps, historic district regulations, design guidelines and site plan review, formula business restrictions, town-serving zones, and vacant store ordinances. Part III examines locally initiated or implemented economic and social regulations and programs to counter impacts from formula based businesses. These strategies include economic impact review initiated by the local government, as well as nongovernmental, community-based strategies that complement municipal efforts to regulate formula businesses, including the use of community benefits agreements and the impact of independent business associations and the local currency movements. The Article concludes with the thought that careful, strategic, community planning, along with a combination of municipal regulatory programs and grass-roots initiatives, can yield thriving communities both with and without certain formula retail establishments.

Keywords: big box, formula retail, formula based business

JEL Classifications: K11, K32

Accepted Paper Series