NFIB Small Business Legal Center has partnered with the Southeastern Legal Foundation in filing an amicus brief in Contest Promotions, LLC v. City and County of San Francisco. This First Amendment case is important because free speech benefits not just our members but is good for the bottom line for all small businesses, the purchasing options of customers, and the economy as a whole.
This case concerns a 2002 San Francisco ordinance prohibiting the display new advertising signs. Specifically, the ordinance bans all signs, except for those advertising goods or services sold on the site. As such, this case illustrates the real world harms imposed by excessive commercial speech restrictions.
First, San Francisco’s regime creates an inconsistent advantage for businesses that have existing signs advertising off-site goods and services. In turn, this creates an artificial barrier to entry for small business owners because they have fewer options to promote their service or products. Anytime the government creates an artificial barrier to entry within a market, it raises the costs of businesses to produce and sell their goods and services, and this ultimately raises the price that consumers must pay. This is bad for small business and consumers alike.
Second, San Francisco’s restrictions result in inefficient outcomes. For example, suppose that a local office supply company wants to partner with an off-site accounting firm, so that each might post advertisements on the others’ property. This cross-promotional arrangement might make good business sense, but it would be illegal in San Francisco. The companies might resign to advertising only on-site, but they lose out because they’re not reaching new markets. For that matter, customers lose out as well.
Finally, this regime creates regulatory confusion for small business owners. It is yet another road block that small business owners must research and comply with, and this takes away time and resources that could be used by these owners for growing their businesses and the economy. What is more, overly restrictive commercial sign regimes are not exclusively a big city phenomenon. On the contrary, many small and mid-size cities impose byzantine restrictions on the placement of signs—in some cases making it difficult to figure out how to advertise at all. For example, we heard from a small business owner not so long ago who was confused and confounded by the fact her small town of Murfreesboro, Tennessee was enforcing an 85-page sign ordinance. That’s just excessive regulation.
