IFA Joins 50-100 Coalition to Protect Small Business Owners from ACA Mandate

The Supreme Court has upheld the Affordable Care Act (ACA), but small business owners across the U.S. are still struggling to deal with its ramifications. The ACA is full of one-size-fits-all mandates that continue to wreak havoc on day-to-day operations of many small businesses. Employers want to provide good healthcare coverage to their employees, but they must to do so in a cost effective way. The ACA has made that harder to achieve. These businesses need relief.

That’s why IFA has joined forces with several other employer organizations to form the 50-100 Coalition. The Coalition is supporting efforts in Congress to protect businesses from the ACA mandate that requires businesses with between 51 and 100 employees to change their healthcare plans by 2016.

The mandate would disrupt the market and force groups with between 51 and 100 employees to drop the health insurance they currently provide to employees. Many of these businesses already provide have through the large-group market. The ACA mandate would force this group to instead purchase coverage through the small-group market. This is unnecessary and won’t guarantee better coverage for anyone.

The 50-100 Coalition is standing behind compromise legislation that would reverse this mandate. The Protecting Affordable Coverage for Employees Act (The PACE Act), which enjoys bipartisan support, would preserve the current definition of a small-market group as 1-50 employees and at the same time give states the flexibility to alter that definition if the need arises. This is a much better approach.

Federal mandates like this ultimately lead to fewer choices and higher costs for consumers. Employers will continue to pursue solutions that protect their employees from government overreach, particularly when it impacts the very personal subject of their healthcare.

5 Reasons to Attend IFA’s Franchise Action Network Annual Meeting

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The most important advocacy event of the year, the Franchise Action Network Annual Meeting (formerly the Public Affairs Conference), is coming to Washington, DC this September 29-30. Here are 5 reasons why YOU need to be there:

1. You CAN make a difference.

Issues like the new joint employer standard can drastically affect your business, and members of Congress need to know why. Attend this event and you’ll have the opportunity to meet directly with your representatives to express the consequences of a new joint employer standard. We need to come together at this critical time-if we don’t do something now, the franchise industry will be in jeopardy. Click here to find out what can happen to your business if this were to take effect.

IFA will prep you before your meeting, and this year we will have Soapbox Consulting here to provide even more guidance on having an effective visit through a professional advocacy training panel during the program! They will also schedule all of your appointments on Capitol Hill. Also, expect to hear from the Soapbox team to discuss your meetings after you register to make the most of your day on the Hill!

2. Network with your peers.

There will be several opportunities for you to form new relationships and see familiar faces during this event. Join us for the Franchisee Meet & Greet, Tuesday, Sept. 29 from 5:30 pm-6:15 pm. You also won’t want to miss our closing event, the Congressional Reception, Wednesday, Sept. 30 from 5:30 pm-8:30 pm. This will take place on the rooftop terrace of Charlie Palmer’s, and you can mix and mingle with your peers and members of Congress while overlooking Capitol Hill! Also, new in 2015, is the Franchising Gives Back Celebration & Annual Awards Dinner (separate fee required) on Monday, Sept. 28 at 7:00 pm – click here for more information.

3. Celebrate franchising.

The Leadership & Franchisee of the Year Awards Dinner on Tuesday, Sept. 29 recognizes outstanding franchisees and leaders among their industry peers. Franchisors: nominate a franchisee today by clicking here. Nominations are due by August 21.

4. Be an informed advocate for franchising.

Our members are the best voices for our industry. Getting involved in IFA’s advocacy efforts during the Franchise Action Network Annual Meeting will help drive our effectiveness on Capitol Hill and within state legislatures all year round. IFA will make sure you are equipped with the most up-to-date information about issues that affect your business so you can help save the franchise business model and protect your livelihood.

5. The Franchisee Growth Conference.

New in 2015 – the Franchisee Growth Conference will be held in conjunction with the Franchise Action Network Annual Meeting! It takes place at the Ronald Reagan Building & International Trade Center, right across from the JW Marriott in Washington, DC, from Sept. 28-29. This conference will feature programming specific to the needs of franchisees that you help you learn the latest innovations and best practices to evolve your business. Attend both the Franchise Action Network Annual Meeting and the Franchisee Growth Conference to take advantage of registration discounts. For more details, click here.

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President Authorizes Increased Funds for Franchise Small Businesses

Today, the IFA is pleased to report that the President signed legislation increasing the authorization level for the Small Business Administration’s 7(a) loan program to $23.5 billion, ensuring the program continues to provide franchise small businesses with much needed funding through the remainder of the fiscal year, ending 9/30/15.  The President signed the bill via autopen, since he is travelling abroad, underscoring the importance of this legislation.  It is only the sixth bill the President has signed by autopen; others include legislation to avoid the fiscal cliff and fund the government under continuing resolutions.  The President’s execution of the bill follows the unanimous approval of the bill by the House of Representatives and the Senate.

The IFA has been working with other interested partiesto make sure this loan program was not shut down for the remainder of the year. Earlier this month, IFA President & CEO Steve Caldeira sent a letter to Members of the House of Representatives’ Committee on Appropriations urging them to increase the Fiscal Year 2015 lending authority for the Small Business Administration’s 7(a) loan guarantee program. In addition, over 350 IFA FANS sent letters to their Members of Congress encouraging them to preserve the loan program after receiving an action alert from the IFA.  Finally, prior to the House vote yesterday, the IFA sent a letter to all Members of Congress urging them to support legislation increasing the authorization level.

In 2014 alone, new franchise businesses utilized approximately $6 billion in loan guarantees resulting in the financing of nearly 30,000 new franchised units.  According to a survey conducted for IFA in 2014, 43% of first-time franchisees who borrowed funds from commercial lenders and 23% of franchisees acquiring additional franchises used SBA loan program guarantees.  Of the $6 billion in loan guarantees used by franchise small businesses, 83% is attributable to the 7(a) program. This funding is important both for franchise business owners and their employees.  For every $1 million in lending to a franchise, 40 new direct and indirect jobs are created – a sizable return on investment.

The advocacy of the IFA and its members was absolutely crucial in ensuring the passage of this critically-important legislation before the impending August recess.  If the House and Senate had not approved legislation increasing the authorization level by this week, the loan program would have ended until at least September, and all loan applications would have been on hold. The IFA is pleased Congress took much-needed, bipartisan action to ensure small business lending and job growth continues.

House Hearing Demonstrates New DOL Regulations Will Hurt Businesses and Workers

On Wednesday, June 10th, major regulatory changes expected from the U.S. Department of Labor (DOL) this summer were the subject of a House Subcommittee on Workforce Protections hearing. The forthcoming changes include the potential doubling of the salary threshold for overtime exemption and a new test for the primary duties of overtime-exempt workers. These modifications should concern franchise businesses, as they could severely limit opportunities for lower-level employees to advance in rank, limit the flexibility of business owners to manage their workers as they see fit, and increase compliance and payroll costs.

Subcommittee Chairman Tim Walberg (R-MI) shared his hope that despite an “administration notorious for overreach”, the Department of Labor should listen to employers’ concerns, and put forward a “proposal that encourages rather than stifles productivity, personal opportunity, and economic growth.”

The Subcommittee heard testimony from industry experts and academics regarding the current and proposed regulatory framework. While the witnesses disagreed in some aspects, they all agreed that the current enforcement structure of the Fair Labor Standards Act (FLSA) of 1938 needs to change. Three of the key witnesses were: Seth Harris, former Acting Secretary of Labor, Jamie Richardson, a Vice President of White Castle, Inc., a well-known quick service restaurant chain and Leonard Court, a labor lawyer and member of the U.S. Chamber of Commerce Labor Relations Committee.

The majority of Mr. Harris’ testimony addressed why the DOL should prioritize combating income inequality by raising the Federal minimum wage and increasing the salary threshold. To back up his claims, he relied on his theory that workers will see pay increases because employers will be forced to reclassify previously overtime-exempt workers as hourly workers, and these workers will then get more 1.5x pay for overtime for the work they previously did on salary.

Mr. Harris’ theories were countered by Mr. Richardson of White Castle, Inc., whom represented the views of many private-sector companies. Mr. Richardson explained that these new regulatory changes will add significant compliance costs, drive down worker opportunities and disrupt business in a negative manner. For example, of the over 400 White Castle restaurants, 445 of the 450 managers started as a cashier or a line cook, and worked their way up. If the primary duties test for a salary employee is narrowed based on strict percentages of time spent on managing, there will no longer be as many opportunities for lower-level employees to get managerial experience necessary for this advancement process. This is because a strict definition of primary duties will no longer afford many managers the flexibility to lead from the front and help out with non-managerial duties as needed. Employers will be forced to choose between classifying a worker as strictly management, and strictly hourly, which will in turn, reduce the amount of managers it can hire. It will also reduce opportunities for workers who depend on the ability to work outside the office to promote flexibility, because they will now fall under strictly hourly regulations, and out-of-office work is hard to measure on an hourly basis.

Contrary to Mr. Harris’ suggestion that these overtime changes would result in additional hours for many workers, Mr. Richardson and another human resources professional on the panel testified that- a reduction of salaried positions will also lead to reduced hours, reduced pay, and a feeling of demotion by these formerly salaried employees.  In addition, Mr. Richardson noted an Oxford University study on the effects of an increased salary exemption, which found that an increase to a salary exemption limit of $808 per week, would affect 1.7 million restaurant workers, and would cost business owners $5.2 billion per year. These increased costs will have a negative impact on raises, health benefits, and generous leave policies.

Leonard Court, a member of the U.S. Chamber of Commerce’s Labor Relations Committee, testified about how unfair DOL enforcement techniques create a negative environment for businesses. He cited numerous examples about how Wage and Hours Division investigators have been using a variety of “questionable” tactics to pressure business owners and human resources professionals into unfair and possibly unjustified settlements. Mr. Court also expressed concerns that the DOL needs to release more administrative interpretations of existing law, in order to give businesses more guidance on how to effectively comply with a complex web of regulations.

Among other issues, the three most concerning tactics employed by the DOL were: deliberately pressuring businesses not to use legal counsel, compelling immediate settlements by threatening litigation, and using bait and switch techniques to grab double punitive damages for new cases by using settled ones as admissions of guilt. These tactics result in an enforcement environment that, in the words of Mr. Court, has shifted from an approach of “cooperation and education to one of confrontation and coerced settlement.” Mr. Court cited one case that demonstrates this attitude, where despite months of investigation and six figures of legal fees, the WHD found no wrongdoing by the employer. The tactics and methods of the DOL are even more concerning in light of the Obama Administration’s authorization of expansive funding for franchise-specific Wage and Hour Division investigators.

The final version of these regulations is expected to be released soon, and it appears the potential changes are already creating uncertainty for businesses. As witnesses like Mr. Court and Ms. Berberich, a member of the Society of Human Resource Management observed, more helpful changes the DOL could make include adding clarity to the laws through opinion letters, and by promoting flexibility for the new generation of tech-savvy workers. Written transcripts of witness testimony can be found here, and the video of the full hearing is available here.

Join the First IFA International Toolkit Webinar on June 23rd

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The international articles by IFA supplier members in the June issue of Franchising World Magazine are the first manifestation of the “IFA International Toolkit”.  IFA is shaping the Toolkit with the intent of it becoming a core resource for franchisors and franchisees interested in international franchising.  The International Toolkit will feature webinar courses that collectively comprise a curriculum in international franchising.  The Toolkit will be branded and located prominently on the main international page of IFA’s website.

The first of these webinars “Choosing A Deal Structure For International Franchise Expansion” will be presented by DLA Piper on Tuesday, June 23rd from 2- 3:15 pm ET.

During the free webinar DLA partners with deep international experience will discuss one of the essential questions for franchisors expanding abroad – what expansion model should be used for entering a foreign market? This webinar will examine different scenarios, drawn from real world experience, designed to illustrate how the choice can be made most effectively, and what factors might be considered in choosing one vehicle over another.

 Presenters

Mike Brennan, Partner, DLA Piper
Erik Wulff, Partner, DLA Piper
Tao Xu, Partner, DLA Piper

    Click here to register

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