Nick Powills, CFE, founder and CEO of the full-service communications firm,No Limit Agency, came up with the idea for a dunk tank benefitting VetFran because he thought it would a fun way to build camaraderie for convention-goers at the No Limit Agency + SMB Franchise Advisors booth. The dunk tank was manned by No Limit staffers with guest appearances from clients, attendees and even some IFA team members. By the end of the convention, No Limit Agency and SMB Franchise Advisors had raised $1,085 for VetFran.
Protesters led by the Service Employees International Union picketed several quick service franchise restaurants throughout the country while advocating for an increase in the federal minimum wage. The protesters demanded that the hourly wage floor, currently set at $7.25, be raised to $15 an hour. “Arbitrarily increasing the cost of labor in the current economy and on top of the costs already being levied on franchise owners by Obamacare’s employer mandate and recent tax increases will result in higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately lost entry-level jobs,” said IFA President & CEO Steve Caldeira in a statement responding to the protests.
The IFA and the U.S. Chamber of Commerce also released research that highlights the unintended consequences of raising the minimum wage, including fewer jobs, reduced hours for workers and slower economic growth. Moreover, the research highlights that employers will make these and similar personnel decisions that will negatively impact workers commensurate with the size of the increase in the minimum wage, whether to a “living wage” of $15 an hour or more, and even to a lesser increase to $9 an hour. Read more
- The Hill-Op-ed by Steve Caldeira: Mandating higher minimum wage will hurt employees and economy
- Washington Post: Why franchises are such a huge obstacle to higher wages
- Charlotte Observer: Fast-food workers, activists protest for “supersized” wages
- San Francisco Chronicle: Fast-food workers rally for better pay
- Bloomberg Businessweek: Fast-Food Workers of the World, Unite!
- New York Times: <nyt_headline>$15 Wage in Fast Food Stirs Debate on Effects
- MSNBC: Minimum wage, major fight
- The New York Times: <nyt_headline>Life on $7.25 an Hour
- Inc: Will Striking Fast-Food Workers Hit Franchises Where It Hurts?
- Politico Influence: Trade Groups Push Back on Proposed Wage Hikes
The International Franchise Association (IFA) and the U.S. Chamber of Commerce’s new study brings hard data to the stories we’ve heard from franchisees throughout the country – Obamacare is raising costs, reducing jobs and slowing growth. Stephen Bienko, who owns 15 College Hunks Hauling Junk franchises, is but one example of the stories behind these numbers. He appeared on Bloomberg Surveillance this morning to detail the impact of the ACA on his business.
Stephen Bienko Asserts That Part-Time Workers Who Want To Increase Their Hours And Go Full-Time Would Be Better Able To Do So Without Obamacare. “If it was not for the Affordable Care Act, yes, we would be making them full-time, 40 plus hours per week [and paying their healthcare benefits]. One of the biggest issues with the Affordable Care Act is the change of the 40 hour work week to 30 hours. Changing that status not only affects the financial reality, but it also affects the culture within a company.” (Stephen Bienko, “How Obamacare Impacts College Hunks Moving Junk,” Bloomberg TV, 11/13/2013)
Due To The Law, Bienko Is Having To Reduce Hours To Plan Ahead For The Employer Mandate. “I have already begun to reduce my employees’ hours, and that’s the way you have to do it as a small business owner, you have to plan ahead…The delay does nothing for us. We have to plan ahead…”(Stephen Bienko, “How Obamacare Impacts College Hunks Moving Junk,” Bloomberg TV, 11/13/2013)
As the IFA-U.S. Chamber study shows, Bienko is not the only one feeling the effects of the employer mandate. Below are more stories behind the numbers (see our fact sheet HERE for more, as well as highlights from the U.S. Chamber of Commerce HERE).
Fact #1: Twenty-nine percent of business decision-makers in franchise businesses report increasing costs due to the law.
Brooke and Les Wilson Of Two Men And A Truck Estimate Obamacare Will Result In $100,000 To $120,000 In Higher Costs. “Les said they already provide health and dental insurance for employees, but they’re expecting more of their employees to elect for coverage because of the individual insurance mandate. They’re estimating that they will see their health insurance costs increase by $100,000 to $120,000 per year after the full roll-out of the law. Les Wilson said he believes the ‘biggest obstacle’ for them may be primarily from rising costs of premiums from their insurer. ‘That’s going to be where a significant amount of costs come from…,’ he said. ‘I think it’s a knee-jerk reaction to the uncertainty.’” (Laura Oleniacz, “Durham Two Men And A Truck Franchisees Lobby Lawmakers,” Herald Sun, 9/23/13)
Mike Bidwell, President Of The Dwyer Group, Which Owns A Number Of Franchise Brands, Has “Never Talked To Any Business Owner That Has Been Enthusiastic” About Obamacare. “I have never talked to any business owner that has been enthusiastic about it,’ says Mike Bidwell, president of The Dwyer Group, a holding company for several service-based franchises, including Aire Serv and Mr. Rooter. ‘I have never seen anything that has resulted in such a unified negative response.’” (Kate Taylor, “Franchisees Fear Obamacare as Uncertainty Paralyzes Growth,” Entrepreneur, 10/1/13)
Fact #2: More than 50 percent of both franchise and non-franchise businesses with 40-70 employers plan to make personnel decisions to stay below the 50 full-time equivalent employee threshold.
Sean Falk, A Salsarita’s Fresh Cantina, Great American Cookies, Mrs. Field’s Famous Brands And Pretzelmaker Franchisee, Says The ACA May Force Him To Reduce Employee Hours To Keep His Doors Open. “Currently, I employ 43 full-time equivalent employees. If my business grows and I create more jobs, I will also drastically increase my costs due to the employer mandate. This has an undeniable impact on my bottom line and is making me reconsider opening new locations…Also, I may be forced to reduce my employees’ hours to less than 30 hours per week so that they do not acquire full-time status. With these challenges and changes, I fear that it may be a struggle just to keep the doors open on my 12 existing businesses.” (Sean Falk, Remarks At U.S. House Of Representatives Committee On Small Business, Washington D.C., 2/13)
Sam Ballas Of East Coast Wings Company Found That Franchisees With Three To Five Units Will See Huge Cost Increases With Obamacare – Forcing Those With Fewer Than Three Units To Stay There. “Mr. Ballas’s company studied the past two years of financial data from its restaurants, and modeled how many units a franchisee could own and remain profitable after covering full-time workers. The model showed that franchisees who operate in three or fewer stores are likely to remain under the mandatory insurance threshold, while an owner who manages five restaurants efficiently would have just enough scale to offset the cost of paying for insurance or the penalty.” (Julie Jargon, “Eateries Fear Health Law’s Bite,” WSJ, 5/14/13)
Mary Kennedy Thompson Of Mr. Rooter Plumbing Argues The 30-Hour Definition Of Full-Time Will Require Business Owners Like Her To Limit The Number Of Full-Time Hires. “As I travel the United States speaking with franchisees in markets large and small, the ACA is the top concern of those small-business owners. While the employer mandate was delayed, there are still serious concerns for small-business owners, in particular the requirement that employers with at least 50 full-time employees offer health insurance to those working at least 30 hours a week — as opposed to the traditional 40-hour workweek. Many ask how a 30-hour workweek ever came to be seen as full time. The impact of this future rule causes employers like me and my franchisees to not only limit the number of full-time employees hired, but also cut current employees’ hours to avoid that 30-hour threshold.” (Mary Kennedy Thompson, “Small Businesses Have Full-Time Problem With Affordable Care Act,” Waco Tribune, 10/13)
Bob Funk, President Of Express Employment Services, Which Provides Businesses With Temporary Work, Says That Obamacare Is A Boon For His Business But Bad For The Economy. “‘Obamacare has been an absolute boon for my business,’ he says as we sit in his new office headquarters near downtown Oklahoma City. ‘I’m making a lot of money thanks to that law. We’re up 8% this year. But it’s just terrible for the country. I see that firsthand every day.’ Why is the health care law good for Express but bad for the country? ‘Firms are just very reluctant to hire full-time workers,’ Mr. Funk says. ‘So they are taking on more temporary help, which is what we do.’” (Stephen Moore, ” Where The Jobs Are—And How to Get One,” WSJ, 9/20/13)
Fact #3: A return to the traditional definition of a full-time worker will increase the ability of businesses to grow and give employees more flexibility on hours.
Stephen Bienko Of College Hunks Hauling Junk Argues That By Returning To The Traditional Definition Of Full-Time, Employers Would Be Provided Flexibility To Give Part-Time Workers More Hours And Pay Them More Wages. “For decades, employers have used a 40-hour workweek as a standard for workforce culture, and continuing this would eliminate the need to revamp longstanding employer personnel policies… For my part, I would be able to give my part-time employees more hours and pay them more wages without incurring additional costs.” (Stephen Bienko, Remarks At U.S. House Of Representatives Committee On Small Business, Subcommittee On Health And Technology, Washington D.C., 10/9/13)
Andrew Puzder, CEO of CKE Restaurants, Points Out That The Logic Is Simple – Making Full-Time Employment More Expensive Will Result In More Part-Time Work. “The logic for businesses is simple. If you have three employees working 40 hours per week they will produce 120 labor hours. Five employees working 24 hours per week also produce 120 labor hours. Employers must offer the three full-time employees health insurance or pay a penalty. They have no such obligation to the five part-time employees, making part-time employment less costly. Make something more expensive and employers will use less of it; make something less expensive and they will use more of it. This unintended consequence of Obamacare must be addressed. The bipartisan ‘Forty Hours Is Full Time Act’ introduced in the House and Senate earlier this year offers a viable solution.” (Andrew Puzder, Obamacare and the Part-Time Economy,” WSJ, 10/10/13)
Don Fox, CEO Of Firehouse Subs, Argues That The 30-Hour Definition Undermines The Flexibility Of Scheduling That Provides Employees Convenience And Opportunity To Earn More Money. “Put plainly, the ACA undermines the flexibility of scheduling that has helped ensure a quality dining experience for customers, not to mention provided employees the convenience of flexible schedules and the ability to earn more income as their time permits. Employees throughout the restaurant industry have embraced and enjoyed this benefit for decades, and they are about to lose it. As it stands, the net effect of these requirements will be a limitation of the earning potential of the 13.1 million of American who work in the restaurant industry.” (Don Fox, “Obamacare’s Acute Affliction On Restaurant Workers,” Forbes, 9/12/13)
Read more about how Obamacare will hurt employers and employees at Free Enterprise.
The Franchise Council of Australia and the International Franchise Association formally launched the Certified Franchise Executive (CFE) program at the FCA’s National Franchise Conference in Brisbane, October 20-22. A Study Tour group of IFA members, led by IFA Chairman Steve Romaniello, CFE, Managing Director, Roark Capital Group, Steve Caldeira, CFE, President & CEO, IFA, and John Reynolds, CFE, President, IFA Educational Foundation, participated in the conference program, CFE sessions, and a 3-day visit with FCA members in Melbourne and Sydney, following the conference.
Members of the delegation are Steve Caldeira, CFE, president & CEO, IFA, John Reynolds, CFE, president, IFA Educational Foundation, Bill Edwards, CFE, CEO, Edwards Global Services and International Affairs Committee vice-chair, Rogelio Martinez, CFE, vice president, International Development, Tutor Doctor Systems, Duane Messerschmidt, director, International Sales and Support, The Johnny Rockets Group, Tabbassum Mumtaz, president, Apex Restaurant Management and IFA Board member, Crystal Bednar, operations manager, Apex Restaurant Management, and Amit Pamecha, CFE, CEO, FranConnect. FCA members, led by FCA Chairman Michael Paul, President, Pack & Send, and FCA Education Manager, Simon Heggen, joined the group for the site visits and meetings.
During the conference IFA and FCA leaders met with Bruce Billson, Federal Member of Parliament, and Minister for Small Business. Look for expanded coverage of this story in the January issue of IFA’s Franchising World magazine.
The Trade Mission delegates arrived in Lagos, Nigeria on Oct. 2 after successful stops in Nairobi, Kenya and Johannesburg. After a brief introduction to the market by Janelle Santerre Weyek and Rebecca Armand with the U.S. Commercial Service in Lagos, the group relaxed to get ready for a very full day ahead the next day.
The day began with a country briefing by the U.S. Commercial Service. With more than 170 million people and a growing middle class, the market is the biggest in Africa. If fact, the country is adding approximately 4-5 million people a year although 65 percent of the population lives in poverty. The U.S. is a big trading partner with Nigeria, exporting nearly $5 billion per year. Of course there are challenges for American brands operating in the country with corruption and fraud being two of the obstacles. The USCS personnel strongly suggested that any potential partners be thoroughly checked out and reminded the group of the International Corporate Profiles that the USCS does for American companies at a very reasonable at a cost of $600 – $1200 per company.
In addition, infrastructure and supply chain challenges remain specifically for food franchisors. If there was any doubt that there was money in the country, all the delegates had to do was look across the river from where we were staying to see two nearly identical $50 million yachts owned by the CEO of Fort Oil of Nigeria and Alhaji Aliko Dangote, founder of the Dangote Group whose interests include cement, sugar, beverages, real estate, oil & gas and steel.