Meet small firms’ needs in reform

 

 

IFA member Ron Bacskai, owner of CertaPro in West Chester explained to the Philadelphia Inquirer the importance for comprehensive tax reform to include more than just the corporate side of the tax code.

There is no doubt that we need comprehensive tax reform. But as the saying goes, the devil is in the details (“Tour promotes real tax reform,” July 29). As an entrepreneur who works all over Pennsylvania, I am concerned that reform may mean reform only for big companies. Reform that addresses only the corporate side of the tax code would overlook many franchise owners, like myself. The International Franchise Association, of which I am a member as owner of CertaPro Painters in West Chester, has consistently advocated for a simpler tax code that would reduce compliance costs and provide greater certainty for small-business owners. Done right, comprehensive reform will revitalize the private sector and jump-start a more robust recovery. However, because small-business owners file their taxes as individuals, tax reform must fix both the corporate and individual sides to truly be real reform. 

Ron Bacskai, West Chester

Jania Bailey, President and COO, FranNet promotes new tool to help franchise small businesses participate in regulatory development

 

 

jania_2012headshot (5)The announcement by House Small Business Committee Chairman Sam Graves (R-MO) of a new initiative to help small businesses participate in the development of federal regulations is a positive step toward enabling small business like mine, and for my franchisees and other small business owners throughout America, to voice our concerns directly to regulators in Washington, D.C.

Whereas large corporations may have hundreds of lobbyists, lawyers and regulatory experts on staff, my franchisees are focused on growing and executing their business and are unable to retain the type of regulatory guidance necessary to influence the decision-making process on regulations that will have an impact on all businesses. The online resource, “Small Biz Reg Watch, will streamline that process, allowing small business owners like myself to ensure our concerns are taken into consideration when agencies develop final rules for complying with regulations.

While the franchise industry is responsible for the creation of one out of every eight sector jobs, it is essential that small business owners make their voice heard as federal regulations are being considered.  I look forward to promoting this new tool and encourage other small business owners to communicate their concerns about regulations.

Jania Bailey,CFE
President & COO
FranNet

Employers Take a Wait-and-See Approach on Hiring Full-Time Workers Due to Pending Regulations and a Fragile Economy

Brian Miller, CFE, COO of The Entrepreneur’s Source, a career and franchise business coaching company with more than 230 offices in the United States and Canada, and COO of AdviCoach, the premier source for business coaching and advisory services for small to mid-sized businesses, weighs in on the fight over the debt ceiling and spending cuts and its impact on the franchise and small-business communities. 

“This fight is shaping up to be an Armageddon of congressional battles, and Main Street businesses aren’t quite in the clear,” said Miller. “The fight over individual tax rates may be over, but now both sides of the political isle will have to wrestle with reaching the debt limit ceiling, sequestration and the need for government spending reductions.”

As an advisor for a number of franchises and small businesses across the United States, Miller adds that, “Franchises and small-business owners are starting to hold back on investments, new equipment and hiring because of uncertainty over government spending and the debt ceiling battle, which will have an immediate impact on the economy. What’s more is there may be an even greater impact as consumers spend less due to the elimination of the payroll tax holiday, as well as recent tax rate increases from the fiscal cliff legislation.”

Miller continues: “Uncertainty over pending regulations and a fragile economy is causing employers to take a wait-and-see approach on hiring full-time workers. Consequently we’re seeing a shift to a part-time work force in America. The small-business and franchising community is a major vehicle for creating jobs and growth in this economy, but the new health care laws are forcing major players in the industry to pull back and rethink essential business strategies just to stay afloat. We’ll continue to see slow growth if we can’t make long-term solutions that make the United States fiscally more stable. Without economic growth, it’s hard to see a path out of our current economic woes.”

 

U.S. Chamber says economic growth should be “front and center” in 2013; tax reform can “turbo-charge” growth

This morning, IFA was fortunate to have a front row seat at the annual “State of American Business” event at the headquarters of the U.S. Chamber of Commerce, the world’s largest business association located across Lafayette Park from the White House. The event, which brings together representatives from trade associations representing all sectors of the U.S. economy, sets the tone for the annual lobbying agenda for the business community.

U.S. Chamber President Tom Donohue

Chamber President Tom Donohue laid out a series of pro-growth priorities sure to excite anyone in the franchise industry who is frustrated with the ongoing pace of the recovery. According to Donohue, the American Jobs and Growth Agenda would generate stronger economic growth by producing more American energy, expanding American trade, modernizing our regulatory system, and reforming our immigration and visa policies. The agenda also emphasizes the urgent need to address the fiscal crisis with a bold plan that slows the growth of runaway spending, reforms entitlement programs, and overhauls our tax code. According to IHS Global Insight, franchise businesses have been on a slow, but steady, recovery from the recession, and now stand poised to accelerate growth plans if more confidence could be instilled in the economy for existing and prospective franchise investors. As such, Donohue’s comments and the Chamber’s agenda in the year ahead should be welcome news to franchisees, franchisors or prospective franchise investors.

“Economic growth cannot solve all of our problems, but without growth, we will not be able to solve any of them,” said Donohue. “The imperative of economic growth should not be an afterthought. It must be job one. The over-riding objective of this ambitious plan is to generate stronger economic growth in order to create jobs, lift incomes, and expand opportunity for all Americans. America needs big solutions so it’s time to put the smallness of politics aside. We call upon all of America’s leaders in and out of government to put country first.”

Specifically addressing the need for comprehensive tax reform, which is a top priority for IFA, Donohue cautioned lawmakers against using tax reform as a vehicle to continue their reckless spending habits. “Tax reform is not a substitute for spending restraint. It must be done after or concurrent to spending cuts. The right kind of tax reform will turbo-charge our growth, create jobs, and generate more revenues for government at all levels” He warned that the tax increases recently levied on small businesses as a result of the end-of-year fiscal cliff deal will hold back growth in the first part of the year.

“As illustrated by the Chamber’s latest survey of small business members, there is significant uncertainty over health care, regulations, taxes, and deficits,” he said. The Chamber’s Small Business Survey results echo IFA’s latest member survey, which showed the uncertainty of numerous regulatory and public policy challenges were holding back growth.

In IFA’s survey, 64 percent of franchisors report the Affordable Care Act will create some significant uncertainty in long-term planning and healthcare reforms will create significant uncertainty in long-term planning for 71.6 percent of franchisee respondents. More than 10 percent agreed with the statement: “We are no longer confident that our business model is profitable.”

The Chamber forecasts growth of 1.5-1.75 percent in the first half of 2013, with growth accelerating to as high as 2.5 percent in the second half of the year. But Washington “deadlines” in the coming weeks and months, such as the need to raise the debt ceiling and pass a budget, may overshadow growth and will continue to shake the confidence of the business community.

On the bright side, if Congress can address these policies, it will likely accelerate job creation and franchise development across the nation. According to IFA President & CEO Steve Caldeira, franchise growth remains slow due to the rising tax burden placed on small business franchisees and the out of control spending by Washington on entitlement programs.

“While we are pleased the industry continues growing at faster rates than other sectors of the economy, we could be growing much faster, creating more new jobs and businesses, if Washington addressed the tax, spending and regulatory uncertainty plaguing the small business community in a meaningful way,” Caldeira said during the recent unveiling of IFA’s 2013 economic forecast for franchising.

To read or watch the full speech, please click here.

Franchise business leaders speak out on “fiscal cliff” in Washington

 

 

With ongoing discussions by Republicans and Democrats on the fiscal cliff, franchise business owners are weighing in about the impact higher tax rates would have on their business.

House Speaker John Boehner, Majority Leader Eric Cantor, and Majority Whip Kevin McCarthy met with small business owners Wednesday to discuss the danger the fiscal cliff poses to the economy.  The event followed President Obama’s meetings with primarily corporate CEOs from The Business Roundtable as Republicans and Democrats work toward a solution to the fiscal cliff. IFA’s Don Fox, CEO Firehouse Subs and Mitch Cohen, Dunkin’ Donuts and Baskin’ Robins franchisee, were among the nine business owners with a seat at the table to shine light on what will happen to their business if tax rates go up on individuals earning more than $250,000, which includes many small business owners.

“They said they are willing to continue negotiations but Republicans need more detailed spending cuts from the President,” commented Cohen as he left the meeting.  Fox said if a compromise isn’t reached, his stores are not going to be able to continue to expand and generate jobs.  “It can be said with absolute, undeniable certainty that if an ever increasing amount of the profit earned by the hard working franchisee is taken by the government, or redirected according to government edicts, the direct effect is that it will take longer to open new restaurants, and longer to create new jobs.”

IFA President and CEO Steve Caldeira and CEO of Firehouse Subs Don Fox spoke with Lauren Simonetti on FOX News Live from Capitol Hill to give their perspective on what the fiscal cliff means for the franchise industry (scroll to the 11 minute mark to watch their segment).

Each new franchise creates on average 40 jobs and with small businesses accounting for 65% of the jobs in this country (according to the Department of Labor), “it doesn’t make sense in this environment to raise taxes on anyone, especially the job creators”, states Caldeira. “There is no good outcome achieved by going over the fiscal cliff and agreeing on a fiscal deal is the first step toward creating long-term growth for the franchise industry,” explains Fox. “Of our small business owners, 80% are LLC’s and Partnerships and are already holding back until they know what tax rates are going to be.”

According to a member survey conducted by the IFA, 79 percent of members would halt growth plans if tax rates go up at the end of 2012.  The IFA sent a letter to Congress by 51 CEO’s urging the fiscal cliff to be averted and for Congress to extend all current rates while creating a framework for comprehensive tax reform in 2013.  Read the letter here.

The President continues to talk about the importance of small businesses to the growth of the economy, yet raising taxes on these owners is not the prescription for growth.  As we talk about the impending effects of the fiscal cliff and tax rates, small business owners need to have a seat at the table talking to the President and lawmakers in both parties about what they believe will enable the creation of new jobs our country so urgently needs.

For additional media coverage, see below: