Yes, Council Member Sawant – Franchises Are Small Businesses

 

 

Franchising is far more than just fast food. In trying to argue that Seattle franchises are not small businesses, Seattle Council Member Kshama Sawant points to a “Good Jobs Seattle” study that only examines ownership of McDonald’s, Burger King, and Wendy’s. But what Council member Sawant fails to realize is that the franchise industry is made up of 100 business lines as diverse as hotel, real estate, and tax preparation services, which offer entrepreneurs opportunities to start and grow their own business at all levels of investment.

Some franchise owners are small with only one or a few franchise units and – yes – certainly some are larger. However, to classify all of Seattle’s franchise businesses, which provide 19,000 jobs to the Seattle area, as large corporations would misrepresent the many single and multi-unit owners in the city that face the exact same challenges as Seattle’s other small businesses.

What’s more, by equating all franchises to large corporations, as Sawant argues, franchise businesses would be at a disadvantage to other small businesses in Seattle. Under Seattle Mayor Ed Murray’s proposal, businesses with fewer than 500 employees would have seven years to adjust to the new $15 minimum wage, while large businesses and “all franchises associated with a franchisor” – regardless of employee count – would be forced to do so in just 3 years. For some franchisees, this amounts to labor costs 50 percent higher than their non-franchised competitors.

As Seattle Council members debate a “fair” minimum wage for Seattleites, let’s not forget that the employers paying these higher wage should be treated fairly as well. Rather than picking winners and losers among business owners operating under different models, wage increases should be applied equitably to all of Seattle’s employers.

This piece of the proposal is discrimination against Seattle’s small businesses at its worst. Small business owners should not be punished for choosing to be part of a larger “name brand”. All small businesses, like Seattle’s franchisees, should be celebrated for their sense of entrepreneurship, passion and motivation. Don’t frame franchisees for building their small business using a proven model to provide a service to Seattle’s citizens.

Tell the City Council and Mayor Murray that Seattle franchisees own the store, not the chain. Franchises don’t want special treatment, just the same as others.

Annex Brands joins California Senator Marty Block to Discuss Economic Impact of Franchising

IFA is continuing its industry engagement in California, actively coordinating meetings between franchisees, franchisors and their lawmakers and taking advantage of the time legislators will be spending in their districts.

On May 2, Steve Goble of Annex Brands, Inc. met with Sen. Marty Block (D-39). Emphasizing the franchise business model and Annex Brands’ contributions to San Diego, Goble described the brand and educated Sen. Block on behalf of the franchise industry, while also discussing important public policy concerns such as the minimum wage and its negative impact on small, local franchise business owners.

“With 43 locations, creating 160 jobs and $12 million in economic output in Sen. Block’s district alone, Annex Brands is a franchise network that prides itself on providing more services to more people in more places,” said Goble. A shipping and business service center, Annex Brands is based in San Diego, Calif. with more than 360 independently owned and operated franchise locations throughout the United States.

The importance of franchising in the state, its economic impact and the job opportunities it offers Californians were recognized and well received by Sen. Block. The conversation concentrated on franchising and the business model, but the current issue of minimum wage was also addressed. With the minimum wage set to increase to $10 an hour in 2016, California small-business owners are making adjustments. As Goble described, when the minimum wage rises, so does labor costs. When labor costs rise, you have to account for that additional expenditure from the bottom line. As a small-business owner, that means either raising prices, if the customer will absorb the increase, or having to cut hours, leaving the owner to work longer, harder days.

Goble has been in franchising for more than 20 years and articulated how franchise small-business owners, who put their savings and credit toward business ownership, should be incentivized to grow and expand in the state and contribute to its economic growth. Sen. Block, familiar with the local Postal Annex+, appreciated the number of units, jobs and sales that are generated in his district and state.

Goble summed up the meeting as, “A respectful, thoughtful meeting and a great experience.”

If you would like to participate in this program please contact IFA’s Erica Farage at efarage@franchise.org.

From a Family-Owned Business to a National Franchise

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Those outside of the franchise community may often be surprised to learn that in addition to food and restaurant-related establishments, franchise businesses include a variety of industries. These industries range from accounting to home improvement, from pet services to retail stores, from senior care to weight control and much more. How do franchise systems get started? One way is through a family-owned business.

“Although many family-owned businesses don’t make it past the second generation, there are valuable lessons that can be learned from those that do,” writes Franchising World author Terri Sniegolski, CEO/vice president of Creative Colors International, Inc. She outlines the steps a family-owned business can take to beat the odds and become a national franchise.

Sniegolski describes the five steps that help give your business get from Point A to Point B:

• Uphold the company legacy,
• Hire for the organization you want to become,
• Adapt to the times,
• Step away from your comfort zone and
• Establish a culture of loyalty.

Learn what else she advises, as well as find other articles to help you better navigate the world of franchising at franchisingworld.com.

 

Linking Veterans and Multi-Unit Franchisees

Franchising World readers are taking advantage of learning how to tap into the pluses that military veterans can bring to franchise businesses.  IFA’s VetFran program offers financial incentives, training and mentoring to veterans interested in small-business ownership or a career path in frVet-Fran Logo (K)anchising.  These incentives that participating VetFran member companies provide may include reducing their initial franchise or other fees or contributing to the franchisee’s initial cost of investment.

Marine veteran and past IFA VetFran Chairwoman Mary Kennedy Thompson, CFE, outlines how military veterans, who are dependable, disciplined and hardworking, also make excellent employees for multi-unit franchisees.

“There are many avenues for finding and recruiting veterans into your organization,” writes Thompson, who is executive vice president of The Dwyer Group and president of Mr. Rooter.  “A couple of tools you may want to consider using are on-the-job apprenticeship trainings programs and veteran job-matching sites.”

The article is getting attention on franchisingworld.com, so don’t miss gaining her valuable insights.  How example, she suggests:  “You can look for veterans on the www.H2H.jobs site that matches veterans to businesses looking for trained talent.”

Thompson reminds us that “Our veterans deserve this chance after so faithfully serving our county. IFA and VetFran are engaged with our veteran’s communities to offer opportunities in as many ways as possible. Franchising is good for veterans and veterans are good for franchising. Let’s make today the day we help one more veteran find the opportunity and employment they so richly deserve.”

 

House Panel Passes Six Business Tax Provisions

Today, the House Committee on Ways and Means held its first markup of tax legislation in several years to consider six separate pieces of legislation.  All six bills would make certain expired or expiring tax provisions permanent, including tax incentives important to businesses of all sizes.    Although the votes on the measures were mainly party-line votes, these measures (frequently called “tax extenders”) are among many that lawmakers from both parties have been supportive of in the past to boost economic growth and development, especially among small businesses.

One bill, H.R. 4457, would permanently extend the limit on Section 179 small business expense write-offs to $500,000.  Since the previous tax extender expired at the end of 2013, the current write-off is only $25,000.  This provision, which the Committee approved by a 21-14 vote, is among the most important tax extenders for franchise small businesses, and IFA has consistently advocated for its inclusion in tax extenders packages proposed in recent years.

Another measure, known as the “CFC look through” rule, addresses the treatment of payments between related controlled foreign corporations, and allows multinational companies to more easily move money between foreign subsidiaries.  The Committee passed this measure by a vote of 22-14.  A third bill, which passed by a vote of 21-13, addresses the tax implications of companies converting to Subchapter S, or “pass-through,” tax status.  The Joint Committee on Taxation (JCT) estimates that the six measures will cost a combined $310 billion over a 10-year period.

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