What are main street franchise owners saying about the proposed minimum wage hike in the State of the Union?

While the President’s State of the Union address touched on a number of priorities of the franchise industry, such as the need for comprehensive tax and immigration reform, many franchisees are concerned that President Obama’s proposal to raise the minimum wage at this time would be a job killer.

After the speech, IFA President & CEO Steve Caldeira released the following statement:

“The franchising community welcomes the president’s call for action in Congress to address challenges with our immigration system and the complexities in the tax code. IFA stands ready to work with Members of Congress to enact these much-needed reforms for America’s 825,000 franchise businesses to accelerate job creation in our industry.”

Franchise businesses have been hit hard with constant incremental cost increases that make it more difficult for them to expand and create new jobs, such as Obamacare compliance costs, tax increases, hikes in commodity and energy prices and the lack of available capital. All of these policies and external factors are chipping away at the profit margins of America’s 825,000 franchise establishments, which support nearly 18 million workers.

This morning, we asked a few of IFA’s members what they thought about the proposal to raise the minimum wage, and here is what they said:

“The vast majority of employees in my business who make the minimum wage are not full- time employees. Requiring me to pay a high-school student, who I am training to be a worker in our society, a minimum wage of $9 will crush my business. 

“If my employees have a great work ethic, then I immediately pay them more.  This is a simple ‘market’ decision. If they are poor performers, then paying them $7.25 or $9 per hour will make no difference in their performance, but it will erode our ability as small-business owners to make a profit and therefore open new locations.”

Sean Falk a multi-unit franchise owner of Salsarita’s Fresh Cantina, Great American Cookies, Mrs. Field’s Famous Brands and Pretzelmaker

“Raising the minimum wage will not deliver customers with more money in their pockets. It will continue to discourage small businesses from hiring or even keeping minimum wage personnel.  Increasing the minimum wages does not help stimulate business.”

Earl Wertheim, Franchise Developer, The UPS Store

The Time is Now: Start Preparing for the Employer Mandate

This time next year, the major provisions of the Affordable Care Act, including the individual and employer mandates, will be in full effect.  Even earlier, in October of this year, the first Health Insurance Marketplaces will open.  2014 will see tax hikes, regulations, paperwork, and headaches for franchise small business owners across the country.

The 2013 IFA Convention in Las Vegas will feature a session entitled “The Health Care Law and Your Business: What You Need to Know.”    Hear the perspective of a multi-unit franchisee, a health care policy expert, and a veteran insurance broker in a terrific panel that will explore the ACA’s impact on franchising, the most newest health care regulations, and how franchise owners can prepare for 2014.

ConventionGraphic_insider

To expand its education efforts surrounding the ACA, IFA is offering to help franchise companies host webinars on ACA employer requirements for franchisees and other stakeholders.  These hour-long sessions include information on key definitions, tax penalties, communications strategies and other topics as well as a Q&A session with a health care expert from Washington Council Ernst & Young.  For more information on this member service, please contact IFA’s Kevin Serafino at kserafino@franchise.org.

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

Tunisia, an Untapped Market for US Franchises

Tunisia, located on the southern shore of the Mediterranean just opposite Italy, is at the crossroads of Europe, Africa, and the Middle East.  Tunisia has a domestic market of over 10 million people with a GDP per capita (PPP) of $9,698 in 2012 as well as a strong history of universal education and gender equality.  Further, its strategic location in the middle of North Africa and strong business climate, ranked best in the region for doing business by the World Bank, offer the potential to access a broader regional market.  Finally, recent legislation has formally defined franchising for the first time creating the necessary legal and regulatory framework for franchising to flourish. 

Tunisia map

Tunisia has few franchises outside the tourism sector and US franchises are underrepresented.  The recent franchising law and the new political and business climate, along with an IFA supported innovative financing facility, hope to change this.  Currently, a few clothing retail franchises such as Benetton, Guess and Zara can be found in Tunis.  Retail grocery giant Carrefour is building a bigger footprint as well.  Much of the rest of the market has little to no franchise presence, including the food and beverage sector.  Currently, the food and beverage sector is unique in that franchises need government approval to operate (other sectors do not need government approval).  That said, the Tunisian government is currently exploring how to reform existing laws to remove the individual approval for the food and beverage sector to fully liberalize the market. 

To learn more, listen to recent Webinar (and access the slides) hosted by the IFA on Franchising in Tunisia.  Contributors include IFA members, an existing franchisor and a franchisee in Tunisia, the organizers of the upcoming Tunis-Med Franchise conference from February 27 – March 1, and the implementers of an IFA supported innovative financing facility for franchises in Tunisia.  There is still time to sign-up to attend the Tunis-Med Franchise conference at the end of February where the IFA will participate. 

 

For more information contact:

Josh Merin (jmerin@franchise.org)
Senior Manager
International Franchise Association
(202) 662-0762

 

 

Groundbreaking Initiative to Finance International Franchising in Tunisia

monastir-tunisia

An exciting new initiative is moving forward without much notice by the international franchising community.  For those who have focused on it, its unique features have quickly made it top-of-mind.

The Overseas Private Investment Corporation, the international development arm of the U.S. Government, has agreed to institute a financing program which has the potential to alter the financing of international franchise expansion.  In partnership with the Middle East Investment Initiative, a non-profit organization which has pioneered the financing of small and medium-sized businesses in that region, it has agreed to guarantee loans to non-US businesses to enable them to –

  • Acquire US franchises
  • Operate them
  • Produce goods and services to supply the franchises
  • Establish businesses as franchisors

The project will begin in Tunisia, and will focus on the development of franchising as a method of doing business there.

Why Tunisia?  Because when the Arab Spring began there, the US Department of State established a “partnership” with that country to raise the level of economic development.

Why franchising?  Because when the State Department asked the Tunisians what they needed, they responded “Franchising”.

What does this mean for the prospects for franchising in such a country?  It means that franchisors can enter the marketplace with a much greater sense of confidence, because their franchisees will to a large degree have the backing of the US Government – something we have never seen anywhere outside the United States.

What does it mean in other parts of the world?  OPIC and MEII have made it clear that if this project develops as hoped, it will serve as a template for other countries.

You can expect to be hearing much more about this from –

  • Future blogposts
  • The MedTunis Expo, in Tunis, February 27 – March 1
  • A program on the subject at the IFA Convention
  • IFA International WebinarWednesday, January 23rd at 11 am ET

Please join Philip Zeidman, IFA’s General Counsel of DLA Piper, the Middle East Investment Initiative’s Jim Pickup, IFA International Vice Chairman Bill Edwards, and IFA’s Vice President, US and International Development, Scott Lehr to find out more about this international development opportunity.

Register Now!

In the meantime, for more information contact:

Josh Merin (jmerin@franchise.org)
Senior Manager
International Franchise Association
(202) 662-0762

By
Philip F. Zeidman
DLA Piper LLP (US)
(202) 799-4272
Philip.zeidman@dlapiper.com

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