Jimmy John’s CEO: Obamacare forces us to raise costs



Ahead of a very important debate tonight for Democrats and Republicans, Jimmy John Liautaud, founder and CEO of Jimmy John’s Gourmet Sandwich Company, stopped by Neil Cavuto last night to explain that even though his company has thrived under Democratic and Republican Presidents, they are beginning to hold back on current expansions.  “About 80 percent of our growth has come from existing franchisees, but what is happening right now is a lot of franchisees are holding back because they are unsure what will happen with the future of Obamacare,” explains Liautaud.

Jimmy John’s, which employs about 60,000 hourly workers, states that they will have to cut back the hours of those workers because there is no other way they will be able to survive. To view the full interview on FOX News click here.

Small business confidence falls as people begin to cut back on everyday purchases



Consumers are known to begin cutting back on big purchases like dining at high end restaurants or on vacations when the economy is sluggish and concern for job certainty is high. But are people now starting to cut back on dining at fast food establishments?   IFA chairman and Arby’s Chairman of the Board Jon Luther discusses the impact the uncertainty is having on fast food restaurants and the franchise industry during a special segment with FOX News’ Neil Cavuto.

Being a part of Arby’s and Dunkin’ Brands, Luther explains that, “we are at the crossroads of consumers and franchisees and we have to weigh their view points and understand their behavior. Early this summer we saw a real slow down overall in the industry, whether it be the franchise or the general restaurant industry,” states Luther.  “People are retrenching and eating out less and generally cutting back on over all purchases and food has become one of them. “

In the franchise world, there are franchisees who are small business owners being affected by consumer slowdown and the uncertainty.  The franchise industry has direct and indirect jobs of 18 million jobs in this country and over 825,000 establishments that are franchised.  “These small business owners can make a huge contribution to our economy and until there are jobs and certainty in the consumer and business environment we are going to be seeing this pattern for a while,” explains Luther.

However, the consumer still has to eat and even with the cut backs Luther assures that “everybody is working hard every day to make sure we provide value to the customers.”

Click here to view the full interview on FOX News.

SBA Announces Near-Record Loan Volume in 2012

On Tuesday, the U.S .Small Business Administration (SBA) announced that its loan programs had reached its second-highest total ever for loan dollars in a fiscal year during FY 2012.  SBA reported that its approvals supported $30.25 billion in 53,848 loans to small businesses as a part of its two major loan programs, 7(a) and 504.  The total was only slightly lower than the FY 2011 total of $30.5 billion and much higher than the FY 2010 total of $22.6 billion.

According to SBA, a driver of the lending pace was the temporary 504 refinancing program, which accounted for 34 percent of the $15.09 billion in loan volume in the 504 program.  The refinancing program was a temporary provision under the Small Business Jobs Act passed in 2010, and expired on September 27.

Although there is still a significant demand for small business lending, this news is an encouraging sign that franchise small business owners are getting the capital they need to expand and open new locations.  SBA also reported that nearly 1,300 lenders returned to SBA lending, highlighting the increasing eagerness of banks to support small businesses as an engine of economic growth and recovery.

To read the SBA’s press release announcing the FY 2012 loan statistics, click here.

Dour Economy Doesn’t Sour East Coast Wings & Grill Growth

A seemingly endless lackluster economic climate hasn’t soured growth prospects for East Coast Wings & Grill, which was just approved $7.5 million to provide start-up funding for franchisees entering the system and expansion funding for existing franchisees.  Created by Franchise America Finance and The Bancorp Bank, a subsidiary of The Bancorp Inc., the lending program is the first of its kind.

The franchise’s CEO envisions that the infusion of capital will enable the opening of 12 to 15 stores annually for the next five years, dotting the Southeast with the franchise’s trademark buffalo wings.  “The successful completion of a financing program in this difficult market is a testament to the strength of our business model and an important step in the company’s continued growth,” said Sam Ballas, CFE, CEO of East Coast Wings & Grill.  By the end of this year, Ballas plans to expand 22-unit East Coast Wings & Grill beyond its home state, opening units in South Carolina and Texas.

The lender enthusiastically welcomed its first emerging chain.  “We are very excited to add East Coast Wings & Grill to our lending program as our first ‘emerging’ brand,” said Ronald Feldman, CFE, CEO of Franchise America Finance. “The unit level economics and adoption of industry best practices by management helped us make our decision to offer franchisee financing.”

“Our national program offers the smoothest, most time-sensitive loan approval process available today,” said Nancy Broudo, vice president of franchisee lending of The Bancorp Bank.  The Bancorp Bank has allocated more than $300 million for small-business franchisees and licensees since the program’s inception. “This access to capitalization will enable qualified franchisees to build their business, their industry and an employment base to create jobs.”

The franchise also recently completed its 35th consecutive quarter of same-store sales increases.

The economy can’t zap the zest of East Coast Wings & Grill’s growth trajectory.


First Debate Exposes Rift Between Romney, Obama Tax Plans

President Barack Obama and Republican presidential nominee and former Massachusetts Governor Mitt Romney met in a head-to-head debate for the first time last night at the University of Denver, kicking off a series of three presidential debates in the weeks leading up to the November 6 election.  Gov. Romney appeared energetic and motivated on stage, aggressively challenging the President’s economic record and attempting to rise above the criticism that has grown more intense in the past two weeks.  On the other hand, by most accounts, President Obama delivered an underwhelming performance.  Although analysts and commentators quickly and emphatically declared Romney the Round 1 winner for both his polished arguments and delivery, it was the exposure of the rift between the candidates’ tax plans that commanded the most attention during the 90-minute ideological clash.

All Big Bird jokes aside, the tax discussion took on a serious and contentious tone, which culminated in the candidates overpowering moderator Jim Lehrer to get in a few extra minutes debating the topic.  Although President Obama attempted to characterize Gov. Romney’s tax plan as a $5 trillion tax break for upper-income individuals, Romney firmly reiterated that his tax plan would increase revenues by increasing economic activity through lower tax rates for small businesses and the lower class.  The President’s plan, Gov. Romney pointed out, threatens to raise taxes on small business owners that file their business taxes on their personal returns, punishing the entrepreneurs that are the engine of the American economy.

CNN Money published an article today explaining how the President’s tax plan, while attempting to tax upper-income Americans, has the unintended consequence of the tax hike for two of the upper-income brackets.  Since more than 80 percent of franchise businesses file their business income on their personal income tax return, Obama’s proposal has the potential to raise taxes on franchise small business owners that are already burdened by tax uncertainty.

For more information on differences between the Obama and Romney platforms and their implications for franchising, click here.  You can also submit feedback and questions to IFA through our mobile app, “Franchising Votes”, or at advocacy@franchise.org.


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