Capital Area Franchise Association Explores ACA Employer Requirements, Action Plans

The Capital Area Franchise Association (CAFA) held its monthly networking lunch this week that included an informative panel on the Affordable Care Act (ACA) and steps employer can take to prepare for compliance in 2014.  The overwhelming consensus: if you haven’t already started preparing, you should.

CAFA

CAFA, a network of franchisees and franchisors in the DC, Maryland and Virginia areas, hosted the event in Tyson’s Corner, VA and assembled a panel comprised of four unique perspectives.  A franchisee, a franchisor, an accountant and an insurance broker contributed to the panel to clarify some of the ACA’s more confusing provisions and describe what effective action plans look like.

Chris Frye, a Virginia-based CPA with Yount, Hyde & Barbour, explained that effective ACA planning involves making a string of strategic decisions, and that business owners should make these decisions while surrounded by trusted advisors.  Mark Carrier, President of the Maryland multi-unit hotel franchisee B.F. Saul Company Hospitality Group, added that no business will be unaffected the employer mandate.  Although some businesses may not be required to provide coverage to employees, every business will see changes to the way they operate.  CAFA President Joe Caruso stressed the need for prompt action on ACA compliance, with open enrollment for state exchanges beginning in October 2013.

As compliance deadlines approach, franchise owners need resources and materials to begin understanding how the employer mandate will impact their businesses.  IFA’s new website, www.MakingSenseofHealthCare.org, contains tools and information for employers to determine which aspects of the employer mandate they are responsible for complying with, testimonials from franchise industry leaders about how they are adjusting their business and workforce to comply with the law, and an interactive feature to chat with IFA government relations staff in real-time to answer questions about the law.  The site is sponsored by the Hylant Group.

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.

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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.

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.

IRS issues employer mandate details

IRS issues employer mandate guidance (REUTERS)

IRS issues employer mandate guidance (REUTERS)

The IRS yesterday (December 28, 2012) issued a Notice of Proposed Rulemaking on the employer requirements under the Affordable Care Act (Internal Revenue Code §4980H), many of which will take effect on January 1, 2014.

The mandate will require “applicable large employers” to either offer full-time employees (and their dependents) an “affordable” health benefits package that meets a “minimum value” standard, or face possible penalties. Applicable large employers are defined as employers with 50 or more full-time-equivalent employees. IFA is reviewing the extensive 144 page rule, which was accompanied by a Q&A document, and will have a full analysis soon. The full rule is available here.

Also, IFA is offering franchise system webinars for IFA members interested in learning about the details of the law’s requirements, penalties and other implications for franchise businesses. To request a webinar, please email Kevin Serafino (kserafino@franchise.org).

In yesterday’s rule, the proposed regulations put forth are organized as follows:

· Definitions

· Rules for determining status as an applicable large employer and applicable large employer member

· Rules for determining full-time employees

· Rules for determining assessable tax payments under IRC §4980H(a)

· Rules for determining whether an employer is subject to assessable tax payments under section IRC §4980H(b)

· Rules relating to the administration and assessment of assessable tax payments under IRC §4980H

· Rules relating to transition relief in certain circumstances

The notice of proposed rulemaking is scheduled for publication in the January 2, 2013, Federal Register, and comments are due by March 18, 2013. In addition, the IRS announced a public hearing on the notice of proposed rulemaking for April 23, 2013, at 10 am. IFA will be submitting formal comments building upon the extensive comments already submitting regarding the law.

Members of the International Franchise Association joined Senate Majority

Members of the International Franchise Association joined Senate Majority Leader Mitch McConnell (R-Ky.), Sen. John Barrasso (R-Wyo.) and Sen. Marco Rubio (R-Fla.) for a press conference yesterday to discuss burdens that policies being pushed by some Democrats and the administration are placing on franchise businesses’ ability to sell more franchises, hire workers and grow the economy. 

“Franchise small businesses need government to get out of the way in order to continue creating jobs at the rate they have historically,” said IFA President & CEO Steve Caldeira. “We applaud Senate Minority Leader McConnell for echoing that message and urge the administration and all members of Congress to develop bipartisan, pro-growth solutions that help franchise businesses to create jobs.”

“The government itself is the problem now,” said McConnell. “We have to allow  the private sector to do what it does best which is to to grow, expand, and create jobs.”

“In recent years, one of the reasons I have not sought to grow is uncertainty surrounding the health care laws,” said David Barr, Chairman of PMTD Restaurants LLC and its affiliates (a franchisee of KFC and Taco Bell) and Rita Restaurant Corp. (the owner and operator of Don Pablo’s Mexican Restaurants). “Obamacare will force me to either decrease employees or move workers from full-time to part-time employees to avoid paying penalties.”

Unless Congress repeals or significantly changes the health care law, 3.2 million full-time employees and tens of thousands of franchise businesses will be at risk of losing their jobs, according to a recent report prepared by Hudson Institute for the International Franchise Association.

“All of my business income is needed to continue to grow and create jobs,” said Gail Johnson, CEO of Rainbow Station, which is a franchise that offers nationally accredited early childhood education and school age recreation programs. “Taking away income from small business owners like myself  through a tax increase is quite simply  a job smasher.”

IFA has urged Congress to consider permanent, comprehensive tax reforms that encourage job creation by franchise businesses, but that also do not hurt small businesses and franchises that file as individuals. Click here to view IFA’s recent letter to Senators.  

“Small businesses that want to grow and have a track record of success should be able to get loans from lenders, said Bob Dorfman, a Five Guys multi-unit franchisee with 9 stores in Tampa, Fla., 10 stores in Columbus, Ohio, 14 stores open in Houston and South Texas, and a commitment with Five Guys to open and operate 103 total stores. “Lenders should be free from overregulation and scrutiny that’s unnecessarily holding back job creation.

Over 82,000 new jobs and over $10 billion in economic output will be lost in 2011 as a result of lack of credit flow to franchised small businesses, according to the IFA Small Business Lending Matrix & Analysis, Vol. 3.

“We have heard today that the rules and the regulations coming out of Washington are making it harder and more expensive for the private sector to create jobs,” said Barrasso.

“Let’s listen to the job creators and create an environment where they can go out and Americans can do what they have done better than anyone in the history of the world,” said Rubio. “They haven’t forgotten how to go out and start a business. These people haven’t run out of good ideas. They just need a government that makes it easier for them to go out and do that and not harder.”

Posted by Matt Haller, IFA Sr. Director of Communications