IFA Continues Immigration Reform Listening Tour with Business Leaders in Arizona

CIR AZ roundtable photo

Franchise industry leaders held a roundtable discussion on the topic of franchising’s role in the economy and the impact the recently introduced immigration reform bill could have on franchise businesses today at the Westin Kierland Hotel & Resort in Scottsdale, Ariz., in conjunction with the Restaurant Leadership Conference, a gathering of 1,700 restaurant industry participants.

IFA Pres. & CEO Steve Caldeira opened the roundtable by reacting to the recently introduced immigration reform bill by saying, “the Senate Gang of Eight bill includes many of the priorities of the IFA’s goals for immigration reform, including a mandatory e-verify system and a new W-visa program that allows employers to access foreign workers for lesser-skilled jobs, but only after Americans have had the opportunity to fill those jobs first.”

“We see the pendulum swinging on this issue in the direction of having more positions available than we can fill with workers right now, even with a still relatively high rate of unemployment,” said Don Fox, President of Firehouse Subs.

It isn’t just restaurants that are facing difficulties finding workers to fill the forecasted demand for growth in their franchise businesses. Peter Tourian, the founder and CEO of SYNERGY home care, part of the growing non-medical in-home care industry, said immigration reform can help fuel the necessary demand for workers in his growing enterprise. “With 10,000 baby boomers turning 65 everyday, the demand for non-skilled care in our industry will continue to grow as this industry grows in the coming years.”

One of the priorities of IFA’s immigration agenda is the inclusion of a federal e-verify system that protects employers who may unknowingly hire illegal employees as a result of worker fraud. Several of the roundtable participants shared their concerns with the current e-verify program, which is mandatory in Arizona and would be mandatory nationwide as part of the Gang of Eight bill.

“There must be safeguards in e-verify to ensure that companies like mine who do the right thing by hiring legal workers are not held liable due to shortfalls in the system,” said Scott Novis, founder and CEO of GameTruck Licensing.

Aslam Khan, the largest franchisee of Church’s Chicken, implemented e-verify at his restaurants last year. “We want to do the right thing and hire legal workers, but as a result we lost many of our best workers who came back as undocumented.”

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The event was part of IFA’s integrated advocacy campaign taking place across the country to ensure the franchise industry’s voice is heard in the immigration reform debate. Participants in the Arizona roundtable included Don Fox, CEO, Firehouse Subs, Aslam Khan, CEO, Falcon Holdings (Church’s Chicken, Jack in the Box, Long John Silver, A&W and Schlotzsky’s franchisee), Scott Novis, CEO, GameTruck Licensing, Eddie Goitia, CFO, Tilted Kilt Pub and Eatery, Steve Chavez, Senior VP of Franchise Operations, Native New Yorker Franchising and Peter Tourian, CEO, SYNERGY HomeCare.

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.

The Obama Administration’s corporate tax proposal: what will it mean for franchise small business owners?

The Obama Administration is set to put forth plans today to reform the corporate tax code today, according to USA TODAY:

Treasury Secretary Timothy Geithner will unveil a proposed business tax plan that would lower the corporate tax rate from 35% to 28%, the administration announced this morning.

The plan would make up lost revenue by eliminating tax loopholes and simplifying a business tax system that an administration statement called “uncompetitive, unfair, and inefficient.”

President Obama’s “framework for business tax reform” is designed to “enhance American competitiveness by simplifying the tax code and eliminating dozens of loopholes and subsidies; incentivizing job creation and investment here at home; and lowering the business rate while broadening the tax base,” according to an administration statement.

Sounds great, right? Businesses love lower tax rates so what could be the harm in that? 

The problem lies in the fact that by only pursuing reform to the corporate tax code through a “piecemeal approach”, reform may negatively impact the more than 80 percent of franchise business owners who are pass-through entities such as S-corporations or LLCs and file their business income on their personal income tax return.

An IFA survey shows job creation and growth by franchise businesses could be negatively impacted through an approach of corporate tax reform without individual reform, given individual rates for many small business owners are set to increase at the end of 2012. In the survey, 88 percent of franchisors and 73 percent of franchisees indicated that higher tax rates on households earning more than $250,000 per year will negatively impact their business.

IFA firmly believes that tax reform should only be addressed through a comprehensive approach. While we appreciate the President recognizing that corporate tax reform is needed to keep the U.S. competitive in a global economy, we cannot support corporate tax reform on the backs of the small businesses that represent the majority of job creators in this country.

Leaving behind individual reform and pursuing only corporate reform would likely increase the uncertainty for franchise business owners at a time when the franchise industry is poised to be a leading driver of the economic recovery after three years of declines. IFA’s 2012 Franchise Business Economic Outlook forecasts projects the industry is poised for approximately 2 percent growth in 2012 in jobs (168,000) and franchise establishments (14,000).

Posted by Matt Haller, IFA Sr. Director of Communications


On Friday, Feb. 3, Bloomberg TV ran a jobs story ”The Big Business of Franchises” featuring two

On Friday, Feb. 3, Bloomberg TV ran a jobs story ”The Big Business of Franchises” featuring two IFA member companies, Valpak and Lucille Roberts, a women’s health center franchise. 

The segment, which aired just prior to the release of the Department of Labor monthly jobs report showing the economy created 243,000 jobs in January and the unemployment rate dropped to its lowest level in years of 8.3 percent, highlights franchising as a bright light in the still-challenging economic recovery. 

The segment summarizes IFA’s 2012 Economic Outlook for Franchise Businesses, which projects that after three years of decline due to the recession, franchise businesses are poised to grow approximately 2 percent in terms of establishments and jobs in 2012. 

Posted by Matt Haller, IFA Sr. Director of Communications

IFA leadership on small business access to capital continues

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As noted in today’s POLITICO Morning Money newsletter, IFA continues to expand its “Small Business Access to Capital Coalition.

Following the POLITICO oped last week from IFA President & CEO Steve Caldeira, Financial Services Roundtable President & CEO Steve Bartlett, Consumer Bankers Association President Richard Hunt and National Association of Government Guaranteed Lenders President & CEO Tony Wilkinson, IFA today delivered a letter signed by 21 trade groups representing small business, retail and banking groups asking Congress:

“for an increase in SBA funding for FY 2012 above FY 2011 levels; funds to extend the loan guarantees for SBA’s 7a; and funds to extend fee waivers for the 7a and 504 programs.”

Here’s a link to the letter. 

For more on IFA’s effort to boost capital access for franchise businesses, check out www.smallbusinesslendinghub.com or www.franchise.org/creditaccess.aspx.

Posted by Matt Haller, IFA Sr. Director of Communications