What’s the impact of the SCOTUS decision on franchise businesses?



While there’s no hiding from the fact that many jumped the gun on yesterday’s Supreme Court ruling, it’s never been a secret that this costly, onerous, cumbersome and unworkable law would have an incredibly negative impact on the franchise industry. Those realities are now becoming even clearer amid yesterday’s decision.

Franchise businesses create jobs faster than other businesses due to the structured and scalable business model that encourages multiple establishment ownership, and they have a growing role in the small business landscape in this country. However, their future is put at risk by the disincentives the Affordable Care Act places on new establishment formation, the hurdles it places on prospective franchisees to own a franchise, and the costly reporting and recordkeeping requirements it imposes on smaller franchise owners. A study done by The Hudson Institute found that 3.2 million jobs at franchise businesses are put at risk by the employer mandate.

But don’t take it from me…take it from IFA members, including:

Tasti D-Lite CEO Jim Amos, who told FOX Business yesterday, “I think for small business in general, and franchise businesses in particular, it will cost jobs and increase costs…particularly as it relates to the employer mandate, franchisees who own one location and might have a desire to expand to multiple locations, they might choose not to invest.”

Or take FASTSIGNS CEO Catherine Monson’s view, who argues in a Washington Post oped this morning, “Employers play a central role in the nation’s health care system. Our company and our franchisees should be able to make their own choices in health care – these decisions should not be made by the government. As we look to expand our franchise system throughout the country, the decision creates increased uncertainty in our long term business planning by forcing me as an employer to choose between absorbing rising premiums or paying mandated penalties.”

As IFA President & CEO Steve Caldeira told CNBC, “This decision sustains the uncertainty they currently have…The impending costs of health care do not give business owners confidence to open that extra store or to hire more people and create the economic output our country needs.”

While the IFA has consistently and passionately fought to repeal and replace the law, in the current political environment, repeal is unlikely until the political dynamic in Washington changes. However, the Court’s ruling does put in play the possibility the Senate could consider repeal of the law under the reconciliation process (making the elections even more important). For this reason, the health care issue will be front and center for the 500+ IFA members who will be in Washington September 10th-12th for our legislative fly-in and throughout our grassroots engagement during the upcoming July 4th and August recess periods.