With the unemployment rate hovering above 9 percent, media attention continues to swirl about the impact government regulations are having on job creation, particularly to small business.
On Saturday, IFA board member and KFC franchisee David Barr appeared on FOX & Friends Weekend to discuss the impact to his business of the employer mandate provisions in the health care law.
Barr said the law will force his company, which employs more than 400 workers at 21 franchise restaurants, to move some employees from full-time to part-time work, or to share employees with other employers in order to avoid paying the penalities associated with the new law. The story told by Barr is echoed across the spectrum of the franchise industry and is particularly relevant for multi-unit franchisees.
The Wall Street Journal noted the impact of the health care law on franchise businesses in a story on their Small Business page, citing IFA’s recent report that 3.2 million jobs may be put at risk as a result of the new law.
The crux of the burden, the IFA report claims, will be on franchise owners who expand to multiple locations, bumping the number of employees up each time a new establishment opens. If employers don’t offer health insurance and reach 50 or more full-time employees between their locations, the law requires them to pay a $2,000 penalty for each employee, with an exemption for the first 30 workers. In other words, a firm with 49 employees that adds one more worker would have to pay $2,000 times 20 employees, or $40,000, according to the IFA study.
Diana Furchtgott-Roth, the author of the study commissioned by the Hudson Institute, has also published several articles highlighting the findings of the study and its impact on job creation in the franchise industry. All of these articles are available on the IFA’s Health Care Resource Center.
Posted by Matt Haller, IFA Director of Communications