IFA - International Franchise Association : The State of the Union – Franchise Edition

Contact:
Jenna Weisbord, 202-662-0766
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WASHINGTON, Jan. 28-In advance of the State of the Union, the International Franchise Association released the following statement from President and CEO Steve Caldeira that outlines IFA's 2014 Franchise Policy Platform

"Tonight, franchise leaders around the country will watch the State of the Union in the hopes that President Obama outlines concrete ways Washington can help small businesses grow and create jobs in 2014. Over the past six years, franchises have added jobs at a faster rate than the economy at-large, but need support from Washington to kick this economy into a higher gear."

On Healthcare

CALDEIRA : "With the employer mandate, the definition of a full-time worker presents an inevitable, but fixable problem. Currently, the 30-hour definition forces employers to drastically cut hours to reduce costs. In the spirit of improving the ACA, while maintaining the integrity of the law, IFA continues to advocate for a return to the traditional 40 hours per week definition of a full-time worker. This switch will give employers more flexibility on hours, mitigating the problem posed by the employer mandate."

IFA Supported Legislation : Forty Hours Is Full Time Act and the Save American Workers Act

Even With The Mandate A Full Year Away, 31 Percent Of Franchise Decision Makers Reported They Have Already Cut Worker Hours . "Many businesses are already seeing their health care costs increasing because of the law. To cope, 31 percent of franchise and 12 percent of non-franchise businesses have already reduced worker hours, a full year before the employer mandate goes into effect." (Presentation of Findings From National Research Conducted Among Business Decision-Makers," Public Opinion Strategies, 10/13)

• POS : "Additionally, 27 percent of franchise and 12 percent of non-franchise businesses have already replaced full-time workers with part-time employees." (Presentation of Findings From National Research Conducted Among Business Decision-Makers," Public Opinion Strategies, 10/13)
• POS : "Among businesses with 40 to 70 employees, 59 percent of franchise and 52 percent of non-franchise businesses plan to make personnel changes to stay below the 50 full time equivalent employee threshold. This accounts for 23 percent of all franchise and 10 percent of all non-franchise decision-makers surveyed." (Presentation of Findings From National Research Conducted Among Business Decision-Makers," Public Opinion Strategies, 10/13)

On Tax Reform

CALDEIRA : "Conversation in Washington seems to presume comprehensive tax reform is dead in 2014, but it ignores the significant challenge posed by such a grand reform and discounts the progress made to date. In 2014, we must continue the dialogue and advance the ball. This issue is simply too important to the U.S. competitiveness in the global economy to ignore."

More Than Two-Thirds Of Franchisees And Franchisors Support Comprehensive Reform, Even With The Loss Of Deductions . "Sixty-nine (69) percent of franchisees and franchisors support tax reform that lowers rates for individuals and corporations, even with loss of deductions, according to a new survey by BDO. This reflects previous IFA surveys finding that taxes are a top concern of franchisees." (Franchise Business Economic Outlook for 2014, IFA, 01/14)

Caldeira Argues That Tax Reform is Particularly Relevant To Franchising Due To The Reliance On Personal Income Taxes In The Industry. "The importance of comprehensive reform to most franchisees and many franchisors are these small pass-through entities… While we applaud corporate CEOs across many industries, including our own industry, for advocating for a lower corporate tax rate that will keep American businesses more competitive in an increasingly global economy, it cannot come on the backs of the small business community that creates nearly two-thirds, 65 percent, of all net new jobs in the U.S. …(Steve Caldeira, "Steve Caldeira On The Importance Of Comprehensive Tax Reform," IFA , 1/13/14)

On Immigration Reform

CALDEIRA : "Our outdated immigration system is broken. Low and inflexible caps and complex rules have led to a system that fails to produce less-skilled workers needed for companies to grow and 11 million people living as undocumented immigrants. Pro-growth immigration reform that creates a comprehensive market-based guest worker program will help companies grow and create jobs for American citizens."

IFA Supported Legislation : The Legal Workforce Act and the Jobs Originated Through Launching Travel Act

Caldeira And Howard Argue That Existing Guest Worker Visa Programs Do Not Adequately Service U.S. Businesses And Inhibit The Growth Of The Overall Economy. Any guest-worker program worthy of the name must give employers the flexibility they need to fill positions in their businesses when these positions open up, for whatever reason. The existing visa programs are inadequate for the U.S. economy. For example, the H-2B guest-worker program is currently capped at 66,000 per year, a woefully low level. Not only are current visa allocations far too few, the program requires employers to submit applications to four government agencies and pay numerous fees. The program is also subject to constant bureaucratic changes. (Steve Caldeira And Jerry Howard, Let Business Guide A Guest-Worker Policy," WSJ, 04/02/13)

Capriotti's Patrick Walls Argues A New Temporary Essential Worker System Will Help The U.S. Labor Market Be More Agile Going Forward. "In addition to reforming broken visa programs, policymakers should seize this rare political opportunity to create a new program for temporary essential workers that will provide employers flexibility and allow them to address labor needs as they arise. In a dynamic, increasingly global economy like ours, market demands will come and go quickly, and having an immigration system that is equally agile will be critical for the continued success of American businesses: small, large and franchises." (Patrick Walls, "Immigration reforms must allow guest and temporary workers," Las Vegas Review Journal, 04/01/13)

On Workforce Policy

CALDEIRA: "Calls for a higher minimum wage ignore less disruptive poverty reduction tools - such as the Earned Income Tax Credit - in favor of a policy that will effectively hurt those it intends to help. Entry-level jobs are critical for people to gain the skills necessary to move up the economic ladder and a higher minimum wage only serves to put those jobs in jeopardy."

More Than Two-Thirds Of Franchise Businesses Would Make Personnel Decisions To Adjust To A $9.00 An Hour Minimum Wage, 86 Percent For A Living Wage. "More than two-thirds (68%) of franchise businesses and 50 percent of non-franchise businesses would make personnel decisions in order to adjust to a $9.00 an hour minimum wage with another fifth to a quarter of businesses likely making personnel decision to adjust to a 'living wage.'" ("Presentation of Findings From National Research Conducted Among Business Decision-Makers," Public Opinion Strategies, 12/13)

According To Economist David Neumark, Research Shows That While The Minimum Wage Does Little To Reduce Poverty, The EITC Is An Effective Tool That Helps Poor Families Escape Poverty. "Research also supports the notion that the earned-income tax credit provides greater support to low-income families than does the minimum wage.  Most studies of the effects of the minimum wage on the income distribution in the United States suggest that a higher minimum wage does little to reduce poverty…In contrast, research shows that the earned-income tax credit has beneficial effects. There is overwhelming evidence of the credit's positive employment effects for female-headed households with children, which have a very high incidence of poverty. And my work with Mr. Wascher shows that the earned-income tax credit helps families to escape poverty - and not simply through the payment of the credit, but also through the incentives that the credit creates to work more." (David Neumark, "The Minimum Wage Ain't What It Used to Be," The New York Times, 12/09/13)

On Veterans Hiring

CALDEIRA : "The franchise industry has seen firsthand the impact of veteran employees and business owners in growing companies and creating jobs. These veterans served us honorable overseas and should be rewarded when they get home. Passing legislation that reduces the costs and red tape associated with starting a franchise would give veterans a boost as they transition to the private sector."

IFA Supported Legislation : Help Veterans Own Franchises Act and Veteran Entrepreneurs Act

The Franchise Industry's Veteran Hiring Initiative Has Brought 151,557 Veterans, Wounded Warriors, And Military Spouses Into Franchising Since 2011. The survey found that the franchise industry has enabled over 150,000 veterans, wounded warriors and military spouses to start careers in franchising since 2011. In total, 146,365 veterans found employment since 2011 across the 1,159 participating businesses, which include franchisors, franchisees, and franchising supplier companies. Additionally, the survey showed an increase in veteran franchise ownership, bringing the total of veteran franchise owners since 2011 to 5,192, for a total of 151,557 new veterans, wounded warriors and military spouses in franchising since 2011. ("Veterans in Franchising: A Progress Report," Franchise Business Review, 11/13)

Caldeira Argues That Hiring Veterans Is Not Only The Right Thing To Do, But Good For Our Economy As Well. "The vision of VetFran is that our nation is stronger because of our veterans' military service, but our economy can benefit as well. Long after they hang up the uniform, veterans are still working hard, growing their businesses and creating jobs. That's something we can all celebrate, but our work must continue, and it will, because it's the least we can do as an industry, and as a country, to support these returning patriots." (Steve Caldeira, "Honor Veterans And Empower Them For Entrepreneurship," The Hill, 11/07/13)

On SBA Lending

CALDEIRA : "Ensuring credit flows to growing small businesses is essential to creating more jobs in 2014. SBA programs, such as the guaranteed 7(a) and 504 loan programs, are success stories that have enabled entrepreneurs to grow their businesses and should be extended more broadly through the passage of the Commercial Real Estate and Economic Development (CREED) Act."

IFA Supported Legislation : Commercial Real Estate and Economic Development Act

According To FRANdata, The Lending Shortfall In 2013 Resulted In 85,900 Jobs Not Created And 11.4 Billion In Output Lost. "A shortfall in lending has limited franchise growth since the start of the recession. The lending gap is slightly larger this year, up 62.1 basis points from the adjusted 9.1 percent shortfall in 2012 and the adjusted 9.7 percent in 2011. This is not to say that the financial institutions are less willing to lend. It is merely a reflection of franchise transaction demand outpacing the increase in funds being made available. In other words, financial institutions are not keeping up with the lending capital demanded by franchises. This year's gap between demand and the supply of capital will result in fewer unit transactions, more than 85,900 jobs not created and $11.4 billion in economic output lost." (Small Business Lending Matrix And Analysis, FRANdata, 03/13)

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About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.