Multi-Unit Franchisee Magazine Issue II, 2012 | Page 58

Health-ScareREFORM
“This could all be devastating to franchisees
because they’d have to include these costs,
yet to be defined,in their budgets and be very
careful when deciding how many people—
part-time and full-time—to hire.”

Misty Chally

regulators consider “adequate” based on
an employee’s ability to pay.
“This could all be devastating to franchisees because they’d have to include
these costs, yet to be defined, in their
budgets and be very careful when deciding how many people—part-time and
full-time—to hire,” Chally says. Once
multi-unit franchisees reach the 50 FTE
threshold, they would have to provide
health insurance for every employee,
likely paying at least 50 percent of the
premiums. “These are significant costs,
especially in times when franchisees are
struggling to make any profits.”
Legal, political question marks

Chally suggests multi-unit franchisees
follow U.S. Supreme Court hearings
slated for the end of March. when the
Court will hear a suit filed by 26 states
on the legality of requiring individuals
to purchase health insurance. This could
also affect the employer mandate, says
Chally, because the law does not include
a severability clause. “If there is no severability clause, if one provision is deemed
illegal the rest of it goes down, too. Even
if they did sever the two clauses, it would
be hard for the entire law to proceed
without the individual mandate,” she says.
Another opportunity for repeal or re-

vision of the mandate could emerge this
November, Chally says. “The elections are
key. If the Senate and the White House
don’t swing to the Republican side, the
laws are going to be hard to reverse.”
IFA President and CEO Steve Caldeira says the employer mandate in the
law will hit multi-unit franchisees and
small business hard. “Clearly the new
law places undue burdens that really
hurt small businesses and franchisees and
their employers,” he says, pointing to a
study the IFA conducted last fall with the
Hudson Institute. “The study shows that
the new law could result in the loss of up
to 3.2 million jobs in franchising, while
costing $6.2 billion to implement—and
that doesn’t even include the cost of compliance,” he says (see page 58).
Other fallout identified in the study
could be fewer full-time employees and
reduced hours that could force employees to find other work to make up for
the lost hours. “Multi-unit franchisees
will be trying to work around that 50
full-time-equivalent number because
of their already slim profit margins. And
that doesn’t take into account the stillhigh unemployment rate and a million
veterans who will be coming home over
the next five years,” he says.
Franchisees, says Caldeira, have an
important role to play as 2014 approaches.
“We’re trying to educate our members
at the convention and with webinars and
prepare them for what will go into effect
in 2014—while encouraging them at the
same time to be small-business advo-

cates and ambassadors for the franchise
community, to let our elected officials
know what the employer mandate would
mean for net job losses, and to support
pro-business candidates in the upcoming elections.”
The IFA, he says, continues to work
with members of Congress and the administration “to peel back the onerous,
costly provisions” that adversely affect
franchisees and small business, and to
draw attention to other issues such as
access to capital, work force policy, and
support for veterans. One success came
with the repeal of the requirement that
would have forced businesses to send
out 1099 forms for vendors they’ve paid
as little as $600. And in February, Congress and the administration managed
to agree on extending the payroll tax cut
through year-end, to continue unemployment benefits, and to avert a serious cut
in doctors’ Medicare fees. However, in
terms of additional favorable developments coming out of Washington, says
Caldeira, “I’m not certain how much
is going to be accomplished this year.”
Paperwork nightmares

Rank and file multi-unit franchisees have

“Clearly the new law places undue
burdens that really hurt small businesses
and franchisees and their employers.”
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Multi-Unit Franchisee Is s ue II, 2012

Steve Caldeira