Below are some excerpts from Kate Taylor’s article in Entrepreneur Magazine
Franchisees are among the many business owners trying to make sense of the new law, freezing expansion and cutting back on full-time employees as they fear increased costs will impact their bottom lines.
In a new survey by the International Franchise Association, nearly 18 percent of franchisees ranked the Affordable Care Act as their top concern. The IFA reported that 92 percent of franchisees believe that the Affordable Care Act will increase the cost of their business operations.
Below are some quotes from franchise owners:
The uncertainty about the health-care law has reportedly already paralyzed some franchisees’ hiring and expansion plans. “I am aware of two owners who have sold several locations simply to get under the 50-employee bar,” says Dick Kauffman, a Fantastic Sams salon franchisee.
“I know of multi-unit franchisees who are selling some of their stores just so they can escape the financial clutches of Obamacare by lowering their employee count,” reports David J. Ketchen, Jr., a professor at Auburn University’s Raymond J. Harbert College of Business.
Decreasing employee hours and increasing part-time employees is a major tactic to temper insurance cost-increases discussed by franchisees. “I am a business owner because I want to help people,” says Stephen Bienko, who operates two College Hunks Hauling Junk and Moving units. However, with the black and white delineation between part-time and full-time employment, Bienko says he and other employers will have to make decisions restricting workers’ hours. Franchisees predict they will become increasingly reliant on part-time workers.
The consumers are going to pay this bill,” says Ken Green, a Bruegger’s Bagels franchisee who runs 33 restaurants in New York. Green currently offers health care for employees who work over 30 hours a week and, he says, spends “more on health care than on flour.” However, his employees tend to be young and earn lower incomes. Many don’t currently have health care or are on their families’ plans. He worries that the ACA will force younger employees who don’t need or want health care to join a plan. These increased costs will result, in Green’s case, a pricier bagel for every customer.
“If we have an x-percent increase in our costs, whether it be in the price of the product that we buy or the wages that we pay or the benefits that are imposed upon us, those costs get passed along to the consumer,” says Green. “And everybody is going to have to pass them along.”
Unfortunately there was no link in the article to view the survey, a Google search did not net any links to the report. I will try and get a copy of it, and I’ll report back to you with my findings.
Franchise Owners Beware: Ultimately, no matter how franchisees try to find loopholes and avoid the effects of Obamacare, most will face increased costs. Franchisees such as Mike Ruffer of Five Guys have faced backlash for threatening to raise prices due to the ACA. However, with increased costs the money needs to come from somewhere. That’s is not a good position for franchise owners to make publicly for fear of backlash.
Jim Coen, MFOA Executive Director[/private_Non-member]