I own and operate 12 franchised business units in several states and have 43 full-time employees. I bought my first franchise in 1998. Some of the businesses I operate include: Salsarita’s Fresh Cantina, Great American Cookies, Mrs. Fields Cookies, and Pretzelmaker. These are brands I’m proud to be a part of and products that my community loves. I’m also proud to be a part of the franchise industry, which supports nearly 18 million jobs nationwide.
As a small business owner, I can’t ignore what happens inside the Beltway. That’s why I’m here today [Wednesday, July 10] as a representative of the franchise industry and small business owners everywhere to testify before the House Ways and Means Health subcommittee on the Administration’s recent decision to delay the employer mandate. I believe I have a unique perspective that policymakers need to hear in order to make prudent decisions.
I, and my fellow small business owners, applaud the decision to delay the employer mandate because it is ambiguous, burdensome, and costly. But a one-year delay shouldn’t hide the fact that implementation of the ACA has presented an enormous challenge for me as a small business owner. I am facing the legalities of health care exchanges, the employer mandate, and full-time equivalents whether it is in 2014 or 2015. Navigating the constant changes, waivers, extensions, regulations, and clarifications of an already confusing and cumbersome law has drained valuable resources from developing my business and creating new jobs.
The reality is that small businesses must plan well in advance for significant changes in law because, as has been well established, the weight of compliance falls more heavily on smaller firms who lack the advantages and resources of large businesses. It’s very difficult to make future business plans when Congress passes, extends, or delays regulations one year at a time.
However, some improvements are better than none and since policymakers seem to be in the mood for reform, they should make two specific changes that would greatly help franchise small business owners like myself. First, Congress should increase the 30-hour threshold that qualifies an employee as full-time to 40 hours a week. Second, Congress should increase the 50 full-time equivalent employee threshold that requires employers to comply with the employer mandate.
Currently, I employ 43 full-time equivalent employees. If my business grows and I create more jobs, I will also drastically increase my costs due to the employer mandate. This has unavoidable repercussions on my bottom line and is forcing me to reconsider opening new locations. Also, now I may be forced to reduce my employees’ hours to less than 30 hours per week so that they do not acquire full-time status when I do expand. I fear that it may be a struggle just to keep the doors open for my 12 existing businesses. Imagine these consequences I’m grappling with multiplied across all small businesses in every state; that’s a considerable chain reaction that will cripple our economy.
Providing policy certainty to small business owners should be a top priority for politicians, since our success is tied directly to economic growth and job creation. In particular, franchise employment has been growing nearly twice as fast as the rest of the economy; shouldn’t we try to amplify franchising’s economic power? Congress should take advantage of this opportunity to make commonsense reforms and empower small businesses across industries to lead our nation back to prosperity.
Falk is a multi-brand franchise owner and member of the International Franchise Association (IFA), the world’s oldest and largest organization representing franchising worldwide. He is testifying before a House panel today.