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Countdown to Convention

We face a historic confluence of some of the most fundamental issues of our time.

In the hospitality business, where I have spent my adult life and entire career, we believe passionately in the power of people meeting together.  There has never been a more important time to get together than during the 2014 International Franchise Association Annual Convention in New Orleans, as we face a historic confluence of some of the most fundamental issues of our time – for our economy, our government and our businesses.

The IFA Annual Convention, scheduled Feb. 22-25, presents a tremendous opportunity for networking and education, it also is our time to come together and use the strength of our numbers to make our voices heard in the national arena on several key fronts. We need to be engaged now – before, during and after our convention to ensure the continuing vitality of the franchise model. These vital issues are:

1. Health Care.  You may not realize it, but you have already made decisions about the new health care law. What you are doing in 2013 sets the benchmark for what you will be expected to do moving forward. As business people, we must follow the law of the land on health care, although we find it flawed and in need of serious correction. We should be concerned that the law incents employers to move full-time employees to part-time status – a change that I believe will wreak havoc on the quality and culture of our work force.

We need to be engaged now – before, during and after our convention to ensure the continuing vitality of the franchise model.

Under the new law, a 20-person restaurant is being treated the same as a 20-person law firm even though the revenue per employee could be 100 times higher at the latter. The legislation will create a world of “29ers” (employees who work less than 30 hours per week) and ”49ers” (companies that keep their number of full-time employees at less than 50). What’s more, all these companies face a whole new world of compliance.

This is a poor one-size-fits-all solution to a complex issue. The struggle to change the worst elements of this law will continue for years, and we need to remain engaged, with the aim of shifting it to a more employer-oriented approach.

2. Immigration.  Unlike the health care situation, which is now law, immigration reform is only in the first inning of what could be an extra-inning game. As employers, we are, of course, fully supportive of enforcing laws and ensuring that our borders are secure. However, it’s fool’s play to think that immigrants are not part of our economy. To treat them as invisible is unfair and wrong. A pathway to citizenship for workers seeking better lives for themselves and their families has always been the American way and needs to be thoroughly addressed. Pending legislation includes the outlines of what would be good, comprehensive reform. From the point of view of Choice Hotels and our franchisees, we do indeed need comprehensive reform. This issue may or may not be resolved before the congressional elections of 2014. In the meantime, however, we should all be interested in having access to legal workers and not be penalized under the verification system that chills compliance by burdening employers with excessive expense and liability.

3. Tax Reform. Again, we may not see change here any time soon, but this debate is the background music of everything else happening in Congress because it is tied to all budgetary and spending issues. What is currently being considered could discriminate against franchisees and partnerships.  Since more than 80 percent of franchise businesses file their business income on their personal income tax return, reform of both individual and corporate rates is needed to ensure that franchise owners and other businesses organized as passthroughs are not disadvantaged by an approach that only reforms corporate tax rates. That’s unbalanced and an inefficient way to spur economic growth, especially considering 60 percent of jobs are created through small businesses that are mostly partnerships or sub S corporations. To saddle the tax burden on folks who are creating jobs simply defies common sense. The goal of tax reform should be a tax code that is fundamentally fair.

The goal of tax reform should be a tax code that is fundamentally fair.

As someone who heads up a company with a hotel system composed entirely of franchisees – many small-business people who own two, three or five properties – I think I contribute a distinctive voice on these debates. Franchising is a uniquely American creation – making enterprises of this kind available to people who want to run their own businesses, who have a family investment in the company, and who want to raise their standard of living by participating in a franchise system.  Inside the world of Choice Hotels, all these forces of American commerce come together in a powerful way.

As I look to my upcoming chairmanship of IFA next year, I will call upon all of you to actively support the issues of importance to the franchise industry.  Our 2014 convention provides an important venue for your business, your range of contacts, and your knowledge regarding key aspects of franchising, and for us to come together on the fundamental issues facing our industry. I encourage you to attend and help make this our most successful conference.

There has never been a more important time for us to meet. I look forward to working with all of our members and seeing you in New Orleans.

Steve Joyce is president and CEO of Choice Hotels International. Joyce serves as vice chairman of the International Franchise Association’s Board of Directors and as 2014 chairman of the IFA Convention Committee.  Find him at via the directory.

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