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Washington Hampering Franchise Small Business

By Matthew Patinkin

Too many decisions coming out of Washington threaten the franchise model of doing business. I should know. I’m a longtime franchisee of Auntie Anne’s Pretzel stores in eight states including Illinois. I’ve never seen the situation more challenging for small business owners like me and our employees.

For starters, the General Counsel of the National Labor Relations Board ruled last year that McDonalds Corp. should be considered a joint employer with its franchisees. The complaint the General Counsel ruled on features only McDonald’s, but all other franchisees are at risk because of it. That leaves franchisees like me with serious questions and a great deal of uncertainty.

If implemented, the ruling will radically change how franchised businesses operate in every sector of our economy, not just food services, but home health care, hotels, auto repair, print companies, and many others. These businesses touch all our lives, and hundreds of thousands of local, independent business owners like me stand to lose their ability to make key decisions and run their businesses successfully.

Make no mistake, franchisees run their own businesses—despite what the General Counsel alleges. All hiring, benefits, wage and hour decisions, employment practices—in fact, all workplace decisions in general—are ours and ours alone. The mere thought of being a “joint employer” with our franchisor is completely foreign. If the National Labor Relations Board thinks differently they simply have their facts wrong. I would urge them to start their own locally owned franchise business to see exactly how franchising works.

In addition to the joint employer challenge, small business owners are being forced to reduce employee hours in order to comply with the new definition of “full time” in the Affordable Care Act. The ACA requires companies with 50 or more employees to provide health insurance to their full time workers or pay large fines. However, the law defines full time as anyone working just 30 hours, not the standard 40 hours that businesses have used for decades.

For many employees across the country, this means they will see their hours cut to fewer than 30 per week, forcing many of them to get second, or even third, jobs. Rather than helping people, this will make life more difficult and costly, particularly for millions of hardworking people and their families. This is deeply troubling.

Recent surveys conducted by the International Franchise Association and the U.S. Chamber of Commerce show that the Affordable Care Act could cause half of all small businesses to cut hours or reduce the number of workers on their payrolls. Forty one percent of those surveyed said that the ACA has forced them to delay hiring new employees. In fact, the survey shows that businesses have already increased their use of part-time workers.

I fully support efforts among business leaders in Washington to reinstate the traditional definition of full time—40 hours per week. This will allow more employees to work more hours and earn more money—improving the livelihoods of real people.

I’m proud of all the jobs our franchise business has created over the years. I have always believed that government should help people who work in small businesses like mine. Instead, too many regulations and decisions are doing just the opposite. I am optimistic about the year ahead and hope to open new stores and hire more people. If Washington stays out of the way, we’ll have a much better chance of achieving that goal.

Matthew Patinkin is an Auntie Anne’s franchisee.

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