US Health Care Law: 5 Franchise Facts Getting Lost in the Politics

Since the Supreme Court upheld the Patient Protection and Affordable Care Act (PPACA) in June 2012, the International Franchise Association (IFA), the National Federation of Independent Businesses (NFIB) and some business owners have communicated their disappointment with the Court’s decision. While the political arguments carry on, decision-makers in franchise systems and units must focus on how their businesses will be affected.

Here Are 5 Franchise Facts You Need to Know:

  1. Some business associations fear “looming employer mandate penalties”.1  The federal government wants you to know that small businesses with fewer than 50 employees are exempt from the law’s requirement of employers to contribute to the coverage of their employees. Since 96 percent of all U.S. businesses, including franchise unit owners, fall in this category, only about 200,000 businesses are subject to the requirement.2
  2. Franchise owners with fewer than 25 employees who provide health insurance can qualify for a tax credit. For franchise owners offering health care benefits through the insurance Exchanges, the credit will increase up to 50 percent in 2014. According to the Internal Revenue Service, “if you are a small employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 a year, and pay at least half of employee health insurance premiums, then there is a tax credit that may put money in your pocket.”3
  3. Franchise owners of indoor tanning businesses specifically are affected by the first tax increase resulting from the Affordable Care Act. On July 1, 2010, the ‘suntan tax,’ representing a 10 percent increase in the cost of doing business, took effect.4
  4. Corporate franchise systems and multiple unit owners may experience reduced expenses in employee insurance premiums. According to the Congressional Budget Office, small businesses should expect lower administrative costs in their group plans, on average, resulting from more people in the system, electronic platforms for paperless processing and reduction of costly errors. With standardized plans, employee choices are simplified to price and provider. 5
  5. Franchisors may see an increase in the number and diversity of new franchisees. With improved access and affordability of health insurance, the federal government expects greater entrepreneurial activity from corporate executives who previously were reluctant to leave jobs with access to group health insurance. 6

While every franchise owner may have his or her political views on the Affordable Care Act, the above highlighted facts clarify some points that may be lost in the ongoing debate leading up to the 2012 U.S. Presidential elections. Franchise decision-makers can take the appropriate action for their company’s best interests.

I am a consultant with Franchise Workforce and have extensive human resources, benefits, insurance and financial services experience gained from market-leading companies: CNA Insurance, KeyBank, National City Bank (now PNC) and numerous top underwriters while with the Forrest T. Jones & Company agency. Complemented by five years of franchisor marketing, distribution and operations experience, my background uniquely enables me to understand your human resource issues and to provide quality advice in tailoring outsourced HR solutions. Call 561-600-5554 or visit FranchiseWorkforce for more on how our group can advise you.

Elevate Franchise Success with Strategic Human Resource Solutions!

©July 2012

1 www.NFIB.com

2,5,6 www.whitehouse.gov/healthreform

3,4 www.IRS.gov

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How are You Solving the Franchise Owner’s Dilemma?

Franchisors provide brand, training, marketing & operating procedures in return for the investment, while franchisees are typically on their own for human resources responsibilities:

  • Employee hiring, administration & payroll
  • Legal compliance & risk management
  • Tax reporting
  • Benefits & workers compensation

Franchisees own the challenges of managing human resources, too. The US Small Business Administration estimates employment paperwork absorbs up to 25% of a business owner’s work activities. That’s time you could be reallocating to areas you consider more productive or enjoyable, such as your core competencies at work or more time with family.

Other areas of concern for franchise owners with employees include:

  • Increased HR Administration. The number of U.S. Labor Laws/Regulations grew by 67% during the past 3 decades, according to the US Small Business Administration.
  • Rising Healthcare Costs & How the Affordable Care Act Will Affect Business.

How would you like to spend your extra time?

Franchise owners can benefit from the same outsourced human resources solutions that many US small businesses enjoy, including a professional employer organization (PEO).  The National Association of Professional Employer Organizations (NAPEO) estimates that PEOs serve as many as 2-3 million working Americans with enhanced access to employee benefits.  PEOs can provide additional stress-relieving and time-saving services, too. Here are just few more ways that human resources strategies from outsourced service organizations can protect franchisors and franchisees:

  • Preserve franchise brand reputation
  • Promote system-wide HR compliance systems
  • Implement risk management policies and procedures
  • Advise on workers compensation and other insurance protection
  • Mitigate employment lawsuits and liability

If you’re a franchise owner or decision-maker who manages at least 10 full-time employees, it’s worth your time to explore how outsourced HR solutions can benefit you.

I am a consultant with Franchise Workforce and have extensive human resources, benefits, insurance and financial services experience gained from market-leading companies: CNA Insurance, KeyBank, National City Bank (now PNC) and numerous top underwriters while with the Forrest T. Jones & Company agency. Complemented by five years of franchisor marketing, distribution and operations experience, my background uniquely enables me to understand your human resource issues and to provide quality advice in tailoring outsourced HR solutions. Call 561-600-5554 or visit FranchiseWorkforce for more on how our group can advise you.

Elevate Franchise Success with Strategic Human Resource Solutions!

©July 2012

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Ten Steps to Protect Your Franchise Brand from Lawsuits

Franchise business owners are responsible for following a multitude of government rules and regulations. In May 2012, a Massachusetts court issued a $3 million damages judgment to Coverall, a privately held janitorial services franchisor found to have misclassified its employees as franchisees. Misclassification of employees is one of many expensive human resources management risks that both franchisors and franchisees face.

Here are 10 RECOMMENDED STEPS to protect your franchise brand and business:

  1. Understand your human resources obligations. Check your franchise system’s operations manual and employee handbook for guidelines, procedures and responsibilities concerning employee management, workers compensation and HR compliance.
  2. Ensure that you have adequate insurance protection. Make sure you have sufficient coverage provided by workers compensation, general liability, directors and officers, and employment liability insurance. Don’t underestimate your exposure to costly litigation resulting from disputes such as sexual harassment, wage and hour or discrimination.
  3. Don’t rely on your accountant for HR expertise. Your accountant can keep you informed of your payroll and tax obligations. However, the administration and processing are likely handled by a third-party provider. Know your provider’s responsibilities, as well as their limits. Don’t rely on your payroll provider to identify or prevent any lapses in worker classification, compensation or wage and hour compliance.
  4. Know your obligations under federal law regarding your workforce. The federal government is actively pursuing companies to reduce the misclassification of employees to capture more tax revenue. Another goal is ensuring compliance with labor laws, which provide important benefits and protections to employees. Misclassifying employees as independent contractors can increase your risk for an IRS audit. Franchise system operators may want to consider focusing on this area in training or operations manuals to help franchisees successfully achieve compliance. Learn more by visiting the US Department of Labor website.
  5. Subscribe to franchise industry-specific legal sources, such as the International Franchise Association’s legal events, e-newsletters and committee information-sharing. Keep in mind that what legally affects one franchise system can easily impact other franchise operations that are similarly structured.
  6. Consult with an employment attorney to establish or review your local HR policies and procedures to help you stay in compliance. Knowing and achieving compliance before any potential problems arise is your best protection against HR-related lawsuit risks.
  7. Seek an outsourced HR service partner. Professional Employer Organizations (PEOs) are expert full-service human resource companies that take control of a franchisee’s employee management functions. PEOs help franchise system operators and owners identify potential risks, mitigate exposure and transfer their employment-related liabilities and responsibilities.
  8. Avoid costly discrimination lawsuits. It is illegal to discriminate among numerous protected classes of people, as listed on the website, or retaliate against those who file a complaint of discrimination. Become familiar with the many US laws passed since the Civil Rights Act of 1964 first established protection against discrimination based on race, color, religion, national origin or gender. Visit the US Equal Employment Opportunity Commission website to learn how to avoid workplace discrimination.
  9. Confirm your new hires’ legal status by using E-Verify. Operated by the US Department of Homeland Security in conjunction with the Social Security Administration, this Internet resource was established for employers who are committed to maintaining a legal workforce. It determines the employment eligibility of newly hired employees.
  10. Protect the value of your brand. How much is your brand worth? How much would you spend to protect it? Widely publicized violations of employment laws or regulations could damage your brand over and above the costs for legal defense, penalties and judgments. Today, bad news spreads virally on the Internet. Take action to prevent your brand from being damaged in the eyes of consumers, prospective franchise owners and the community.

Franchise business owners can spend an inordinate amount of time achieving compliance and assuring that employee paperwork is in order to avoid compliance risks and liability. No franchise system operator wants to be devastated by a multi-million-dollar catastrophic damages bill, such as Coverall suffered. You may find it is well worth your time to prioritize becoming informed and compliant.

I am a consultant with Franchise Workforce and have extensive human resources, benefits, insurance and financial services experience gained from market-leading companies: CNA Insurance, KeyBank, National City Bank (now PNC) and numerous top underwriters while with the Forrest T. Jones & Company agency. Complemented by five years of franchisor marketing, distribution and operations experience, my background uniquely enables me to understand your human resource issues and to provide quality advice in tailoring outsourced HR solutions. Call 561-600-5554 or visit FranchiseWorkforce.com for more on how our group can advise you.

Elevate Franchise Success with Strategic Human Resource Solutions!

©July 2012

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Welcome to my blog

I’ll be sharing content in the areas of my expertise from more than 20 years of marketing, sales promotion, leadership and human resources, mostly in regulated industries:

  • Franchising
  • Financial Services

I’ve started a new consulting venture, called Franchise Workforce, with business partners from the employee benefits and professional employer organization industries.  I’ll use this opportunity to share insights from our group about human resource management issues in franchising and how we can help solve them with outsourced solutions.

http://www.slideshare.net/franchiseworkforce

http://www.slideshare.net/ccswan92

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