Leadership from the Coalition of Franchisee Associations met with members of Congress last month for its annual day at the Capitol to discuss solutions for industry challenges.
Much of the lobbying by the CFA revolved around two issues: transparency for potential franchisees looking for loans, and tapping into the broader workforce to deal with labor shortages. Regarding the latter, CFA Chairman John Motta said the coalition discussed its backing of legislation to bring more recent retirees back into the workforce.
The legislation in question is the Senior Citizens Freedom to Work Act, introduced in the House by Rep. Jackie Walorski, R-Ind. The bill would repeal a retirement earnings test, which applies to those who receive Social Security benefits before reaching retirement age who want to return to work.
The retirement earnings test places a $1 reduction for every $2 of earnings above $18,960 annually.
“The way inflation is today, I’m sure a lot of retirees are struggling to pay for gas, groceries and rent,” Motta said. “This would give them an opportunity to make more income, without being penalized. On the other side, it would help employers like myself to hire these retirees who have a very good work ethic and bring them back to fill open positions we have.”
Motta, a multi-unit Dunkin’ franchisee, said the labor shortage is affecting everyone’s business.
“We’re usually open from 5 a.m. to 7 or 9 p.m., but there are some afternoons now where we have to close at 3 p.m. because we don’t have enough people to man shifts,” Motta said. “People are cutting back hours and days. There are restaurants closing full days now, like on Mondays just to give their staff a rest.”
Another labor-related bill touted by the CFA is the Essential Workers for Economic Advancement Act. Also introduced in the House by Rep. Lloyd Smucker, R-Penn., the bill would create a non-immigrant visa program for high demand/short supply industries in metro areas.
Terry Hutchison, the CFA’s vice chair, said they also back reforming rules for the Earned Income Tax Credit, which has age limits for those who qualify.
“Right now, there’s a range from 25 years old to 65 years old,” Hutchison said. “There are people who’re above 65 and those who’re under 25 who could otherwise qualify for this benefit, and we want to break down these barriers and allow this portion of the American workforce to have access to the EITC.”
“The CFA is really looking at all avenues to get people either back to work or to work,” CFA Executive Director Misty Chally said. “There are other things we can do, like incentivize women to return to the workforce by increasing the child care tax credit. We can also look at getting the second chance work programs more funding and encouraging those who have a criminal record to go to work.”
CFA Executive Director Misty Chally
Making franchising more transparent
Two other pieces of legislation highlighted by the CFA revolved around loans through the Small Business Administration. One bill is the SBA Franchise Loan Transparency Act, that would establish minimum standards of disclosure by franchisors whose franchisees use loans guaranteed by the SBA.
Included in the legislation is a requirement for franchisors to disclose the average and median revenue for franchised outlets, and the number of units that have either ceased operations or were transferred in the first year in the FDD.
“These loans come with commitments, and while the franchisor and lender profit from the loans, the franchisee bears the total liability on what is often a lifetime investment,” Hutchison said. “This bill specifically requires franchisors to disclose fundamental, basic information that anyone needs to make a lifetime decision.”
The other bill was the SBA Franchise Loan Default Disclosure Act, which requires the SBA to publish and update the default rates for the past decade of each franchise brand. The bill is meant to ensure a franchisee borrower has access to loan performance data.
“If you knew a brand had the highest default rate over the past 10 years, that will help you inform your decisions,” Hutchison said. “It’s going to help you, your family and the people you employ.”
Both loan disclosure bills were introduced by Sen. Catherine Cortez Masto (D-Nev.) In a statement to Franchise Times, Cortez Masto said, “I appreciate the CFA’s support of both of my bills to provide franchisees with historical revenue and loan default data. These pieces of legislation will help investors make the best decision for themselves and their business.”
U.S. Sen. Catherine Cortez Masto, D-Nev.
“We went to Capitol Hill with all of these things in our mind,” Hutchison said. “What really surprised me is that while in these congressional offices, some of the questions coming to us after we discussed these issues indicated an interest and a showing that our representatives are understanding the impact that small business has on the United States and to the economy. I had people asking ‘what else do we need to know?’ and ‘what else is impacting the franchise community?’”
The CFA includes more than 20 franchisee associations. Combined, those associations include more than 46,000 franchisees.