1851

Dear Franchise Owners: I regret to inform you that I am the bearer of bad news. As you&#8217;ve probably suspected by now, labor costs are on the rise. And, consequently, your bottom line is on the decline. No surprise, right? Of course, labor costs are headed up (when aren&#8217;t they?). Of course, it will impact your bottom line. Of course, you&#8217;re not happy about it. And, of course, I jest. None of this is new to you. But, what may be new is the reason why. This year, the franchise industry stands at a new type of crossroads: the intersection of Affordable Care Act Avenue and Substantially Higher Wages Way. Benefits expand in 2016 under the ACA, and, for most, this is likely to be the most expensive year for compliance yet. Fines for the uninsured are set to nearly double. Taxpayers without insurance will now pay $695 or 2.5 percent of modified adjusted gross income (MAGI), compared to $325 last year. That means all of those healthy young adults that were holding out are likely going to be signing up. Healthy workers are good workers, but employers will now feel the full effects of the employer mandate. Under these changes, employers must provide plan options that cover 60 percent of allowed medical costs for full-time employees (FTEs) and their children (26 and under) as well as subsidize any cost over 9.5 percent of MAGI. Companies with more than 50 FTEs must offer coverage for 95 percent of FTEs. All of that will be amplified by insurers, who have already announced plans to raise rates by double digits&#8212;some by as much as 52 percent. &#8220;Simply understanding the impact of the ACA can be a challenge in and of itself,&#8221; said Nader Masadeh, President &amp; CEO of <a href="http://ownabuffalo.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=laboring-toward-an-uncertain-future-how-growing-labor-costs-could-impact-franchising-in-2016-3681" target="_blank" rel="nofollow">Buffalo Wings &amp; Rings</a>. &#8220;Corporately, the initial requirements of the law didn&#8217;t impact us that much. We&#8217;ve always offered strong healthcare coverage to our employees. But, at a franchise level, it&#8217;s a different story. There is a lack of understanding of the changing requirements from franchisees, and they&#8217;re constantly calling for help from us for guidance. With another round of changes happening now, I expect that will only grow as we move through 2016.&#8221; It&#8217;s a tough pill to swallow for some franchisors, made even tougher by the prospect that wages are highly unlikely to stay static for much longer. The &#8220;fight for $15&#8221; has been highly publicized in markets across the country and wage boards are growing more confident by the month that they can boost minimums, despite an onslaught of anti-business and anti-inclusionary arguments that seem to increasingly fall on deaf ears. &#8220;It hasn&#8217;t affected our system directly yet, but it is affecting the industry as a whole,&#8221; Masadeh said. &#8220;I expect that it won&#8217;t be long before wages are boosted nationwide. And, it will likely result in short term pain for some franchisors. But, I think of it like I think of gas prices. When prices went up to $3 then $4 per gallon, people did start traveling less at first. But, then those prices became the new normal, and people adjusted their budgets accordingly. The key to weathering all of that is to plan ahead as a franchisor, and expect that change will come.&#8221; Still, even if those storms can be weathered, some franchisors and franchisees alike are finding their most pressing issue is simply hiring enough qualified staff. As the economy&#8217;s health continues to improve and hiring continues to expand across a wide variety of industries, there are fewer and fewer workers to staff the scores of new franchises being added each year. A growing number of restaurants, for instance, are finding it necessary to pay beyond the minimum, provide stronger benefits and more transparent career paths to get qualified candidates in the door and then engaged with the company. &#8220;Finding qualified, trained watchmakers and jewelry repair technicians is harder now than it&#8217;s ever been before,&#8221; said Gerry Weber, CEO of <a href="http://fastfix.com/franchise/who-we-are/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=laboring-toward-an-uncertain-future-how-growing-labor-costs-could-impact-franchising-in-2016-3681" target="_blank" rel="nofollow">Fast-Fix Jewelry &amp; Watch Repair</a>, the nation&#8217;s largest and most successful franchise of its kind with more than 150 locations in the U.S., U.K. and Ireland. &#8220;The notion of trade schools has all but disappeared in the U.S. because there is an expectation with parents that their children will go to college. We&#8217;re working to combat that by working with for-profit schools across the country to develop a jeweler/watchmaker curriculum. But, in the meantime, we are forced to look outside the borders to ensure we&#8217;re employing the highest quality craftsmen in our stores. That does allow us to provide quality employment opportunities for immigrants who find a better life here. But, the downside is: it makes employment a far more difficult process for us, because we&#8217;re not willing to compromise on quality.&#8221; &#8220;The additional challenge is retaining those quality employees once they are hired,&#8221; agreed Masadeh, of Buffalo Wings &amp; Rings. &#8220;You have to plan carefully to create the right kind of competitive environment. The values we&#8217;ve built Buffalo Wings &amp; Rings on help sell our brand as an experience to both employees and potential franchisees, and those values are more important now than they might have been to previous generations who simply took a job in order to be employed. That gives us a built-in advantage on a very competitive playing field.&#8221; After more than a decade of experience solving a wide variety of labor challenges, Masadeh says the key to strong growth in the environment franchising now faces is a long-term plan. &#8220;It&#8217;s critical that you build up enough long-term savings to weather those short-term dips,&#8221; he said. &#8220;If you have a solid plan in place, then you anticipate change before it comes, and you can weather that storm. In my experience, when that happens, everything tends to work itself out in the end.&#8221;

1851 Franchise

Spoiler Alert: The ACA and Possible New Wage Regulations Are Poised to Hit Harder This Year Than Ever Before

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

Laboring Toward an Uncertain Future: How Growing Labor Costs Could Impact Franchising in 2016  

laboring-toward-an-uncertain-future-how-growing-labor-costs-could-impact-franchising-in-2016

Senior Care Authority

How This Senior Care Authority Franchisee Turned Love for His Grandparents Into a Lifelong Calling

how-this-senior-care-authority-franchisee-turned-love-for-his-grandparents-into-a-lifelong-calling

HomeTeam Inspection Service

Hometown News: Like Father, Like Son — Family-Run Inspection Business Blends Generations of Expertise and a Keen Eye for Detail

father-son-home-inspection-franchise-florida

KLA Schools

KLA Schools of Beachwalk Hosts Admissions Kick-Off Celebration

kla-schools-of-beachwalk-hosts-admissions-kick-off-celebration

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

rising-home-insurance-costs-ohio

CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

primetime-fitness-expands-crunch-portfolio-with-capitalsprings-backing

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

AI Is Reshaping Franchising: $100 Billion Valuations and Hyper-Localized Advertising

ai-is-reshaping-franchising-100-billion-valuations-and-hyper-localized-advertising

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

1851 Franchise Deep Dive graphic with Sparkle Squad logo

Sparkle Squad Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-sparkle-squad-franchise-costs-fees-profit-and-data

Design with school-aged child standing on pencil with text "Education Franchises" and "<$500K"

Top Education Franchises Under $500K To Explore in 2025

top-education-franchises-under-500k

Laboring Toward an Uncertain Future: How Growing Labor Costs Could Impact Franchising in 2016

MORE STORIES LIKE THIS