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Contact: Alisa Harrison, 202-628-8000

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Health Care Reform will Take Center Stage at IFA’s September Member Fly In


WASHINGTON, Aug. 12, 2009—As lawmakers continue to work on health care reform during the August break, International Franchise Association President & CEO Matthew Shay urges lawmakers to take advantage of this historic opportunity and develop a truly market-based health care program that lowers costs, creates real competition and preserves and produces jobs, not destroys them.



“Some proposals currently being debated in Congress put the cost of the reform squarely on the backs of the business community, and small and franchised businesses will likely bear a big share of the burden,” Shay wrote in the August issue of Franchising World.” “Now is not the time to add financial burdens to small businesses when they continue to struggle with an economy in recession and cost pressures that produce narrow profitability. Everyone should have access to adequate and affordable healthcare but not at the cost of economic recovery.”



Shay said that under some proposals currently being debated, employers would have to pay for a basic level of coverage for full time employees and pay for at least some of the costs for part-time employees. If a business did not meet the minimum coverage, it would be required to pay the federal government a tax based on their payroll, with exemptions for a yet to be fully-defined category of small businesses.



“Congress is incorrectly assuming that small businesses can afford coverage based solely upon their total payroll and will assess a tax penalty for non-compliance based on that amount,” Shay stated. “Payroll is not an accurate reflection of a business’ profitability or ability to sustain new regulatory costs.”



In preliminary data gathered by IFA, when asked to gauge the impact of the health care reform proposal on their businesses, 25 percent of franchisors said that the current health reform legislation would threaten the economic viability of their system, and 43 percent of franchisees predict that passage of the bill as it’s written would threaten the economic viability of their store.



Next month, hundreds of IFA members will arrive in Washington for its annual Fly In, to advocate for measures to help businesses help their employees, such as targeted tax credits or tax rebates that offset the cost of offering or maintaining health benefits. IFA members will urge Congress to allow small employers to pool together to offer health insurance to their employees through either the employer’s membership in an association, or association-like group (such as a franchise system) or at a state level. 



“Franchise businesses support comprehensive reform, but market-based strategies must prevail. Providing a framework for small businesses to join would enable small employers to compete on a more level playing field with other businesses by spreading risk among a much larger group, strengthening negotiating power with plans and providers, and reducing administrative costs,” Shay said. “A federal mandate to provide health insurance—either so-called ‘pay-or-play’ or benchmarking to a percentage of payroll or revenue—would stretch any business’ limited pool of resources past its breaking point. In order to comply, franchise businesses would have to scale back wages, reduce hiring and raise prices for services—or as our survey indicates—close stores.



“We have a real opportunity to pass comprehensive healthcare reform this year and provide those Americans who do not have health insurance access to adequate coverage and affordable premiums for themselves and their families,” Shay wrote. “We need reform that is a win-win for everyone.”



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About the International Franchise Association

The International Franchise Association, the world’s oldest and largest organization representing franchising, is the preeminent voice and acknowledged leader for the industry worldwide. Approaching a half-century of service with a growing membership of nearly 1,300 franchise systems, 10,000-plus franchisees and more than 500 firms that supply goods and services to the industry, IFA protects, enhances and promotes franchising by advancing the values of integrity, respect, trust, commitment to excellence, honesty and diversity. For more information, visit the IFA Web site at www.franchise.org.



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