It’s over. The votes (for the most part) have been counted; a few virtual handshakes have taken place between former rivals. TV ads and lawn signs are gone. It’s time to get back to business.
Franchise owners who’ve been, “waiting to see what happens with the election” have some decisions to make. And, I don’t think that those decisions are going to be difficult at all. That’s because franchisees really only have two choices. They are:
Why Are Franchises Purchased?
I’ve never met a prospective franchise owner who’s wanted to become a franchisee for the heck of it.
In other words, people don’t invest a significant portion of their life’s savings into a business unless they feel that they can come out as winners. And, winning to them usually has to do with the growth of their bank accounts. The word to key in on here is “growth.”
Of course, there’s no guarantee that the franchise concept chosen will turn a profit-even one that is a well-known brand. A great brand can become a not-so-great brand in a hurry these days, thanks to the rise in internet use and the 24/7 social media world we live in. But, for the most part, today’s franchise buyer’s take a hard look at the pros and cons, and make their decisions accordingly.
Once they’ve signed their franchise agreement and loan papers, they’re off and running. At first, their goal is to break-even. Once that happens, it’s strategy-time. More times than not, that strategy involves profit-seeking. It may even involve growth.
In franchise business ownership, growth is pretty easy to visualize, especially if it’s in the retail or food service space. It even has a name; multi-unit franchise ownership. Attaining multi-unit ownership status is pretty high up on the list of things that define success for today’s franchise owners.
Believe it or not, some franchisees appear to be ready to not grow their businesses, and they seem to be blaming it all on Obamacare.
Zane Tankel, a multi-unit franchisee of Applebees, says that he won’t be able to add more restaurants to his 40-unit empire. That means that he won’t be able to create more jobs.
Helping to add fuel to the fire of his assertion that he’ll have to stop his company’s growth because of Obamacare, is a detailed report created for The International Franchise Association (IFA) by The Hudson Institute.
Titled, “The Effects of the Patient Protection and Affordable Care Act on the Franchise Industry,” this report states the following:
“The new health care law will have negative effects on the franchising industry’s ability to grow and create much-needed jobs for the U.S. economy. We estimate that the law will negatively affect tens of thousands of franchise businesses, adding more than $6.4 billion in increased costs, not including the cost of regulatory compliance. Further, we estimate that the jobs of more than 3.2 million full-time employees in franchise businesses would be put at risk.”
Spin Can Get In The Way
I’ve always had the ability – and the desire – to listen to both sides of a story. But realize that I always have to consider the source.
For example, John Schnatter, CEO of the Papa John’s pizza franchise empire, said that he would have to increase the price of his pizza because of Obamacare. I’m more inclined to take Schattner at his word if it wasn’t for the fact that he was one of Governor Romney’s most visible donors, even holding a fund raiser or two at his private mansion.
Update: Schnattner has apparently walked back his statement about raising his prices and will instead be cutting employee hours due to Obamacare.
The Bottom Line
Some franchisees will continue to grow their businesses. They will also continue to find ways to cut costs. That’s what small business owners do.
While none of us really know what the next year…the next four years actually – will bring in terms of business growth, one thing is certain. Small business owners are in it to win it – and they’ll keep finding ways to do it.
John Schnatter, CEO of Papa John’s Pizza Photo via Shutterstock