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WACO, Texas - The chairwoman of the International Franchise Association gives an exclusive interview to Blue MauMau about her experiences on Capitol Hill testifying for lower taxes and why franchisees should get active in guarding against current card check and health care reform bills.
Ms. Dina Dwyer-Owens is chairwoman and CEO of The Dwyer Group, positions she has held since 1999. The company has six franchise brands servicing residences and businesses, including Aire Serv and Mr. Electric. Ms. Dwyer-Owens is this year’s chairwoman of the International Franchise Association, which is celebrating its 50th anniversary this year, making it one of the oldest franchise trade associations.
This is part one of a two-part interview.
BMM: Ms. Dwyer-Owens, let me get started by diving straight into the questions. Why are you making trips to Capitol Hill?
Dwyer-Owens: I’m making trips for a couple of reasons. Number one is that I’m here to protect the relationships I have with my own franchise owners. If I don’t take of my time to go and speak on their behalf, then I’m not doing my job as the leader of The Dwyer Group. Of course, I also serve in the role of chairwoman of the IFA this year. This is probably one of the most important things that I can be doing in that role, besides laying out the strategic plans for the future of the IFA with a wonderful team of people helping with that.
Making sure that we have a presence on Capitol Hill I think is the top priority.
BMM: Is there a memory or two of your experiences on Capitol Hill that stands out?
Dwyer-Owens: If it weren’t for the IFA, I probably would have never made it to Capitol Hill, to be perfectly frank. When the Association first started doing these visits, I was part of a very small group that first went to Capitol Hill.
My fondest memory is hearing from my franchise owners, who wouldn’t have done it either if it weren’t for our relationship with the IFA. They said to me, “This is amazing. I never thought I would have been on the steps of Capitol Hill and meeting with our representatives and telling them where we need their help and thanking them again for their good work for small business.”
That’s probably my best memory.
BMM: When you go to Capitol Hill, is it typical that franchise owners will come with you?
Dwyer-Owens: Absolutely. This past year The Dwyer Group had 48 franchisees on the Hill. Combined, there were 450 franchisors and franchisees in attendance for the [IFA’s] Public Affairs Conference, which used to be called Franchise Appreciation Day. A large portion of those were franchisees.
At The Dwyer Group, we just feel it is very important to have our franchisees be there with us and be the voice of franchising.
Typically we will have advisory councils in D.C. at that time so that we have the benefit of going to the Hill together. They surprised me this year. We had 48 of our franchisees, which was representative of four of our ad councils versus [normally] just two because they thought this was such an important time for them to be on the Hill with us. So they decided that they would have their advisory councils in conjunction with the public affairs conference.
BMM: What are some important bills and issues on the Hill that franchisees should be watching?
Dwyer-Owens: Access to credit for one.
We are fortunate at The Dwyer Group because our franchise fee is not that expensive, and Dwyer can finance our franchisees. But that’s not representative of most franchisors.
Access to credit for most franchisors can help their franchisees get into a first concept or multi-unit expansion.
Yet there are franchisees on the ground who are running great businesses. Who have customers. And yet they cannot get additional financing that they need to grow their business — that capital infusion that small businesses need to take their business to the next level, which often includes hiring additional people.
I was shocked sitting in one of the meetings in one of the [U.S. House of] Representatives' offices. One of my franchisees who was based outside of Houston, Texas, said to me, “A year and a half ago I had a banker that tried to give me money. He wanted to loan money to us so bad. My business over time has continued to grow and do well. I now want to finance four vans.” (In our business, franchises go to the customer’s house.) The franchisee continued to say, “Which means I can employ four additional people. But I cannot get the bank to lend me money.” He said, “Nothing has changed in my business, other than I have gotten better.”
The whole card-check thing is a big issue too on the Hill. The idea of not protecting the secret ballot [in certifying that business employees want to unionize] is very scary for our franchisees. It just goes against, I think, what America is all about.
Of course, there is health care, another huge issue.
We spend more time on [the Hill, lobbying for] access to credit, card check and health care.
BMM: President Obama recently made a speech at Langley, Virginia where he advocated raising the amount of SBA-backed loan caps from $2 million to $5 million and using TARP money to help free up the SBA’s frozen secondary market, which clears the bank guaranteed loans. Why is that important?
Dwyer-Owens: I think it is key. Franchisees are not able to get loans right now. And sometimes $2-million-dollar loans just isn’t enough, especially if you are in the larger businesses like hotels and restaurants. That’s just not enough for them. So raising SBA coverage to $5 million would be huge, especially for the multi-unit franchisees.
There are other pieces to that that are also important, like maintaining that guarantee to 90% versus the 75% level, which gives the banks more protection, but also is easier for the franchisee to go out and get the loan in that case.
BMM: Who is being most affected by the lack of available credit? Is it the franchisees who want to expand? Is it the franchisors who can’t sell new franchises? Or is the lack of lenders providing loans affecting franchisees in their day-to-day operations?
Dwyer-Owens: I think everybody is being affected, to be frank with you. When the franchisees can’t get the financing they need, it’s not good for the franchisor, of course.
I had a chance on Capitol Hill to meet with some very large multi-unit franchisees. We don’t have many of those in the Dwyer brands. But outside of Dwyer, I met a gentleman who has some Long John Silver and A&W Root Beer [stores]. If I remember correctly, I think he has a hundred. It is frustrating for him because this guy is such an ambitious guy, and he wants to continue and buy and build more of those businesses.
But he’s stuck because he is not able to get financing.
If the franchisees can’t get financing, whether it is to open new units or to just help with their current operations, it’s not good for the franchisor. It’s not good for America.
BMM: The President’s announcement on freeing credit sounded more like an initiative of the Administration. But it sounds like it is something that Congress has to authorize.
Dwyer-Owens: Congress needs to act. You are absolutely right. We think that it [the bill] is heading in the right direction and that it will be passed.
BMM: The big news lately is health care reform. What’s your take on this? Do the current health care reform bills help small businesses and franchisees?
Dwyer-Owens: I don’t think so. The way that it is currently structured is only going to hurt our franchisees and small business owners.
Number one: taxes will go up because the U.S government will need to create a lot of deficit to fund this. They are eventually going to have to tax our franchisees more.
That’s not good. That means that franchisees cannot continue to hire new employees. And that they will have to find ways to cut back.
If you look at the franchisees of the IFA, most of the membership are small companies with less than 200 employees. It’s only going to hurt them if the government starts putting mandates to provide health insurance to all employees, especially when insurance rates aren’t going down. We [the IFA] don’t see rates coming down with the bill that the House has made. We think the rates are going to go up.
One of the things we’d like to see is to remove the barriers to buying insurance across state lines.
We don’t like the bill that is on the table right now. We certainly are for health care reform. We should be lowering the cost of health care. We should be improving the quality of care. And we should be making health care affordable for businesses, especially franchisees.
This bill doesn’t accomplish that.
BMM: That’s particularly the case for franchisors, right? Franchisors have been particularly hard pressed to get any sort of health insurance for their franchisees for decades.
Dwyer-Owens: No doubt about it. The IFA has been pressing for years for the association health plan so that we can be buying at the level that these large corporations are buying. One of the biggest challenges to that is the barrier of the state line. So we think that is the solution.
We’ve been talking about it for years on Capitol Hill. And we are afraid people aren’t listening, unfortunately.
There are people who are listening and are fighting for the same thing we are.
But unfortunately, the bill on the table right now is not the one that helps our franchisees or franchisors.
BMM: With the health bills out there in the House and the Senate, has the IFA figured out where the cut-off is of how many employees they need to have before their taxes are raised if the health care bill passes? In other words, if a small business has 50 employees or above, will the franchise see its taxes go up or if they have under 50 employees will their taxes drop?
Dwyer-Owens: My take from what I have studied is that taxes will go up for all of us, regardless. If they are going to start mandating that employers carry a certain level of benefit, and my understanding is that they are going to, there’s going to be some specific contributions that small business owners will have to make towards individual health premiums as well as family health premiums.
There are some small business owners who are franchisees out there who just can’t do that.
I think that taxes are going to go up for everybody, regardless.
BMM: Large corporations have advantages in hiring employees because of health benefits and other perks that are loaded to their advantage. If the playing field is changed so that small businesses can access group health care rates, won't it be easier for small businesses to find and retain employees?
Dwyer-Owens: Absolutely. It is important. Franchisors could help franchisees pool together to buy health care insurance and provide insurance to the franchisee’s employees at a better rate.
That’s good for everybody.
That’s the direction we need to be going in, not what is on the table today.
BMM: You earlier mentioned Card Check [Employee Free Choice Act], where franchisee employees can more easily vote to unionize their work force by checking off a card that is passed around. Tell me why franchisees should be concerned about that piece of legislation.
Dwyer-Owens: The scary thing about that is the employees of the franchisees won’t have the right to a secret ballot. Pressure can be put on those who may not want to vote for a union. More shops will become unionized.
Our experience is that costs go up for the employer when those shops are unionized. That just complicates their business. I can only speak for the experiences I’ve had with my own franchisees, but it’s been very negative.
BMM: Is there a sense of whom this will affect? Is it just franchisees of the large hotel chains with their many employees that might be targeted? Or would it include the small Subway sandwich shop?
Dwyer-Owens: I don’t know how much they’d be going after the small Subway shops, but I can tell you that Dwyer has some shops that the unions have tried to get into.
We have shops that have as little as 10 to 15 employees.
That’s a scary thing for our franchisees. We’ve got to continue to fight this.