Franchise Lawyer Blog

The New Health Care Law and Franchises

The final chapter on how the new health care law will affect small franchisee business operations has yet to be written. In fact, much remains unclear despite the length of last month’s nearly 2,600 page piece of congressional legislation.

We do know that even though most of the act’s provisions will not go into effect until 2014, the new health care law will add to the already substantial stack of government regulations franchisees need to comply with, understand or discuss with an attorney. For example, the new law says that small businesses with fewer than 50 full-time employees will be exempt from the mandate to purchase health insurance. However, if you own a franchise and want to make health care coverage an option for your employees before 2014, strong incentives in the form of tax breaks and tax credits are available to help offset those costs. Another important feature of the new law is the aggregating requirement for part-time employees. In essence, employers will have to add up the total number of hours worked by part-time employees each month and then divide that number by 120 hours to determine the equivalent number of full-time workers.

The International Franchise Association has expressed its concerns in prior publications about the affect of the new health care law on franchising and in direct communications to the Administration. Although the IFA has traditionally been viewed as the voice of the franchisor community, many of these stated concerns would be shared by individual franchise owners. At the heart of the inquiry is how will health care reform affect small business owners. The concern is that the labyrinthian regulations will be onerous and expensive to small business owners, no matter what the stated intentions.

Stay tuned.

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