President's Job Proposals are a Good Start, But More is Needed

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Jan 28, 2010, 10:00 ET

Increased Access to Credit, More Restrained Approach to Health Care Will Spur Job Creation by Franchise Businesses

WASHINGTON, Jan. 28 /PRNewswire-USNewswire/ -- The International Franchise Association today urged Congress to implement many of the small business provisions proposed by President Obama in his State of the Union address and to expedite efforts to increase credit access to franchised small businesses.

"We are pleased that the President focused on the economic importance of small businesses to job creation and the nation's economic recovery," said IFA President & CEO Matthew Shay. "We support the President's call for targeted tax relief for new investment in small businesses. Additional tax incentives to encourage new hirings are a good first step, but much more can be done to help. Franchised small businesses, for example, need strengthened efforts to support access to credit and start-up capital."

Shay said franchise businesses have been severely impacted by the lack of access to credit, which was down 40 percent in 2009 causing the industry to lose over 400,000 jobs last year. While slow growth in 2010 is expected, the demand for lending to franchised businesses will not be met. A $3.4 billion shortfall in lending to franchise businesses in 2010 will result in 134,000 jobs not created and $13.9 billion in economic output lost, according to data released by the International Franchise Association Educational Foundation.

"IFA appreciates the efforts to date by the President and Congress to support many of our recommendations to improve credit access," Shay said. "But, now is the time to put that support into action. For example, immediately raising the SBA 7(a) loan program limit from $2 million to $5 million will help to create between 450,000 and 650,000 new jobs."

In addition, Shay said that providing resources and programs to help aspiring entrepreneurs acquire the skills and experience to succeed in operating their own businesses will help many Americans currently out of work get into business for themselves. At the President's Economic Recovery Advisory Board Workforce Development Meeting last month, Shay recommended a partnership to develop a fundamental training program to provide individuals seeking a career change with the skills necessary to purchase and operate a franchise business. The creation of a Franchise Entrepreneurship Development Program, coordinated by the IFA Educational Foundation, would help individuals consider and prepare for a career as a franchise business owner.

Responding to the President's health care reform agenda, Shay said that for more than a decade IFA members have been telling Congress that spiraling health care costs make it difficult to create jobs and compete in an increasingly global market place. "Our emphasis has always been, and continues to be, reigning in the costs of health care so that small business can improve access and delivery," he said. "If we are going to seriously consider meaningful healthcare reform and create jobs, cost containment is the place to begin. It's time to slow down the process and develop a bill that benefits everyone and avoids catastrophic consequences to our economy."

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 more than 1,200 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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SOURCE International Franchise Association