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Capitol Required

A major question: Can Congress AGREE to help franchisees?


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Cain and Caldeira:

As senior vice president of communications and marketing for the National Restaurant Association, Steve Caldeira spent a lot of time talking to the media for his boss—Herman Cain. More recently, he spent a lot of time talking to the media about him.

“Over the past two months, I have conducted at least 12-to-15 interviews, including The Wall Street Journal, The New York Times, The Washington Post, Los Angeles Times, Bloomberg, POLITICO, CNN, CBS and CEO Update,” Caldeira shared with Capitol Required in December.

Now in his second year as the International Franchise Association’s President/CEO, Caldeira reported directly to Cain from December 1996 to March 1998. Cain, a Republican radio talk-show host with no government experience, ended his presidential campaign in early December in the wake of sexual harassment allegations stemming from his time as NRA CEO. He denies all allegations. Caldeira most recently spoke with Cain November 18 in Miami, where the former Godfather’s Pizza CEO addressed IFA’s Executive Leadership Conference.

Caldeira remembers Cain as “a strategic and inspiring leader” and contributed $2,500 to Cain’s campaign. He also contributed another $2,500 to Mitt Romney, a keynote speaker at the 2011 IFA Conference in Las Vegas. In addition, OpenSecrets.org says Caldeira had donated $2,496 to the International Franchise Association through September 30, 2011.

Sick of sick leave? After failed attempts at multiple levels of Colorado government, paid sick leave to hourly employees finally came to a vote on the City of Denver’s November ballot, but was defeated by a 2:1 vote. At issue: Should companies be required to provide paid sick leave to all employees?

Previously, voters in San Francisco, Washington D.C., Milwaukee, and Connecticut passed paid sick leave ordinances or bills. (Wisconsin Gov. Scott Walker nullified Milwaukee’s bill after it was passed).

Are franchisees liable for worker’s compensation? The Kentucky Uninsured Worker’s Fund unsuccessfully went after Subway’s parent company, Doctor’s Associates Inc., late last year, seeking reimbursement on a small claim paid to a Subway franchisee’s employee.

The Worker’s Fund sought reimbursement because a two-unit Subway franchisee had let his required worker’s compensation insurance lapse, and had to pay the franchisee’s employee. According to Subway’s legal department, franchisees are required to follow “all applicable local regulations regarding their business and carry whatever insurance their local law requires.” However, it does not track how many of its 14,000 franchisees are insured.

Under Kentucky’s employment laws, Doctor’s Associates and the Subway franchisee are in the “same line of business,” thus making Doctor’s Associates initially liable, according to the IFA’s state-level lobbyist Wayne Weikel. Though, that decision was later overturned.

IFA had submitted an amicus brief to the Kentucky high court, stating if it ruled in favor of the Fund, it would “hobble the very aspect of franchising that has allowed it to contribute 176,000 jobs and billions of dollars to the Kentucky economy.” The court rejected IFA’s argument, but ultimately sided with Subway.

Still, Weikel sees problems with states’ antiquated and unrefined employment laws, which he said are unable to account for “the unique qualities of franchising.” He said IFA has proposed legislation in a number of states, including Massachusetts and Georgia, and will soon push for a legislative fix to the employee-employer classification problem in Delaware.

“The real fight, as many of these things are, was over the principle and not wanting to open the franchisor up to future liabilities from the whole system,” Weikel said.

San Fran not toying around: The Bay City  isn’t building any bridges by regulating the Golden Arches. As of December 1, McDonald’s can no longer put toys in kids meals that have more than 600 calories, due to legislation from a San Francisco city supervisor. Or can it?

Four San Francisco franchisees have found a loophole, and decided to charge an extra 10 cents for a Happy Meal toy, with proceeds going to local Ronald McDonald Houses, thus keeping kids “happy.”

Nonetheless, other franchises are seeing the writing on the wall. Arby’s and Popeye’s have pared back the caloric intake they offer to children, and Jack in the Box has reportedly pulled toys from its kids’ meals in San Francisco.

In related news, Burger King is tackling San Francisco’s new composting requirements head-on.

“Burger King is pretty much in compliance in the city,” said Alex Dmitriew of the San Francisco Environmental Department. BK was “exemplarily in being proactive,” setting up compost bins and signage in response to the October 2009 city ordinance requiring restaurants to organically break down food waste.

While no fines have been levied, the city could start scolding scofflaws not in compost compliance. Subway, for example, has been less compliant, Dmitriew said. “But I can’t really think of any franchises with 100 percent compliance. It’s a work in progress.”

Legislation to watch: The AGREE Act. The country is $15 trillion in debt. In Washington, the bipartisan super committee, frankly, wasn’t so super. And … Congress has a 12 percent job-approval rating.

Professional politicians need something to go right. Now comes a feel-good Bill if there ever was one.

The bipartisan American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act, introduced by Sens. Marco Rubio (R-Fla.) and Chris Coons (D-Del.), is an amalgamation of small-business friendly measures, many cherry-picked from Obama’s proposed Jobs Bill, meant to show the American People that Congress really can work together (hold your applause).

Introduced in mid-November, AGREE also proposes a number of fixes to franchise issues, including: access to capital; expensing and depreciation; intellectual property protection; an R&D tax credit; immigration and regulatory relief. It also borrows from Sen. Bob Casey’s (R-Pa.) Help Veterans Own Franchises Act. And it just might be something everyone can agree on in 2012.

Reach Steve at Spease@franchisetimes.com or 612-767-3226.

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