Jan. 27, 2010
The National Restaurant Association and the International Franchise Association have each issued a response to President Barack Obama's State of the Union address given Wednesday evening.
Dawn Sweeney, the president and CEO of the NRA, said in a statement that she welcomed the president's efforts to support small business, job creation, and our nation's economic recovery.
"We support the president's call for tax incentives to help spur the economy and generate additional jobs, including the extension of expired provisions that allow businesses an enhanced deduction for expensing and â€˜bonus' depreciation for capital expenditures," she said. "This will encourage restaurants to invest and create jobs. A tax credit for new hires will further encourage restaurateurs to hire additional workers. "During these challenging economic times, restaurants – many of which are small businesses – continue to have difficulty securing access to credit. We are encouraged by the president's proposal to allow a portion of unspent TARP money to be used to directly support small business lending. His call for a continued elimination of fees and continued increase in guarantees for SBA loans through 2010 would help restaurant businesses secure access to credit."
Sweeney also pointed out that the industry's nearly 13 million workers lost jobs in 2009, but, as outlined in the NRA's 2010 Restaurant Industry Forecast, employment growth is expected to resume this year. According to the forecast, the industry should expand by 1.3 million jobs by 2020.
"The scale of the industry's upturn depends largely on consumer confidence," she said. "Until personal disposable income increases and general unemployment levels fall, economic recovery will be prolonged. Consequently, we strongly support efforts that lead to measurable, overall results in these two critical areas.
Health care reform
Regarding health care reform, Sweeney reiterated the association's support of the protections added to the Senate version of the legislation, saying "it is essential to the restaurant industry" that these be included if the Congress enacts any reform. She also voiced appreciation for the first lady's efforts planned for this year to create a national movement to tackle the epidemic of childhood obesity. "We look forward to working to advance voluntary, practical solutions to this issue while protecting consumer choice, the health and vitality of all our people, and the U.S. economy," she said. The IFA 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.
Responding to the president's health care reform agenda, IFA president and CEO Matthew 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."
IFA responds to efforts regarding 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 Shay in a statement. "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, he said.