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December 2012 • Issue 17

We Communicate, We Educate, We Advocate!

Surviving sandy

Dunkin’ Franchisees Provide Power, Comfort, Food and Drinks to Disaster Area by Chere Coen

and...

A Wake-Up Call for Your Critical Data by Adam Goldman

The Affordable Care Act: Now, It’s Here to Stay by Susan Minichiello IndJoe #17 covers print.indd 1

12/12/2012 12:01:14 PM


DD_IJ_Dec_2012_FNL.pdf

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11/14/12

9:07 AM

Affordable Care continued from previous page

MA Health Care Law Update

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Massachusetts health care insurance reform became law in 2006 and served as the prototype for the federal plan. It has since undergone significant revisions, most recently to the Fair Share provisions. As originally written, the law required any Massachusetts employer with 11 or more full-time equivalent (FTE) employees to provide employees with health insurance that passed certain tests, or pay the Commonwealth $295 per year per FTE. Further, if fewer than 25 percent of employees opted to accept the coverage, the employer had to pay the penalty.

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CM

NOTE: Franchise operations located in the Commonwealth of Massachusetts are subject to the Massachusetts Health Care Reform Law, also known as the Massachusetts Mandated Health Insurance Law, and its subsequent applicable amendments.

The law made no consideration for the reasons an employee might opt out of employer coverage (e.g., already covered under a spouse’s or parent’s plan or as a senior citizen or military personnel), and the 11 FTE threshold seemed arbitrary and excessively burdensome. Dunkin’ Donuts franchise owner Rob Branca helped lead an effort to amend the law, bringing franchise owners’ concerns to the attention of key legislators. They agreed the law was unjust and fought to fix it accordingly. In August 2012, the Massachusetts legislature passed, and Governor Deval Patrick signed into law, an act that includes new Fair Share provisions. The new provisions, which go into effect on July 1, 2013, will raise the FTE threshold from 11 to 21 and make an adjustment for employees with other coverage.

Special thanks to Daniel S. Field and David G. Abbott of Morgan, Brown & Joy, LLP for help building this glossary. Morgan, Brown & Joy, LLP is located in Boston and is New England’s oldest and largest managementside employment law firm. See more at www.morganbrown.com.

Web Sources: www.aldoi.gov/PDF/Consumers/HealthCareGlossary.pdf www.healthcare.gov/glossary/c/index.html www.healthreformgps.org/glossary/ www.davisonbenefits.com/for website Glossary of Terms relating to the Affordable Care Act Updated 8 2012.pdf www.washingtonpost.com/wp-srv/special/health-care-overhaul-lawsuits/glossary.html www.fairhealthconsumer.org/glossary.aspx http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act www.dol.gov/ebsa/newsroom/tr12-01.html - .ULUnSoUmQt4 www.shrm.org/hrdisciplines/benefits/Documents/EmployerPenalties.pdf www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers

index ®

Independent Joe Advertisers

20 17 6 10 2 15 8

Access to Money ATM, Inc. Adrian A. Gaspar & Company, LLP Bright House Network Comcast Business Services Direct Capital Franchise Group Exchange Authority

24 14 16 21 4 19

Joyal Capital Management, LLC Kensington Company & Affiliates Performance Business Solutions RF Technologies Sprint Starkweather & Shepley Insurance

Fidelity Bank

DECEMBER 2012 • Independent Joe

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12/12/2012 12:01:17 PM


Hurricane Sandy Should Be A Wake-Up Call for Your Critical Data by Adam Goldman For many of us in the Northeast, Sandy was our first taste of massive destruction and outages that businesses in the South and Midwest know too well. Many franchisees lost power for over a week, faced floods, and even saw their stores and homes destroyed. Hopefully all will be rebuilt, equipment will be replaced and things will get back to normal. But what if you lost your Radiant site controller, or your manager’s workstation, or even worse your main computer that has all of your QuickBooks files, employee files, and bank files? If Dunkin’ Loss Prevention, The Department of Labor, or the IRS serves you with an audit notice and you do not have these critical files, there is no insurance policy that will help you out of this costly situation. Fines can rise to the tens of thousands of dollars very quickly. In my pre-Dunkin’ days I was an executive with IBM, providing disaster recovery to our clients’ critical data. These companies understood the importance of having a disaster recovery program in place, but they also had full time CIO’s and very deep pockets. So where does that leave the small business owner with one store or a network of 20 stores who has no IT staff and a much more modest budget?

Let’s look at a few options that could save you and your data. 1. Radiant has provided a backup of your site controller to the manager’s workstation. However, in most cases, these two machines are in the same office and if you lose one you probably will lose both.

2. You could burn a CD of your manager’s workstation and your main office computer once a month and take it home. The problem with the CD is you have to remember to back

it up, and large amounts of data may not fit on one CD; the same is true of USB thumb drives. 3. External hard drives are increasingly popular due to their low price and the ability to automatically set backups of your computer. But what if you have a network of 5 stores? That would require 5 hard drives plus the one for your office machine, and if you have an iPad you are not going to walk around with a hard drive attached to it all day long. Plus, the drive will be housed in the same location as the computer increasing the chance that if you lose the computer, you lose the backup drive. 4. Online or “cloud” backup, which until recently was reserved for Fortune 500 companies because of the cost, has now become a cheap give-away for large internet service providers. But, most offer only 2 gigabytes (GB) of space which may be inadequate for your businesses. The other issue is that your data at work may be stored by one company and your office machine by another. On the positive side, the backup

03 05 07 08 12 23

Hurricane Sandy Should Be A Wake-Up Call for Your Critical Data Adam Goldman

New Laws and Regulations Threaten Franchisee Profitability Betsy Lawson

The Affordable Care Act: Now, It’s Here to Stay Susan Minichiello

DDIFO Directory of Sponsors Surviving Sandy Chere Coen

Index of Advertisers

process takes place automatically and can be set to run daily, weekly, or continuously. Since the process runs in the background, this takes the human factor out of the equation. If online backup is truly the best solution, how do you choose between storage space provided by your internet provider, those you find through online search, or those which advertise on the radio? I spent the better part of a weekend researching each of the major companies to determine which would best suit my company’s needs. I wanted a solution that would cover each of my locations: my office machine, my wife’s business computer and the three computers we have at home. I wanted something easy to set up; something that required no human interaction after the initial install. I also wanted a company with a proven track record. I ended up going to a number of the larger firms that provide off-site data storage capabilities. These firms are consistently Critical Data continued on page 16 DECEMBER 2012 • INDEPENDENT JOE

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Up to $350/line early termination fee (ETF) for advanced devices and up to $200 ETF/line for other devices (no ETF for Agreements cancelled in compliance with Sprint’s Return Policy). Individual-Liable Discount: Available only to eligible employees of the company or organization participating in the discount program. May be subject to change according to the company’s agreement with Sprint. Available upon request on select plans and only for eligible lines. Discount applies to monthly service charges only. No discounts apply to secondary lines or add-ons $29.99 or below. Other Terms: Coverage not available everywhere. Nationwide Sprint and Nextel National Networks reach over 280 and 279 million people, respectively. Offers not available in all markets/retail locations or for all phones/ networks. Pricing, offer terms, fees and features may vary for existing customers not eligible for upgrade. Other restrictions apply. See store or sprint.com for details. ©2012 Sprint. Sprint and the logo are trademarks of Sprint. Other marks are the property of their respective owners. N115656 MV1234567

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INDEPENDENT JOE • DECEMBER 2012


New Laws and Regulations Threaten by Betsy Lawson Franchisee Profitability DDIFO Working to Leverage Collective Strength to Protect Franchise Owners When this issue went to press, franchisees in New Jersey were looking at a possible 17 percent increase in the state’s minimum wage. In Florida, state regulators are auditing Dunkin’ Donuts franchisees to be sure they are complying with sales tax regulations. And in Illinois, close scrutiny was being given to the legal language governing whether a dozen donuts is considered a bulk sale or not. A business owner’s misinterpretation of the Illinois law could result in negative tax repercussions down the line. While these regulations may seem specific to the individual states involved, they are singular in theme says New Hampshire franchisee John Motta. “Legislation, whether at the local, state or national level, is going to have a bigger and bigger impact on the small business owner,” he said. With more than three decades in the Dunkin’ Donuts system, Motta knows first-hand all the responsibilities vying for owners’ attention: from hiring and scheduling, to overseeing product quality and customer satisfaction, to bookkeeping and taxes. Motta acknowledges that especially for the new business owner, it can feel like there aren’t enough hours in the day to keep stores running smoothly, let alone stay current on legislative issues at home and across the country. And yet it’s crucial they be informed, Motta says, so they can have an active voice in the process. One of the reasons DDIFO took a leadership role in founding the Coalition of Franchisee Associations (CFA) in 2007 was because the organization provides a platform to organize and speak for franchisees at the national level. Based in Washington, DC, the CFA brings together some of the largest and most reputable independent franchisee associations to leverage the collective strength of franchise owners (see sidebar “CFA Members” page 21).

Motta, a member of CFA’s government relations subcommittee, says he makes it a point to stay current on issues by reading and attending workshops and forums. Like many businesspeople, he often has a more thorough understanding of the business impact of impending or newly passed regulations than the legislators responsible for their passage. An example of this just happened last July during the annual CFA Day Forum on Capitol Hill. Motta met with a senator’s top aide to discuss health care regulations and laid out the figures as he understood them. The aide expressed surprise that the legislation affected small business owners to the extent Motta had outlined. At the time, Motta was visiting the Hill with a small group of CFA members, representing various franchise systems. Motta’s hope for this coming July’s CFA Day Forum is to have some two dozen or more DDFIO members in attendance as well.

“There is definitely strength in numbers.” Motta says he has noted an increased emphasis on government relations from Dunkin’ Brands over the past few years. There will be cases, such as the use of Styrofoam cups, where the interests of Dunkin’ Brands aligns with the franchisees, but that will not always be the case. As such, the more the franchisees can work with one another to speak from their collective best interest, the better. Motta acknowledges learning the ins and outs of operating a Dunkin’ Donuts restaurant can seem overwhelming for a new franchise owner. Navigating the political process is an even greater challenge. But, when franchisees speak with one voice—whether it’s on paper or at a meeting—there is room for a wide-range of experience. New Laws continued on page 17

December 2012 • Issue #17

Independent Joe is published by DD Independent Franchise Owners, Inc. ®

Editors: Edwin Shanahan, Matt Ellis Contributors: Chere Coen, Adam Goldman, Betsy Lawson, Susan Minichiello Advertising: Joan Gould • Graphic Design/Production: Susan Petersen Direct all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2012 • Printed in the U.S.A. DECEMBER 2012 • INDEPENDENT JOE

5


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INDEPENDENT JOE • DECEMBER 2012


The Affordable Care Act: Now, It’s Here to Stay Two years of campaigning and an estimated $3 to $6 billion dollars in spending later, the makeup of the federal government is essentially the same as before the election, and there is little doubt the Affordable Care Act (ACA), also known as Obamacare, will survive. Small business owners and large employers alike need to start planning now for the upcoming health insurance provisions. “For Dunkin’ Donuts franchise owners who have not been subject to state mandatory health laws before, it is crucial to understand the costs associated with the Affordable Care Act and to begin planning now,” said Daniel S. Field, a partner with Morgan, Brown & Joy, LLP, a Boston law firm specializing in representing employers in employment and labor law matters. “If you haven’t done so already, it is essential to begin shopping for health insurance options and to work closely with a tax professional to weigh plan costs and potential tax benefits, and to plan for the provisions of the ACA that become effective in 2013 and beyond.” With numerous rules and potentially substantial penalties, the ACA presents a variety of challenges for employers. Two initial critical steps must be taken: The first entails examining the size and composition of an employer’s workforce. The second requires analyzing circumstances under which commonly-owned or commonly-controlled organizations must be considered a single “employer” for regulatory purposes. And throughout, it is vital to understand the terminology used in the law itself. (See page 22 for a Glossary of Terms.)

Automatic Enrollment The automatic enrollment provision requires an employer with more than 200 full-time equivalent (FTE) employees to automatically enroll new full-time employees in one of the employer’s health benefits plans and to continue the enrollment of current employees. The rule also requires adequate notice and the opportunity for an employee to opt out. The Department of Labor has delayed

implementation of the automatic enrollment provision until further guidance and related regulations are issued, likely sometime in 2013 or later. While not yet in effect, however, it appears to be just a matter of time.

The Employer Mandate Under the ACA, large employers must offer to full-time employees a health benefits plan that is both affordable and of minimum value, or pay tax penalties if at least one full-time employee obtains coverage from a Health Insurance Exchange (HIX) and receives a federal premium tax credit. Like the well-publicized individual mandate, under which nearly all Americans will be required to maintain health insurance or pay a tax penalty, the employer mandate goes into effect January 1, 2014. Employers must offer the option for employees to cover their dependents, but the employer is not required to contribute to the cost for dependent coverage. The mandate applies to “large employers,” that is, those with 50 or more FTE employees.

How HIXs work Each state must establish a fully certified and operational HIX by January 1, 2014. These exchanges are state-managed “marketplaces” where individuals and small businesses can shop for and purchase private health insurance. Federal premium tax credits and subsidies on HIX coverage will be available to individuals for whom employer-sponsored insurance does not meet the affordability standard. The affordability standard requires that, for an employee whose household income falls between 100 percent and 400 percent of the federal poverty line, his/her contribution to the self-only premium (i.e., not the premium for family members/ dependents) must not exceed more than 9.5 percent of his/her household income. Since employers do not have the right to demand disclosure of actual household income, the government is providing a “safe harbor” exception: Employers who use employee W-2 income to calculate

by Susan Minichiello

affordability will not be subject to fines for violating the standard. The minimum value standard means that a plan must cover at least 60 percent of allowable medical expenses. “Health Insurance Exchanges will be the lynchpin of the employer mandate and will have a significant role in screening and identifying insurance carriers that meet the affordability standard,” Field said. “As we have already seen in Massachusetts, these exchanges will be a significant clearinghouse and informational resource for identifying compliant, credible coverage.”

Determining Automatic Enrollment or Large Employer Status To help determine whether or not a franchise owner is an applicable large employer, the U.S. Department of the Treasury provides the following guidance for calculating FTE employees. For each calendar month of the preceding calendar year, employers must: 1. Count the number of full-time employees, defined as those who work on average 30 hours per week per month. 2. Calculate the number of FTEs by aggregating the number of hours worked by part-time employees per month and dividing by 120. (For example, an employer with 20 part-time employees who each work an average of 96 hours per month yields 16 additional FTEs, i.e., [(20 x 96) ÷ 120].) 3. Add the number of full-time employees and calculated FTEs for each of the 12 months in the preceding calendar year. 4. Add the monthly totals and divide by 12. If the resulting number is 200 or more, the employer must follow the automatic enrollment rules. If the result is 50 or more, the employer is considered an applicable large employer under the employer mandate. Affordable Care continued on page 11 DECEMBER 2012 • INDEPENDENT JOE

7


Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org

Accounting

CML Operations

Bederson & Company LLP - CPAs and Consultants 405 Northfield Avenue, West Orange, NJ 07052 Steven Bortnick, CPA • sbortnick@bederson.com 973-736-3333 • www.bederson.com

Communications

Adrian A. Gaspar & Company, LLP, CPAs 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 Robert Costello • cpas@gasparco.com 617-621-0500 • www.gasparco.com

Cynthia A. Capobianco, CPA 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114 Cynthia Capobianco • 401-822-1990 cynthia@capobianco.necoxmail.com James P. Ventriglia, CPA, Inc. 145 Phenix Avenue, 2nd Floor, Cranston, RI 02920 Jim Ventriglia • jimv@jpvcpa.com 401-942-0008 • www.jpvcpa.com Rubiano & Company, CPA’s 5 Austin Avenue, Suite 1, Greenville, RI 02828 Daniel J. Rubiano, CPA • dan@rubianocpa.com 401-949-2600 • www.rubianocpa.com Sansiveri, Kimball & Co., LLP 55 Dorrance Street, Providence, RI 02903 Joseph Mansour • jmansour@sansiveri.com 401-331-0500 • www.sansiveri.com Thomas Colitsas and Associates, CPA 103 Carnegie Center, Suite 309, Princeton, NJ 08540 Tom Colitsas • tcolitsas@tcacpa.com • 609-452-0889 “A Member of Franchise Pros”

Mid-State Isuzu 35 Southwest Cutoff, Worcester, MA 01604 Craig Judge • craig@midstateisuzu.com 860-281-4117 • www.midstateisuzu.com Comcast Business Services 500 South Gravers Road, Plymouth Meeting, PA 19462 Comcast National Sales • Dunkin_National_Sales@comcast.com 866-407-6338 • www.business.comcast.com/internet/index.aspx Sprint 3 Van De Graaff Drive, Burlington, MA 01803 Caroline Fedele • caroline.fedele@sprint.com 781-367-1057 • www.sprint.com/ddifomembers

Cost Recovery

Bedford Cost Segregation, CPAs 60 State Street, Suite 700, Boston, MA 02109 Bill Cusato • bcusato@bedfordcostseg.com 978-263-5055 • www.bedfordcostseg.com/who_we_serve/ddifo.asp EF Cost Recovery PO Box 79361, North Dartmouth, MA 02747 Ed Craig • ecraig3@efcostrecovery.com 774-263-7388 • www.efcostrecovery.com Performance Business Solutions, LLC 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 Jeff Hiatt • jdh@revenuebanking.com 508-878-4846 • www.revenuebanking.com

Back Office

IKMS Group, Inc. PO Box 6221, Manchester, NH 03108 Cliff Pratt • ctp@ikmsgroup.com 603-644-4683 • www.ikmsgroup.com

Bank With a Heart

Jera Concepts - Order and Production Management Software 17 Fruit Street, Hopkinton, MA 01748 Wynne Barrett • wynne@jeraconcepts.com 508-686-8786 • www.jeraconcepts.com

Building

Trane HVAC 225 Woldwood Avenue, Woburn, MA 01801 Jonathan Ralys • Jonathan.Ralys@Trane.com 781-305-1335 • www.Trane.com/commercial ViewPoint Sign and Awning 35 Lyman Street, Northboro, MA 01532 Bill Gavigan • billg@viewpointsign.com 508-393-8200 • www.viewpointsign.com WatchFIre Signs 1015 Maple Street, Danville, IL Devon Mourer • devon.mourer@watchfiresigns.com 217-442-0611 • wwwwatchfiresigns.com

Business Broker

Our lending specialists understand the complexities of today’s business environment. Using our LifeDesign approach we get to know you and your business and we can help you turn obstacles into opportunities and help you get where you want to be- that’s the LifeDesign difference.

Call Today Sally Buffum John Merrill 800.581.5363

Kensington Company & Affiliates 185 Roslyn Road, Roslyn Heights, NY 11577 David Stein • kstein@kensingtoncompany.com W: 516-626-2211 • M: 718-490-2218 • www.kensingtoncompany.com 800.581.5363 fidelitybankonline.com

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INDEPENDENT JOE • DECEMBER 2012


Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org

Energy

Glacial Energy 24 Route 6A, Sandwich, MA 02563 Kristy Solt • kristy.solt@glacialenergy.com 340-201-4323 • www.glacialsales.com/dunkindonuts Metromedia Energy 200 West Park Avenue, Suite 125, Westborough, MA 01581 Scott Werman • swerman@mmenergy.com 508-329-0186 • www.mmenergy.com

Finance

Business Financial Services 3111 N. University Drive, Suite 800, Coral Springs, FL 33065 Scott Kantor • skantor@businessfinancialsservices.com 954-509-8019 • www.businessfinancialservices.com Capital One Bank 710 Route 46 East, Suite 306, Fairfield, New Jersey 07004 Stuart Vorcheimer • Stuart.vorcheimer@capitalone.com 732-439-7626 • www.capitalone.com Centrix Bank & Trust 1 Atwood Lane, Bedford, NH 03110 Deborah Blondin • dblondin@centrixbank.com 603-589-4071 • www.centrixbank.com

Susquehanna Commercial Finance 2 Country View Road, Suite 300, Malvern, PA 19355 Brian Colburn • brian.colburn@susquehanna.net 443-996-1792 • www.susquehanna.com TCF Franchise Finance 300A Lake Street, Suite B, Ramsey, NJ 07446 Mike Vallorosi • mvallorosi@tcfef.com 201-818-2700 • www.tcfef.com United Capital Business Lending 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 Trey Grimm • tgrimm@ucbl-inc.com 410-771-9600 • www.unitedcapitalbusinesslending.com

Food Products

CSM Bakery Products 1901 Montreal Road, Suite 121, Tucker, GA 30084 Marla Cushing • marla.cushing@csmglobal.com 770-723-2083 • www.csmbakeryproducts.com Quaker Oats A Division of PepsiCo 402 Kilarney Way, Royersford, PA 19468 Ed Bowes • Ed.bowes@pepsico.com 610-948-8309 • www.pepsico.com

Human Resources

Direct Capital Franchise Group 155 Commerce Way, Portsmouth, NH 03823 Robyn Gault • rgault@directcapital.com 603-433-9476 • www.franchise.lendedge.com

CareerBuilder.Com 400 Crown Colony Drive, Suite 301, Quincy, MA 02169 Maureen O’Neill • maureen.oneill@careerbuilder.com 781-453-3570 • www.careerbuilder.com

Fidelity Bank 465 Shrewsbury Street, Worcester, MA 01604 Sally Buffum • sbuffum@fidelitybankonline.com 508-762-3604 • www.fidelitybankonline.com

Employers Reference Source 1587 Hamilton Avenue, Waterbury, CT 06706 Sandra Fabrizio • sandra@employersreference.com 888-512-2525 • www.employersreference.com

First Franchise Capital 2715 13th Street, Columbus, NE 68601 Karen Johnson • karen.johnson@firstfcc.com 402-562-5111 • www.firstfranchisecapital.com

Gecko Hospitality 1415 West 22nd Street, Tower Floor Oakbrook, IL 60523 Robert Krzak • robert@geckohospitality.com 630-390-1000 • www.geckohospitality.com

GE Capital, Franchise Finance 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 Christine Keating • christine.keating@ge.com 203-229-1804 • www.gefranchisefinance.com Infinity Franchise Capital 3154 18th Avenue, Suite 3, Columbus, NE 68601 Sharon Soltero • ssoltero@infinityfranchise.com 402-562-1801 • www.infinityfranchisecapital.com Joyal Capital Management Franchise Development 50 Resnik Road, Plymouth, MA 02360 Daniel Connelly • dconnelly@joycapmgt.com 508-747-2237 • www.jcmfranchise.com Merchant Cash & Capital 450 Park Avenue South, 11th Floor, New York, NY 10016 Seth Broman • sethb@merchantcashandcapital.com 212-545-3185 • www.merchantcashandcapital.com NFA Restaurant Finance 400 E. 22nd Street, Suite A, Lombard, IL 66148 Larry Howard • lhoward@nfaloans.com 205-871-8450 • www.nfaloans.com Priority Capital 174 Green Street, Melrose, MA 02176 Brian Gallucci • bgallucci@priotiycapital.com 800-761-2118 Ext 14 • www.prioritycapital.com

Granite Payroll Associates 176 Granite Street, Qunicy, MA 02169 Marco Schiappa • marco@granitepayroll.com 401-263-7921 • www.granitepayroll.com Gulpfish.com 1005 Main Street, Pawtucket, RI 02860 Ilya Reikhrud • ceo@gulpfish.com 800-974-4514 Ext 101 • www.gulpfish.com JobOn 141 Log Canoe Road, Stevensville, MD 21409 Pete Steiner • pete.steiner@jobon.com 774-217-0340 • www.jobon.com Ovation Payroll 2 Stamford Landing 68 Southfield Rd. #100, Stamford, CT 06902 Jim Ferreira • jferreira@ovationpayroll.com 203-530-3512 • www.ovationpayroll.com Snagajob 4851 Lake Brook Drive, Glen Allen, VA 23060 Erin Brumfield • ebrumfield@snagajob.com 804-822-4604 • www.snagajob.com/employer-solutions

Thank You to Our Sponsors! Sponsors cont. page 18 DECEMBER 2012 • INDEPENDENT JOE

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INDEPENDENT JOE • DECEMBER 2012


Affordable Care continued from page 7 “As is clear from the regulatory guidance, the ‘large employer’ provisions of the ACA sweep up many smaller businesses that most of us would hardly think of as large employers,” said Field.

Calculating the Large Employer Penalty Applicable large employers can be penalized for not offering coverage to full-time employees and their dependents at all, or for offering coverage that doesn’t meet the affordability or minimum value standards.

In a recent webinar, the Coalition of Franchisee Associations (CFA) advised, “The common control test said that if two or more businesses have the same five or fewer owners collectively owning at least 80% of the shares or interest, they shall be considered run by a single employer.”

• Applicable large employers who do not offer coverage to fulltime employees and their dependents will be subject to an annual tax of $2,000 times the total number of full-time employees* if at least one full-time employee receives a federal premium tax credit for HIX coverage. The ACA permits employers to subtract the first 30 employees when calculating the tax penalty for not offering coverage at all. • Applicable large employers who offer coverage to full-time employees and their dependents that doesn’t meet the affordability or minimum value standards will be subject to an annual tax of $3,000 times the number of full-time employees* eligible for and receiving tax credits for HIX coverage. These taxes (or penalties) are capped at the employer’s potential taxes for not offering any coverage as described above. *Refers to true full-time employees (those working on average 30 hours per week in any month), not FTEs

The Role of Common Ownership or Common Control For employers with some level of common ownership or shared corporate control over multiple business entities, an essential piece of this puzzle is the determination whether or not some or all enterprises are considered a single employer under the ACA. An employer that is part of a group of businesses under the common control of small group of individuals, as defined by IRS tax code, may be treated as a single employer.

exploring sooner rather than later. Some of these include elements of the ACA not detailed in this article but still important to any employer’s business. Field recommends an employer bring such issues to his/her benefit broker or health care provider, accountant, attorney and/ or other professional advisors or associations.

Regarding provisions already in effect: • Can your business take advantage of the small business tax credit? • Is your business eligible for a Medical Loss Ratio (MLR) rebate from your insurance provider? • Is your business large enough to be subject to the W-2 reporting requirement?

Regarding impending provisions: • Is your business an applicable large employer? The CFA emphasized not taking this at face value, but consulting with one’s accountant and/or legal counsel for specific guidance. “The common ownership rules that will control the determination of whether related business entities will be aggregated are particularly concerning for small, family businesses as they may trigger the ACA’s large employer obligations,” Field said.

Next Questions to Ask & Steps to Consider

“As we move into 2013, DDIFO leadership is looking to host several regional meetings throughout the year that will address the Affordable Care Act. We will advise members as soon as specific meeting dates and locations are confirmed,” said DDIFO Executive Director Ed Shanahan. “Our goal is to ensure our members are as informed as they can be with regard to the Act and its impact on our franchise community.” In the meantime, here are some of the questions and steps Field suggests

• Should you consider any changes to hiring plans or work schedules? • Does your business offer health insurance coverage?  If no, do you need to start doing so?  If yes, does it meet the affordable and minimum value standards?  If not, what should you do? As evidenced by changes since the ACA first passed in 2010, it is by no means a static piece of legislation. There are many moving parts including additional rules, regulations and guidance still to be issued as the provisions are implemented and amended over time. It is vital that franchisees be vigilant and talk with their trusted advisors. The information contained in this article is general in nature and offered for informational purposes only. It is not offered and should not be construed as legal advice. Affordable Care continued on page 22 DECEMBER 2012 • INDEPENDENT JOE

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Surviving sandy

Storm Victims Themselves, Dunkin’ Franchisees Provide Power, Comfort, Food and Drinks to Disaster Area by Chere Coen Laura Donavan of New York City was disappointed when the Starbucks stores in her neighborhood closed due to Hurricane Sandy, which hit the New York area late Oct. 29. Needing her morning cup of coffee, she called her local Dunkin’ Donuts and found them open.

“Customers were looking for the basics,” said franchise owner Scott Campbell, who owns 46 restaurants in Queens and Nassau County. “They love the routine; it’s part of their lives. They seek you out because it’s stable to them. It’s what they know and it’s comforting.”

“I immediately threw a hoodie over my flannel pajama top, changed my clothes, and dashed out the door,” Donavan wrote in her blog. “Dunkin’ had a decent amount of customers as well.”

The storm forced Campbell into disaster mode — from getting restaurants back online to opening a new location by Kennedy Airport — but he made sure customers, first responders and those in shelters were taken care of with Dunkin’ Donuts products, he said.

She gave the employees a “massive tip” and shared her story with the world. “The company slogan ‘America runs on Dunkin’ has taken on a whole new meaning for me,” she concluded. The scene played out throughout the affected areas where super storm Sandy knocked out power to a record 8.5 million homes across 21 states, the hardest hit being coastal New York and New Jersey. In cases where Dunkin’ Donuts restaurants had power, lines formed outside, with people desperate for not only Wifi, heat and coffee, but companionship as well. 12

INDEPENDENT JOE • DECEMBER 2012

“If you’re going to give something, you want to give back to the community,” Campbell explained. “It wasn’t all about making money, it was about giving back.”

Dealing with Disaster Rizwan Sheikh, who owns a network of five stores on Long Island, lost two to flooding, and had another three without power for days. One store had no electricity for two weeks. And because he lives in Oceanside, Sheikh lost power in his home for 14 days as well.

Toppled trees from Sandy knocked out power to communities throughout New Jersey.

“We had some tough times,” Sheikh said. “The good news is nobody got hurt.” He’s “exploring the options” with FEMA and other organizations to rebuild the restaurants damaged by flood since he lacked flood insurance. “I called up my insurance company and said I want every kind of insurance — flood, hurricane, earthquake. She said, ‘You don’t need earthquake,’ and I said, ‘I don’t care, I want it’,” he said with a grim laugh. Many of his employees had little or no power in their homes as well and suffered through the long lines obtaining gasoline for their cars. “Hats off to my crew members,” Sheikh said. “Most had lost everything and worked 10 to 12 hours a day with a smile on their faces.” Mo Khalid, a franchise owner in Newark, N.J., didn’t suffer physical damage to his 12 stores but the power outages kept 10 of them in the dark. He didn’t rent a generator before the storm hit; afterwards couldn’t find one.


Outside damage to Rizwan Sheikh’s shop on Austin Blvd. in Island Park, NY is minor compared to the inside. Seawater flooded the entire restaurant.

Hurricane San Satellite phot dy was the la o courtesy of NOAA affecting 24 states. Its fo rgest Atlantic hurricane rc ever, e caused over in damage. $71 billion

“I called all the way up to Canada to see if I could rent generators, and then all the way down to Florida,” he said. “I had no luck renting something big enough to run a Dunkin’ Donuts.” Khalid says he lost $200,000 worth of cash flow because he wasn’t able to bring his stores back online. Another complication Khalid faced was getting employees in to work, since many of them lived in the neighborhood and were facing the same lack problems—no electricity and no gas for their cars. None of his locations are in lowlying areas so flooding wasn’t an issue, but gasoline was hard to find because gas stations in the area weren’t able to pump for lack of power. “We scrambled,” Khalid explained. “We went to people’s houses to pick up employees. We drove them back to the stores. We had our own personal cars and cab service for the employees. And then, the other stores that were closed, whoever was willing to work called me, and then I sent different cars to pick them up and bring them to these stores because we needed a lot of people to work behind the counters to handle the high volume.” Many people in the New York metro never faced a storm aftermath as disruptive

as Sandy’s. Scott Campbell learned lessons from his family who lived through Hurricane Katrina in 2005. After Sandy’s storm surge, Campbell mobilized to assist employees living in the Rizwan’s Is land Park, impacted area who had no NY locatio loss after s n was also eawater flo electricity at their homes a total oded the in side. and no access to gas for their cars. He also needed to move product around his network of restaurants, carrying donuts from store to store, filling in need where it appeared. “We weren’t sure where the demand would kick in,” he said. “It was all hands on deck.” Because he lives north of New York City—away from the hardest hit areas— Campbell had access to gasoline and would drive home, fill tanks and return them to the city.

Supply Chain Support The storm also challenged the DCP’s distribution center in Westampton, NJ, which supplies 2,000 Dunkin’ Donuts shops in New York, New Jersey and Pennsylvania. Despite the impact of Sandy on the region - power outages forced the facility to run on generator power for a week, trucks had to be re-routed because of flooded roads and

Cover Photos: The flag waves over a devastated neighborhood in the Breezy Point section of Queens. Photo courtesy David Handschuh, New York Daily News. Dunkin’ Donuts in Cranston, RI collects donations to aid victims of Hurricane Sandy.

stock ran low on certain items because suppliers couldn’t make their deliveries - the DCP did its job. Chief Executive Kevin Bruce says the DCP brought in extra drivers, worked with its fuel supplier to keep trucks gassed-up and kept the Dunkin’s running. “Overall the members were pleased,” he said. A sentiment echoed by Long Island’s Rizwan Sheikh. “They were very, very helpful and they did everything they could to get supplies out here.” But an event of this magnitude did cause disruptions. On his regular schedule, DCP delivers once a day to Campbell’s restaurants. After the hurricane, Campbell requested DCP meet a modified delivery schedule that would allow him to produce all day to meet increased customer demand. Campbell chose Sandy continued on page 15 DECEMBER 2012 • INDEPENDENT JOE

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In 2012, 21 stores have been sold/under contract/ letter of intent. We currently represent 12 DD owners in 7 states looking to sell their network of stores.

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INDEPENDENT JOE • DECEMBER 2012


Sandy continued from page 13 products that were fast and easy to create and Dunkin’ Brands worked with him, he said. Half of his stores are gas stations, so the market side supplied themselves, another plus. “It (the gas station franchises) made it easier for us if DCP couldn’t make it to us.”

Comfort Food One of Mo Khalid’s shops in Newark became a refuge. The shop had power because its electric lines were

Dunkin’ Brands has donated $100,000 to the American Red Cross, and The Dunkin’ Donuts and Baskin-Robbins Community Foundation has donated $100,000 to Feeding America, both to aid in the recovery of those affected by Hurricane Sandy. Feeding America is the country’s largest domestic hunger-relief organization and the donation will be distributed among numerous food banks in the areas hardest hit by Sandy. The DDBRCF has had a national partnership with Feeding America since 2007 and has donated nearly $1 million to support local food banks.

Campbell understands the needs that arise after a storm since experiencing his family’s difficulties after Hurricane Katrina. But he has a new outlook on the value of his franchises, whether as a place for necessities such as power and a hot cup of coffee or the opportunity to be with others. “People really, really utilized us,” he said. “Probably more than we would have understood before this.” Photo courtesy: WPRI 12/wpri.com

Rhode Islanders donating to the Red Cross relief effort for Hurricane Sandy victims at a Dunkin’ Donuts in Cranston.

underground and once residents realized the shop had power, they lined up to get in. They were seeking shelter in a place with electricity, food and drinks. “Imagine, [that shop was] the only food place where you could eat, use a bathroom and charge your cell phones,” said Khalid. “So, it was kind of a rescue place for the people to come, get a cup of coffee, and get food for the kids.” “It was chaotic,” said Sheikh of his Long Island shops. “The lines were out the door.” He says he let everyone use the facilities, access a phone and charge their phones. “We tried our best to accommodate them. The truth was I felt guilty charging them for coffee. These were my neighbors, the people down the street. But at the end of the day I had to make a living.”

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Critical Data continued from page 3 rated very highly in all aspects of their data storage solutions and all meet the strict encryption protection required by the banking and credit card industry. They offer an easy-to-use platform, good customer service and the ability to operate completely automatically. The difference between them is price, which becomes a real factor when your network has more than two locations. Some charged monthly based on the per-computer cost and the amount of storage, which I thought could end up costing me far too much money for my eight computers. In fact, one of the proposed solutions would have cost as much as $1,800 for the year. There are others however, that allow for an unlimited number of computers with 250 GB of storage for as little as a couple of hundred dollars annually. That was an easy decision for me at that point – all 8 of my computers with a total of 250GB of available space for under $300 per year—a bargain considering the benefits and peace of mind.

After I made my decision, it took less than 10 minutes to download and set up each computer, specifying which files I wanted to add or remove from the backup set. The solution also provided

The system will also send you an email if one of the computers fails to backup for any reason. the ability to remotely monitor each computer and the amount of data being stored, using either a web browser or a smartphone app. The app displays all of the files that were backed up on each machine. You can open and view the file or email it. For example, if you created a file at one store, you could instantly see the file and send it to another store without being in either location. The system will also send you an email if one of the computers fails to backup for any reason. The software is fairly

small, intuitive even for a novice and I have not seen any changes in the performance of my machines (except during the initial backup which could take 24 hours if you don’t have a highspeed connection). After using the service for the last four months, I have been extremely pleased with both the solution and the company’s 24/7 customer service. In fact, customer service representatives will gladly help walk you through the process of setting up your account and each computer on the phone. Or you can allow them remote control of your computer and they will set it up for you. Regardless of the solution you choose, backing up your data is critical—not just when disaster strikes. Adam Goldman is a DD franchise owner with a successful multi-store network in upper New Jersey. Contact him at njddonuts@gmail.com.

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New Laws continued from page 5 “Newcomers can watch and learn, gain experience and see how it’s done,” Motta said.

A Different Classification Franchisees in Florida are waiting for the dust to settle on potential changes regarding how Dunkin’ shops are classified and taxed. Until now, the state has classified a stand-alone Dunkin’ Donuts as a bakery rather than a restaurant; but, if the Dunkin’ is paired with a Baskin Robbins, it is already classified as a restaurant. According to franchisees interviewed by Independent Joe, the state is looking at a single type of classification which could result in, among other things, changes to how franchisees charge sales tax on bulk sales of donuts, muffins and bagels. The Florida Department of Revenue (DOR) has initiated audits on several franchisees to determine whether they have been charging sales tax on bulk items. According to the Florida DOR website, bakery products are exempt from tax

when they are “sold for intended consumption off the premises,” but can be taxed when they are “sold in quantities of five or less [and] are assumed to be sold for consumption on the premises.” But, by rewriting the rules, the state would require customers to pay sales tax on all bulk sales—even if the box is sealed with a sticker—indicating the items were not intended to be consumed on premises. Florida franchisees have retained the accounting firm Ernst & Young to review DOR audits and get clarification on how the system will work going forward. “It’s still early in the process,” said one Florida franchisee. “We hope to know soon how this is going to play out.”

Strength in Partnerships How to tax a dozen donuts is playing out in a different way in Illinois.

At issue is the application of the state’s restaurant tax rate (about 10 percent) versus the bulk sales rate (about 2 percent). The restaurant tax rate applies to all goods purchased. It impacts Dunkin’ Donuts customers because they are charged the same tax rate on one donut as they are on a dozen, even though a dozen is technically a bulk sale. If that same customer purchased a dozen donuts in the grocery store, he would pay the lower bulk rate tax. Franchisee Dennis Gramm is a two-store operator in greater Chicago and understands that value is an important driver in a very competitive QSR market. Chicago area franchisees identified an opportunity to create value for the consumer if donuts sold by the dozen are classified as bulk retail sales. In other words, Dunkin’ Donuts restaurants would continue to charge and collect the same amount per dozen (or more) donuts, but because the state is applying a lower tax rate to the bulk sale, the guest can New Laws continued on page 20

DECEMBER 2012 • INDEPENDENT JOE

17


Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org

Sponsors continued from page 9

Insurance

The Hill Agency 5 Washington Avenue, Endicott, NY 13760 Rita Frailey • rfrailey.hilla01@insuremail.net 800-446-1775 • www.thehillagencyinc.org KK Insurance Agency 541 Broadway, Long Branch, NJ 07740 Ashish Vadya • ashish@kkinsuranceagency.com 866-554-6799 • www.kkquote.com Paris-Kirwan Insurance 1040 University Avenue, Rochester, NY 14607 John Mulcahy • johnm@paris-kirwan.com 585-473-8000 • www.paris-kirwan.com RMS Insurance Brokerage, LLC 575 Jericho Tpke, Suite 102, Jericho, NY 11753 Donna Mis • dmis@rmsinsurance.com 516-742-8585 • www.rmsrestaurants.com Sinclair Insurance Group - Risk Management 4 Tower Drive, Wallingford, CT 06492 Matt Ottaviano • mottaviano@sinclair-insurance.com 203-284-3235 • www.srfm.com Starkweather & Shepley Insurance Brokerage, Inc. 60 Catamore Boulevard, East Providence, RI 02914 Sabrina San Martino • ssanmartino@starshep.com 800-854-4625 ext. 1121 • www.starkweathershepley.com Wells Fargo Insurance Services 2502 North Rocky Point Drive, #400, Tampa, FL 33607 Mark Stokes • mark.stokes1@wellsfargo.com 813-636-5301 • wfis.wellsfargo.com

Legal

Lisa & Sousa Attorneys at Law 5 Benefit Street, Providence, RI 02904 Carl Lisa, Sr. • clisa@lisasousa.com 401-274-0600 • www.lisasousa.com Paris Ackerman & Schmierer LLP 101 Eisenhower Parkway, Roseland, NJ 07068 David Paris • david@paslawfirm.com • 973-228-6667 www.paslawfirm.com “A Member of Franchise Pros” Vernis & Bowling of Palm Beach, P.A. 884 US Highway One, North Palm Beach, FL 33408 Tammy Bouker • tbouker@national-law.com 561-775-9822 • 561-775-9822 • www.national-law.com Zarco, Einhorn, Salkowski & Brito, PA 100 SE 2nd Street, 27th Floor, Miami, FL 33131 Robert Zarco, Esq. • rzarco@zarcolaw.com Robert Salkowski, Esq. • rsalkowski@zarcolaw.com 305-374-5418 • www.zarcolaw.com

Operations 3M Company Bldg. 223-2N-20 St. Paul, MN 55144 Jim Sinclair • jwsinclair@mmm.com 650-736-3836 • www.3m.com/xt-1 3 Wire Group, Inc. 101 Broadway Street West, Osseo, MN 55369 Derek Knapp • derek.knapp@3wire.com 518-563-3200 • www.3wire.com

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INDEPENDENT JOE • DECEMBER 2012

Access to Money ATM, Inc./Cardtronics 628 Route 10 - Suite 8, Whippany, NJ 07981 Doug Falcone • dougf@accesstomoney.com 973-599-0600 • www.accesstomoney.com Belshaw Adamatic Bakery Group 814 44th Street NW, Suite 103, Auburn, WA 98001 Fran Kauth • fran_kauth@belshaw.com 206-718-3573 • www.belshaw-adamatic.com Bunn-O-Matic Corporation 1400 Stevenson Drive, Springfield, IL 62703 Todd Rouse • Todd.Rouse@bunn.com 800-637-8606 • www.bunn.com Cashmaster Cash Solutions 2108 Trving Blvd., Dallas, TX 75207 Jayson Dunston • jdunston@cashmaster-us.com 214-747-1982 ext. 2 • www.cashmaster-us.com Delphi/Fast Track 2+2 Drive-Thru Timer 3500 West Moore Avenue, Suite M, Santa Ana, CA 92704 Mike Pierce • mike@phaseresearch.com 714-850-1320 • www.fasttracktimer.com DTT Surveillance 1755 North Main Street, Los Angeles, CA 90031 Mira Diza • mdiza@dttusa.com 800-933-8388 • www.dttusa.co Ecolab 8300 Capital Drive, Greensboro, NC 27409 Arliene Bird • arliene.bird@ecolab.com www.ecolab.com/Businesses/ eCube 5 Cold Hill Road, Building 20, Mendham, NJ 07945 Cardie Saunders • cardie.saunders@getecube.com 888-99-ECUBE • www.getecube.com Grainger 100 Grainger Parkway Lake Forest, IL 60045 Valerie Jenkins • valerie.jenkins@grainger.com 503-887-6775 • grainger.com Hi-Tech Sound 53 Brigham Street, Unit 8, Marlborough, MA 01752 Gary Hanna • gary@hitechsound.com 508-624-7479 • www.hitechsound.com HME Drive-Thru Headsets 14110 Stowe Drive, Poway, CA 92064 Brady Campbell • bcampbell@hme.com 858-535-6034 • www.hme.com HS Brands International 500 Myles Standish Boulevard, Taunton, MA 02780 Michael Mershimer • mike@mershimer.com 800-723-1150 • www.hsbrands.com

o t u o Y k n Tha ! s r o s n o p S Our


Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org Jarrett Services ATM, Inc. 1315 Stelton Road, Piscataway, NJ 08832 Eric Johnston • ej@jarrettforcash.com 732-572-0706 • www.jarrettforcash.com

SureShot Dispensing Systems 100 Dispensing Way, Lower Sackville, NS, Canada B4C 4H2 Steve Robert • srobert@sureshotdispensing.com 905-827-4415 • www.sureshotdispensing.com

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TredSafe/WalMart 450 West 33rd Street, New York, NY 10001 Ted Travis • ttravis@esoriginals.com 909-949-0495 • www.walmart.com

Macdonald Restaurant Repair Service, Inc. PO Box 61, 83 Pond Street, Norfolk, MA 02056 Mark & Debi Macdonald • debi@macdonaldcompany.com 508-384-9361 • www.macdonaldcompany.com

UAS Security Systems 700 Abbott Drive, Broomall, PA 19008 Chris McGurk • chrismcgurk@uas.com 800-421-6661 • www.uas.com

Mint-X Corporation 2048 199th Street, College Point, NY 11356 Amie Yee • ayee@mint-x.com 877-646-8224 • www.mint-x.com

Waste Management 107 Silvia Street, Ewing, NJ 08628 JoAnn Bradbury • jbradbury@wm.com 215-378-1417 • www.wm.com

Muzak 3318 Lakemont Boulevard, Fort Mill, SC 29708 Joanna Barrett • joanna_barrett@muzak.com 803-396-1656 • www.muzak.com

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New England Drive-Thru Communications 12 Wildwood Road, Auburn, NH 03032 Angela Bechard • angela@nedrivethru.com 888-966-6337 • www.nedrivethru.com

Exchange Authority 9 Leominster Connector, Suite 1, Leominster, MA 01453 Marie Dias • mdias@exchangeauthority.com 978-433-6061 • www.exchangeauthority.com

New England Repair Service - a div. of New England Coffee Co. 100 Charles Street, Malden, MA 02148 Jerry Brown • jerry.brown@necoffeeco.com 781-873-1536 • www.nerepairservice.com Paramount Restaurant Supply Corp. 101 Main Street, Warren, RI 02885 Jeffrey Cartier • jcartier@pararest.com 401-247-6500 • www.pararest.com Payless Shoe Source 3231 SE 6th Avenue, Topeka, KS 66607 Matt Lemke • matt.lemke@payless.com 785-368-7530 • www.payless.com R.F. Technologies 542 South Prairie Street, Bethalto, IL 62010 Jennifer Morales • jenm@rftechno.com 618-377-4063 ext. 121 • www.rftechno.com Register Tapes Unlimited 1268 Bella Vista Circle, Longwood, FL 32779 Michael Curtin • michael.curtin@rtui.com 203-240-4121 • www.rtui.co Silver King 1600 Xenium Lane North Plymouth, MN 55441 Chris Lyons • lyonsc@silverking.com 630-462-4906 • www.silverking.com SKAL East, Inc PO Box 303, 31 Eastman Street, Easton, MA 02334 Jim Zafirson • jim@skaleast.com 800-966-0106 • www.skaleast.com/index.cfm?keyword=dunkin

DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising. DECEMBER 2012 • INDEPENDENT JOE

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New Laws continued from page 17 pocket the savings. According to Gramm, as with any change in tax law, franchisees need to be educated to ensure they understand how the change applies to their business.

wage from $7.25 per hour to $8.50, and tie future increases to the Consumer Price Index. The bill, S-3, is now before the full Senate. If enacted, it would establish the thirdhighest minimum wage rate in the country, behind only Washington State ($9.04) and Oregon ($8.80). The last increase in New Jersey’s minimum wage was in 2009, when the federal minimum wage was increased to $7.25 per hour.

“DDIFO has to take a very active role,” Gramm said with regard to how the organization communicates information about this and other legislative and regulatory issues to its members. He stressed that DDIFO must act collaboratively to collectively represent the voice of the franchisees.

Hegde acknowledges that raising the wage may be a political eventuality in New Jersey, but that there is still room to negotiate. “It’s an increase of 17 percent,” he said. “It’s an exorbitant number.” He and other business leaders are hoping any significant increases can be phased in over time, to cushion the blow and give small business owners the chance to run their own numbers.

One way DDIFO is getting active, noted Asheesh Seth, vice chairman of DDIFO’s board, has been through reaching out to the Illinois Chamber of Commerce. Seth said a member of the Illinois Chamber was invited to address a group of local franchisees to discuss how the tax rate applies to all goods purchased in QSRs and other restaurants. Andrew Proctor, the director of advocacy for government affairs at the Illinois Chamber says his Members of the Coalition of Franchisee Asorganization recognizes that busisociations are listed on a display at the July ness owners–large and small–first 2012 CFA Day event in Washington DC. have to be experts in their area of business, and may not have the background or understanding to decode the intricacies of a piece of legislation. One way the Chamber helps inform constituents, is by sending a weekly legislative bulletin focused on issues that can impact business owners.

The timing of the bill comes as a shock to storm battered New Jersey. Like other business owners along the Jersey Shore, Hegde has focused his attention on getting stores re-opened and assessing the impact to his bottom line. Adding 17 percent to his cost of doing business will be another shock. Still, Hegde realizes he is not alone. “Right now it’s a New Jersey issue, but it’s going to spread around like wildfire.” New Laws continued on page 21

Timing is Everything Getting on the public radar can make a huge difference when it comes to impending legislation, according to Shub Hegde, who operates a number of Dunkin’ Donuts in Ocean County, New Jersey. As this issue was going to press, Hegde was awaiting a meeting date with Governor Chris Christie to discuss the impact that raising the state’s minimum wage would have on small business owners like himself. On November 19, 2012, the New Jersey Senate Budget and Appropriations Committee released legislation that would increase the state’s minimum 20

INDEPENDENT JOE • DECEMBER 2012

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Current Members of the Coalition of Franchisee Associations With the addition of the Long John’s Silver’s, Domino’s, 7-Eleven and Pharmacy Franchise Owners associations in 2012, the Coalition of Franchisee Associations (CFA) now represents more than 25,000 franchise owners, more than 66,000 locations and more than 1.2 million employees. Headquartered in Washington, DC, its members include:

• Asian American Hotel Owners Association

• Long John Silver’s Franchisee Association

• Buffalo Wings National Franchisee Association

• Meineke Dealers Association

• Domino’s Franchisee Association

• North American Association of Subway Franchisees

• Dunkin’ Donuts Independent Franchise Owners Association

• National Coalitions of Association of 7-Eleven Franchisees

• Edible Arrangements Independent Franchisees Association

• National Franchisee Association, Inc., An Association of Burger King Franchisees

• Independent Association of Massage Envy • Independent Coalition of Franchise Owners • Independent Hardee’s Franchisee Association • Independent Association of Little Caesars Franchisees

• Pharmacy Franchisee & Owner Association, Inc. • San Francisco Monterey Bays 7-Eleven Franchise Owners Association • Service Station Franchisee Association

Dunkin’ Donuts franchise owner Rob Branca is CFA vice chairman and a member of its fair franchising and government relations committees. “The CFA member associations are amongst the strongest and best structured in franchising and have made ground breaking strides for their franchisees. There really is no other place that franchisees can learn firsthand about the details of these achievements from the other franchisee associations,” Branca said.

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Affordable Care continued from page 11

Glossary of ACA-Related Terms Affordable Care Act (ACA): The Affordable Care Act (ACA) is also known formally as the Patient Protection and Affordable Care Act (PPACA) and informally as Obamacare or federal health care. President Barack Obama signed the Act into law on March 23, 2010. Together with the Health Care and Education Reconciliation Act (enacted by Congress to amend the ACA/PPACA and signed into law by President Obama), it represents the most significant regulatory overhaul of the U.S. health care system since the passage of Medicare and Medicaid in 1965. The ACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care. It stipulates a number of mechanisms intended to increase the coverage rate including mandates, subsidies and tax credits for employers and individuals. Additional provisions are aimed at improving health care outcomes and streamlining the delivery of health care. Automatic Enrollment: Section 18A of the Fair Labor Standards Act (FLSA), as added by section 1511 of the ACA, directs an employer to which the FLSA applies, and that has more than 200 full-time equivalent (FTE) employees, to automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to any waiting period authorized by law), and to continue the enrollment of current employees in a health benefits plan offered through the employer. Section 18A further requires adequate notice and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled. Related regulations from the U.S. Department of Labor (DOL) have yet to be issued. The DOL has indicated that, until such regulations are issued (which it says will happen by 2014), employers are not required to comply with section 18A. Employer Mandate: Beginning in 2014, employers meeting certain ACA thresholds will be required to offer minimum essential health benefit packages or pay a set portion of the cost of those benefits for use in Health Insurance Exchanges (see definition below). This ACA provision provides that an applicable large employer (50 or more FTE employees) could be subject to penalty if any full-time employee is certified to receive a premium tax credit or subsidy. Health Insurance Exchange (HIX): The ACA requires each state to create a Health Insurance Exchange (HIX) or Health Benefit Exchange, which is a competitive insurance marketplace where individuals and small employers can shop for health plans. Exchanges will assist individuals and small businesses in comparing and purchasing qualified health plans. If a state decides not to establish an Exchange, the federal government will establish an Exchange in that state. The Exchanges are to be implemented by states or the federal government by 2014. Affordability Standard: A term used in the ACA to designate both the types of coverage arrangements available to individuals and the level of family income that is considered available to pay health insurance premiums, the affordability 22

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standard requires that, for an employee whose household income falls between 100% and 400% of the federal poverty line, his/her contribution to the self-only premium (i.e., not the premium for family members/dependents) must not exceed more than 9.5% of his/her household income. Employers can use an employee’s W-2 income to calculate affordability. Minimum Value Standard: In order for a health benefits plan to meet the “of minimum value” threshold under the ACA, the plan must cover at least 60% of allowable medical expenses. Large Employer Penalty: Beginning in 2014, employers with 50 or more FTE employees may be subject to a maximum annual penalty of up to $2,000 or $3,000 per employee, respectively, if the employer either (1) offers no coverage; or (2) offers coverage, but such coverage does not meet the affordability or minimum value standards as defined above. Common Ownership/Common Control: An employer that is part of a group of businesses under the common control of small group of individuals, as defined by IRS tax code, may be treated as a single employer under the ACA. According to the Coalition of Franchisee Associations (CFA), “The common control test said that if two or more businesses have the same five or fewer owners collectively owning at least 80% of the shares or interest, they shall be considered run by a single employer.” This should not be taken at face value, however; it is essential to further consult with one’s accountant and/or legal counsel for specific guidance. Medical Loss Ratio (MLR): A Medical Loss Ratio (MLR) is the proportion of premium dollars that an insurer spends on health care services and certain recognized plan administration costs relative to health insurance premiums paid by subscribers. The ACA requires health insurers offering health insurance coverage in either the group or individual (nongroup) market to submit an annual report to the Secretary of Health and Human Services on their MLR and to provide rebates in circumstances in which losses exceed permissible levels (80% in the individual market; 85% in the group market). The MLR and rebate requirements apply to both new and grandfathered insurance plans and went into effect for plan years beginning September 23, 2010. Small Business Tax Credit: The ACA provides certain small businesses that offer health plans a tax credit. These tax credits vary with the size, contribution and tax status of the small business. To be eligible, the business must: cover at least 50 percent of the cost of single (not family) health care coverage for each employee; have fewer than 25 FTE employees; and those employees must have average wages of less than $50,000 a year. Such businesses may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of insurance. Starting in 2014, the small business tax credit increases to 50% for qualifying businesses (up to 35% for non-profits). Affordable Care continued on next page


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MA Health Care Law Update

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Massachusetts health care insurance reform became law in 2006 and served as the prototype for the federal plan. It has since undergone significant revisions, most recently to the Fair Share provisions. As originally written, the law required any Massachusetts employer with 11 or more full-time equivalent (FTE) employees to provide employees with health insurance that passed certain tests, or pay the Commonwealth $295 per year per FTE. Further, if fewer than 25 percent of employees opted to accept the coverage, the employer had to pay the penalty.

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NOTE: Franchise operations located in the Commonwealth of Massachusetts are subject to the Massachusetts Health Care Reform Law, also known as the Massachusetts Mandated Health Insurance Law, and its subsequent applicable amendments.

The law made no consideration for the reasons an employee might opt out of employer coverage (e.g., already covered under a spouse’s or parent’s plan or as a senior citizen or military personnel), and the 11 FTE threshold seemed arbitrary and excessively burdensome. Dunkin’ Donuts franchise owner Rob Branca helped lead an effort to amend the law, bringing franchise owners’ concerns to the attention of key legislators. They agreed the law was unjust and fought to fix it accordingly. In August 2012, the Massachusetts legislature passed, and Governor Deval Patrick signed into law, an act that includes new Fair Share provisions. The new provisions, which go into effect on July 1, 2013, will raise the FTE threshold from 11 to 21 and make an adjustment for employees with other coverage.

Special thanks to Daniel S. Field and David G. Abbott of Morgan, Brown & Joy, LLP for help building this glossary. Morgan, Brown & Joy, LLP is located in Boston and is New England’s oldest and largest managementside employment law firm. See more at www.morganbrown.com.

Web Sources: www.aldoi.gov/PDF/Consumers/HealthCareGlossary.pdf www.healthcare.gov/glossary/c/index.html www.healthreformgps.org/glossary/ www.davisonbenefits.com/for website Glossary of Terms relating to the Affordable Care Act Updated 8 2012.pdf www.washingtonpost.com/wp-srv/special/health-care-overhaul-lawsuits/glossary.html www.fairhealthconsumer.org/glossary.aspx http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act www.dol.gov/ebsa/newsroom/tr12-01.html - .ULUnSoUmQt4 www.shrm.org/hrdisciplines/benefits/Documents/EmployerPenalties.pdf www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers

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October 2012 • Issue 16

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Independent Joe Magazine December 2012 #17