Page 60 - 914INC - Q1 2016

FRANCHISE 2016 REPORT
A passion for user- friendly tech service drove Seth Berkman (inset)to open
three Westchester uBreakiFix franchise locations.
sults of your work, right away,” Lang notes.
As a community, Westchester of- fers both enticements and potential roadblocks to franchising. “It takes a certain amount of income to live here, so there are plenty of people who don’t blush at spending money,” Magnus says. “That’s always good when you are selling something.” This relative wealth has created fran- chise opportunities for supplemental services and enrichment activities, such as specialized fitness centers, home healthcare for the elderly, and childcare and early-education pro- grams, Internicola says. More prob- lematic, though, is the high cost of real estate. “I see a lot of people who make errors in real estate,” Magnus says, meaning they misjudge the hit those high costs will impose on their bottom line.
The Minimum-Wage Factor
Another storm cloud billowing overhead is the minimum-wage is- sue, which affects the entire state, of course. In most businesses, labor is the biggest expense, “and it has been a runaway train,” Magnus says. “And that train became a bullet train recently, [with the minimum wage]
on track for $15 an hour.” While most of those interviewed agree that the current minimum of $7.25 is too low, they also agree that $15, which Governor Cuomo is calling for in the food-service industry, is too high.
“I worked for minimum wage back in the day, so I know the need,” Kaufmann says. “On the other hand, picking an arbitrary number like $15 an hour, which the governor is cram- ming down our throats, creates a dilemma.” Kaufmann believes that doubling the cost of labor will result in higher consumer prices and in franchisees not making an adequate ROI, which will in turn slow business growth in the county.
Magnus says a hike in the mini- mum wage will of course eat into his profits at Elevation Burger and
counters that the restaurant business is actually one of the best places for workers to move up the manage- ment and income chain. “There is no industry where people can grow faster in their careers than in this business,” he says. “I had a woman start at my Ridge Hill store, and she went, in two years, from $7.25 an hour to a manager spot making a $50,000 base salary.”
An even bigger threat looms at the federal level. The National Labor Relations Board (NLRB), in an action against the McDonald’s Corporation, is proposing to change the status of franchisors to that of “joint employ- ers” of the people who work for the franchisees. “The federal govern- ment seems to be challenging the very structure of franchising and the
58 914INC. Q1 2016
“Franchising does very well with first-time business
owners, b”
ecause it’s like cooking from a recipe.
— Frank Dunne, FranNet