Small Businesses and Franchises Added More Jobs in June

The economy's continual improvements have been noted in a number of sectors in recent months, but when it comes to hiring, it remains that small businesses are leading the way nationwide. Now, though, franchises appear to be joining them.

Small businesses added some 84,000 jobs across the country in June, making up a considerable portion of the roughly 188,000 across all sectors, according to the latest figures from Automatic Data Processing. This marked a 45 percent increase in hiring by small businesses from the numbers seen in May, as well as a 39 percent increase for all companies during the same period.

Interestingly, though, franchises also significantly increased their own hiring efforts, bringing on nearly 28,000 new workers, itself an increase of about 46 percent from May's total, the report said. About three out of every four hires (slightly more than 21,000 in all) made by franchise businesses were from those in the restaurant industry. That was up from an average of close to 10,400 over the previous six months.

"During June 2013, U.S. franchise industries added a total of 27,910 jobs, an increase over the 19,160 jobs added in May," said Ahu Yildirmaz, senior director of the ADP Research Institute. "Most of the franchise industries measured by the ADP National Franchise Report recorded employment gains during the month of June 2013. Restaurants can be credited for the majority of the growth and are followed by, to a lesser extent, gas stations/auto repair shops, business services, and accommodations. In fact, restaurants added 75 percent of the total 27,910 private-sector franchise jobs last month."

Other sectors that saw sizable upticks in hiring were the aforementioned gas stations and auto repair companies, which added 2,750 jobs in June, up from an average just 690 over the previous six months, the report said. Meanwhile, accommodations added some 1,250 jobs, business services bringing on 1,360 new workers, and food retailers took on an additional 390 workers.

What caused the change?
Keith Miller, the chairman of the Coalition of Franchisee Associations, told the company that within his industry, there is some discussion as to whether the change constitutes a long-term trend or simply a seasonal spike in hiring that will decline once again as time goes on, the report said. He also noted that there may be issues related to future regulatory changes under the Affordable Care Act, as well as tax policies, that could weigh heavily on franchisee hiring decisions going forward as well.

Already, some restaurant chains have announced plans to keep franchises from having to cover ACA-related health insurance costs by giving them greater flexibility to use workers for fewer than 30 hours each, which effectively allows them to skirt the coverage mandate, the report said. This might require them to bring on more part-time workers to cover the lost hours that previously full-time workers might have been taking. Some restaurants are also putting into place plans that allow them to share workers with other franchisees so that the people work at the same company, but in different locations, as another means of avoiding having to provide coverage.

Of course, company owners who are looking to expand in any way may also want to reconsider what they're paying for small business insurance. Evaluating their costs for liability insurance and other policies that can be quite expensive, and even more so if they bring on new workers, can certainly help to reduce overall spending and allow companies to devote those funds to other issues where the funds may be needed more.