Franchisees Want Certainty, Not ‘Fiscal Cliff’: Restaurant CEO

Franchisees Want Certainty, Not ‘Fiscal Cliff’: Restaurant CEO

Charley’s Grilled Subs has been growing quickly in spite of a sluggish U.S. economy, but the company’s franchisees remain concerned about the uncertain regulatory and tax environment, Bob Wright, the company’s chief executive told CNBC’s “Squawk Box” on Tuesday.

Charley's Grilled Sub


“We’ve been real fortunate through the recession and even during this slow recovery to be able to grow not only our same-store sales but also our unit count,” said Wright.

Charley’s has 210 franchisees operating more than 400 restaurants, and Wright said many operators are keeping an eye on Washington.

(Read more: A Pitch Fest for Startups to Create Jobs)

Wright said franchisees are worried about the “fiscal cliff” — automatic spending cuts and tax increases slated to hit the economy at the end of the year. Other concerns include the looming debt ceiling discussion coming next year and the ongoing health-care debate.

With so much uncertainty, key business decisions have been difficult for small firms. “They’re the ones on the front lines hiring employees, making decisions about whether they’ll buy new equipment or build another location,” CEO Wright said. “They’d like to know what environment they’re operating in.” These small-business owners “absolutely care” about the potential for higher taxes on those making over $ 250,000 a year, Wright said. (Read More: Denny’s Franchisee Imposes Surcharge For Obamacare).

Wright added parent companies should help franchisees navigate the uncertainty. “If they’re operating in an environment with higher costs and regulation, we’ve got to do what we can to help them make a profit and continue to employ people,” he said.

Amid all the negative news, access to credit may be one area that’s improving for franchisees. Although many Charley’s Grilled Subs franchisees pay for their investment using cash, Wright said there are emerging signs that credit markets are loosening. (Read More: How to Access More Capital for Main Street.)

“When they do borrow money they’re getting loans from smaller banks and there are some S.B.A. (Small Business Association) loans out there,” the CEO said. “But it is tougher and it affects their growth.”

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