Health insurance coverage is a touchy issue for all business owners, and franchisees are no exception. Very few franchisors offer insurance coverage for their franchisees. And since insurers classify franchisees as separate from the parent company, they can’t even take advantage of group rates for coverage.
However, BlueMauMau, a Web site covering franchising, reports on a promising development: Allegra Network, a print shop franchisor with nearly 600 franchisees, this year began offering its franchisees and their employees PPO (Preferred Provider Organization) health insurance plans through Blue Cross Blue Shield of Michigan. BlueMauMau reports that over one-third of the chain’s franchisees have already signed up, and cites one franchisee who says he’s saving $30,000 a year on premiums for his shop.
It took Allegra quite a while to find an insurer willing to group several small businesses together under one umbrella and invoice each of them individually. Allegra’s efforts to find insurance solutions gained greater urgency after surveying its franchisees last year to assess their health insurance concerns.
“Interest was strong among our existing franchisees, but even stronger among folks looking to invest in an Allegra franchise,” says Allegra CEO Carl Gerhardt. “With the current economic crisis, people are very concerned about the availability of health insurance and whether a company like ours can provide comprehensive coverage for themselves and their family members.”
Bernard Rubenstein, president and CEO of Franchise Benefit Solutions, an insurance broker that works with franchisees, says typically franchisees have to join trade groups, such as franchisee associations, in order to get group rates for insurance. And today, even some of the associations are finding it harder to offer affordable health insurance.
The situation is complicated by the fact that franchisors usually have locations all across the country, because health insurance is subject to a myriad of state laws. Allegra benefited from having nearly 600 franchises with around 3,200 employes, meeting Blue Cross Blue Shield’s criteria for a certain number of participants.
Not all franchisors have these kind of numbers—nor are most lucky enough to find an insurer willing to work with them. And the article cites several experts who express doubts as to how long the insurance will last.
As an entrepreneur myself, I know health insurance is a major consideration when people decide to start their own businesses. And sadly, the lack of affordable insurance keeps many from ever taking the leap. In today’s economy, there are already enough hurdles for people who want to become franchisees. Worrying about health insurance for themselves and their families shouldn’t have to be one of them. I hope more franchisors and insurers follow the lead of Allegra and Blue Cross Blue Shield.
Rieva Lesonsky is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. Follow Rieva on Twitter @Rieva. Visit SmallBizDaily.com to read more of Rieva’s insights on small business and to buy her newest book, Startup 101: Quick Tips for Starting a Business.