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The Employee Ownership Update

Loren Rodgers

April 2, 2018

(Loren Rodgers)

The 2018 Appropriations Bill Includes Employee Ownership Language

As we reported on social media and on our employee ownership and current events page, the omnibus appropriations bill for fiscal year 2018, released on March 21, includes language directing the Small Business Administration to increase its efforts to encourage employee ownership. The bill is the result of bipartisan negotiations among leaders from both parties and both chambers of Congress, and President Trump signed it into law on March 23.

The text included in the bill reads:
Employee-Ownership.—It is noted that worker owned businesses are uniquely structured to provide wide-ranging economic benefits. In order to encourage new and assist existing employee owned businesses, SBA is directed to provide education and outreach to businesses, employees, and financial institutions about employee-ownership. This effort should include information about the different business structures available, such as cooperatives, Employee Stock Ownership Plans, and technical assistance to assist employee efforts to become businesses. Further, SBA is directed to develop guidance on employee-ownership to approved lenders and assist in accessing financing through the 7(a)(15) loan guarantee program.
The full bill is available at this link, and the paragraph on employee ownership is on page 88.

Today: Philadelphia Considers Promoting Local Employee Ownership

Philadelphia City Council's Committee on Commerce & Economic Development held hearings on April 2 to hear testimony about employee ownership. The city of Philadelphia has a dozen employee-owned companies, such as McKean Defense, Urban Engineers, and Crown Cork & Seal. According to Kevin McPhillips, the executive director of the Pennsylvania Center for Employee Ownership, the goal is to have the city actively support the creation of new employee-owned companies by using the city's outreach, its departments, its partners, and by helping identify businesses that are good candidates for employee ownership. The committee's discussion, anchored by two panels of people involved in employee-owned companies, was active and productive.

Employee-Owned Wawa Plans to Hire 5,000

Wawa, which operates a chain of a convenience and gas stores in six states, announced that it plans to hire 5,000 new employees. Those new employees may join the ranks of Wawa's 11,000 ESOP participants.

Should Franchisors Require Succession Planning?

In a March 26 article in the Legal Intelligence, Craig Trachtenberg argues that franchisors should either suggest or require that their franchisees develop a succession plan. Noting that franchises face more requirements that other businesses because of the franchise agreements, the article argues that an ESOP may be the right choice for some franchisees.

Huawei Loses Share in U.S.

Following a new warning, this one from Paul Nakasone, the nominee to head both the National Security Agency and U.S. Cyber Command, during his confirmation hearings in mid-March, Chinese company Huawei has continued to see its presence erode in United States, with Best Buy announcing it would no longer sell Huawei phones. Huawei, which is known as China's most prominent employee-owned company, denies that it has even been asked to spy by any government.

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