BOSTON (SHNS) – When Gov. Charlie Baker announced a new $668 million small business recovery program in late December, gyms and fitness centers, along with restaurants and food trucks, were among the small businesses told they would be at the front of the line to qualify for relief.
But the governor didn’t mention the fine print.
Owners of franchised businesses do not qualify for the program, which has made grants available to small employers hurt by the pandemic of up to $75,000 or three-months of operating expenses to help pay for salaries, utilities, rent, debt or other expenses.
Forty-one lawmakers are now urging Baker to amend the eligibility criteria to make relief funding available to franchisees who still pay taxes, rent and employ residents of Massachusetts, regardless of their affiliation with a larger chain.
“Indeed, franchisees face the same economic hardship and loss of revenue as any nonfranchised small business. Overwhelmingly, franchises are held by independent owner-operators who live and work in their local communities,” the lawmakers wrote in a letter on Tuesday to Baker and Economic Development Secretary Mike Kennealy.
The grant program is being administered by the Massachusetts Growth Capital Corporation. After an initial round of funding went out to businesses that had applied to a previous iteration of the program, a new application window opened on Dec. 31 and closes on Friday, Jan. 15.
Businesses that will be prioritized for funding include gyms and fitness centers, nail salons, barber shops, indoor recreation and entertainment facilities like bowling alleys and roller skating rinks and event support companies, like photography studios and florists.
Chains, franchisees, real estate officers, liquor stores, lobbying shops, non-profits and marijuana businesses are ineligible.
“Given the limitations on available resources at the state level, eligibility criteria were developed to ensure resources through MGCC could be focused on Massachusetts-based businesses that are among the sectors most impacted by the pandemic and that have no connection to a corporate network that could be an advocate for individual franchisees,” the administration told the News Service, explaining the policy.
Ron Levin, the owner of one Elements Massage franchise in Burlington and an investor in two other locations in Andover and East Longmeadow, called the explanation “clear as mud.”
“I’m sure there are multi-unit franchisees who are based out of state, but most of us of course are legally based right here in Mass., where the owners and staff members primarily reside. Our franchisors are effectively suppliers to us. They are certainly not in any way the owners of our businesses,” he said.
Levin added, “Segregating recipients based along industry lines makes complete sense, but this explanation of how franchisees are excluded still doesn’t pass the basic logic test as far as I can understand it.”
Elements Massage is a national chain operating massage studios in 33 states and British Columbia. The company has 27 locations in Massachusetts.
Levin said his Burlington studio employs about 20 full- and part-time staff, and 90 percent of the staff at the three locations he is involved with are women.
Levin said his studios were forced to close between March and June for COVID, and business has been down 20 percent to 30 percent since reopening with some clients choosing not to return yet due to the ongoing pandemic.
“We are operating at break-even or cash flow negative due to depressed demand,” Levin said.
The letter from lawmakers to the administration and MGCC included testimonials from some business owners, mostly gym owners, and legislators who have heard from constituents shut out of the program because they own and operate a franchised business.
Rep. Jeffrey Roy, of Franklin, and Rep. Brian Murray, of Milford, were the first two names on the letter, which was signed by a bipartisan group that included 32 House members and nine senators from all parts of the state.
A constituent of Roy and Murray’s who operates an OrangeTherapy Gym in Medway said in a testimonial shared with the letter that the $581,528 in revenue his business saw in 2020 was down 52 percent from the prior year.
“I may fall under the franchisee category, but I can tell you that my corporate franchise has done nothing to help my individual business; in fact, they have continued to take the full 7% royalties the entire time, excluding the months I was actual closed and not generating any revenue,” the owner said.
Levin, who also offered a testimonial, said he’s lucky because he works as a full-time venture capital investor in addition to operating Elements Massage studios, but he said most other Elements owners make that their full-time occupation.
“We and our staff need just as much relief as any other small business that has been hard hit,” he said.
Baker promoted the grant program during an event Thursday at a Boston restaurant where he said $195 million in direct support had been dispensed to employers to help them pay rent and meet payroll.
(Michael P. Norton contributed reporting)