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Of all the twists and turns of the 2024 election — debate breakdowns, assassination attempts, candidate switches, garbage trucks — one of the most enduring scenes was President-elect Donald Trump walking behind a fryer at a McDonald’s in Pennsylvania. It was the defining photo of the competition and had many memorable moments.
Coupled with Vice President Kamala Harris’s ad referencing her time working at McDonald’s as a college student – a life experience she shares with greater than one in eight Americans – the franchise model was thrust into the national highlight. In fact, at one point a Wall Street Journal declared column flipping burgers, “a new, desirable life line.”
As the Trump administration and congressional leaders plan for next yr, it might be sensible to take stock of the franchise business model that powers McDonald’s and apply its resonance with voters to its governing strategy. The franchise model covers much greater than just food, with over 300 industries ranging from home repairs to payroll services to salons and pet care. In fact, franchising accounts for almost nine million jobs in this country. Here are 3 ways the Trump administration can revitalize the franchise model.
Extend the TCJA
First, tax policy in favor of small businesses must be expanded Tax Cuts and Jobs Act of 2017. The franchise community is particularly interested in the sustainability of the Section 199A business deduction, which allows for a deduction of 20% of indirect business income, increasing Employment Opportunity Tax Credit (WOTC), property tax repeal, foreign intangible income incentive, and follow-up
veterans tax credit.
The TCJA included $8 billion in federal tax savings for franchised businesses, including $2.5 billion in pass-through deductions and $2 billion in equipment savings savings.
Early indicators show that tax cuts are high on the list of priorities for the latest yr, though greater than half of Congress members were in office during the 2017 primary term because of franchise allies including future Senate Majority Leader John Thune ( R)-SD) and U.S. Rep. Jason Smith (R-MO), chairman of the House Ways and Means Committee, leading the charge, let’s hope lawmakers join them in prioritizing the task to avoid approaching the looming fiscal cliff at the end of 2025.
Reverse laws on killing at work
Second, reverse the previous administration’s job-killing regulations. It starts with the 2023 NLRB’s overly broad joint employer standard, which might undermine franchisees’ independence as business owners by making them employees or associates of the franchisor, threatening the equity of their businesses and the viability of the entire model. Fortunately, a bipartisan coalition of lawmakers and a federal judge intervened. It’s time to pass a law that may ensure transparency in the operations of franchise firms – as has been the case for over 30 years before the employers’ collective shenanigans began in 2015.
Outside the NLRB, Department of Labor (DOL) attempted to boost the overtime-exempt wage threshold to almost $60,000, raising the cost of doing business for countless franchisees and putting 1000’s of jobs at risk while raising prices for consumers struggling with inflation. The Occupational Safety and Health Administration (OSHA) has sought to implement a “workaround” rule that permits union organizers, trial lawyers, and even direct competitors unprecedented access to workplaces.
The IFA has challenged each of those rules in court, but the Trump administration should signal a willingness to vary course. Fedral Trade Commission (FTC) desired to impose a blanket ban on non-compete clauses in franchise agreements and also issued a negative option rule that harmed each consumers and small businesses. The Commission’s focus on so-called “junk fees” and non-compete agreements has been too broad and far-reaching and goes beyond its mandate, and the Commission have to be stopped so it could focus on its core mission: protecting consumers.
Update the Franchise Policy
To this end, the next FTC chairman should work with the franchise community to extend transparency in the franchise sale process and modernize the disclosures required under the Franchise Rules, which have not been updated since 2007. Under Lina Khan’s current leadership, the FTC has launched multiple information requests ( RFI) on franchise agreements and franchisors’ business practices that were designed to generate negative reactions about the model while leaving desperately needed updates to franchise rules unaddressed.
Despite five bipartisan and bicameral letters from congressional leaders, a rebuke from the U.S. Government Accountability Office (GAO), and contacts from state franchise regulators, the FTC has shown little interest in working with our community to enhance pre-sale disclosure requirements. We need to create a stronger foundation for all franchise relationships, ensuring potential franchise owners have access to more precious information before they make a sound financial investment. We released A Responsible franchise policy last May’s motion plan, which is a positive first step, but we want support from the FTC to make significant progress.
The 2024 elections are over, but the lessons learned should remain alive. Even in a divided country, it’s telling that each major political parties desired to associate themselves with an iconic American franchise. With the right plan of motion, our model can reach even greater heights, providing countless opportunities for many people searching for the American Dream.
Matt Haller is president and CEO of the International Franchise Association.