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The five weeks between the Republican and Democratic conventions could have been a lifetime, as a brand new Democratic ticket formed in record speed. As always, yes International Franchise Association (IFA) is neutral in presidential elections and we will work with whoever is in the White House to improve our model. Just like we were in Milwaukee for the RNC, we were on the ground in Chicagoeducating candidates and campaigns about all the benefits of franchise has to offer, especially for minority-owned businesses.
More highlights from franchise defense with Chicago lawmakers at #DNC2024. IFA is proud to work with members across the board on policies that support the franchise business model and its 9M employees in the US pic.twitter.com/vexxskHpuK
— IFA (@Franchising411) August 21, 2024
Like many Americans, the franchise community is interested in learning more about Vice President Harris' vision and policy priorities, which she characterized in her acceptance speech as a Opportunity Agenda. It's encouraging that one of her early ads features her time works at McDonald's. In fact, if elected, Harris, along with her husband Doug Emhoff, will share a common thread with 1 in 8 Americans
who worked at McDonald's. To truly support the franchise business model, here are five concrete ways Vice President Harris can appeal to the franchise community.
Become a champion for exclusivity
First, Vice President Harris must be a champion for exclusivity and use every day at campaign trail to visit franchises and meet their employees in swing states – and everywhere in between. Doing so will unlock franchising as a component of the Opportunity Agenda, including the unique benefits of franchising for all stakeholders involved in the model.
These stakeholders are essential—of the nearly 9 million employees who work for America's 800,000 franchise businesses (and earn higher wages and better benefits than non-franchise employees) for franchise owners themselves, who are more diverse in race and gender than not exclusivity.
Abandon an expanded joint employer rule
Second, Vice President Harris spoke at the DNC about working with business and labor. However, one of the main work priorities has been a common employer rule that would effectively destroy the franchise. A Harris administration that wants to support small business creation should abandon efforts to implement an expanded common employer rule.
Bipartisan majority in congress and a federal court have rejected expanding the joint employer test to include reserved and indirect control. Even the Democratic supermajorities in California's legislature and its state governor, Gavin Newsom, rejected joint employer liability. This created an avenue to negotiate a bill with organized labor that preserved the franchisee's equity in their business and created predictable growth in minimum wage.
Call for pro-small business tax policies
Third, Vice President Harris should call for pro-tax policies for small businesses, given the outdated and outdated provisions of Tax Cuts and Jobs Act (TCJA). These include extending the qualified business income deduction (QBID), also known as the section 199A deduction, and reinstating a pro-growth interest deduction standard that expired at the end of 2022.
Extending the 199A deduction, along with passing bipartisanship Tax Relief for American Families and Workers Act — which won overwhelming bipartisan support in the House of Representatives this year — would greatly benefit franchise owners. This legislation would increase the amount of interest owners can deduct from their income taxes, provide temporary bonus depreciation for the purchase of equipment and short-lived capital assets, and include other pro-business and pro- workers.
These actions would ensure small business entrepreneurs with a competitive advantage over large corporations and demonstrate that Vice President Harris is committed to addressing the needs of the small business community. It can chart a new path and extend an open hand to the business community by putting politics aside and committing to expanding a policy they have come to rely on. Without action, every business owner in the country wakes up on January 1, 2026, to increased taxes.
Related: Learn the Secrets of Running 20+ Businesses as a Side Hustle — Find and Educate Your 'STIC People'
Increase in SBA lending limits
Fourth, the increase in credit limits Small Business Association (SBA) and to increase access to the 7(a) Working Capital Pilot program (WCP). During her acceptance speech, Harris vowed to him“provide access to capital for small business owners and entrepreneurs and founders.” Launched earlier this year, WCP is a credit product line that features an annual guarantee fee structure that works to provide greater flexibility than a traditional term loan to meet specific business needs.
Access to capital is increasingly challenging in such a situation high interest rate the environment. The SBA introduced the concept as a means of breaking down barriers seeking to start their path to entrepreneurship, where the franchise model is poised to continue to play a leading role.
Describe a future for the Federal Trade Commission
Finally, Harris must outline a future for the Federal Trade Commission (FTC) that includes a modernization of the Franchise Rule, a federal regulation enforced solely by the FTC that governs the sale of a franchise. Currently under review by the FTC, Rule of exclusivity it hasn't been updated since 2007 — the same year the first iPhone was introduced.
Research published in Wall Street Journal indicated that it took more than 20 years of education to understand a Franchise Disclosure Document (FDD), and a federal investigation found that many prospective franchisees did not read the disclosures at all. This needs to change, especially during the pre-sale process when a potential franchisee is deciding whether to invest significant financial resources in a franchise.
A Harris administration would be wise to course-correct FTC to foster the development of franchise entrepreneurship and to further the FTC's true mission – to protect consumers and prospective franchisees. The franchise business model encourages workforce development and small business formulation in local communities, we look forward to working with every administration and every political party towards this important goal.
Related: Is franchising right for you? Ask yourself these 9 questions to find out.
Matt Haller is President and CEO of the International Franchise Association (IFA). Greg Flynn is the Founder, Chairman and Chief Executive Officer of Flynn Group and Flynn Properties and a member of the IFA Board. With over 2,700 Applebee's, Taco Bells, Paneras, Arby's, Pizza Huts, Wendy's and Planet Fitness locations generating $4.7 billion in sales and employing 75,000+ people in 44 states and 3 countries, Flynn Group is the largest franchise operator in the world.
