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The five weeks between the Republican and Democratic conventions could have lasted forever, as a brand new Democratic slate formed in record time. As always, the International Franchise Association (IFA) is neutral in presidential elections and we will work with anyone in the White House to improve our model. Just as we were in Milwaukee for the RNC, we were on the ground in Chicago to educate candidates and campaign teams about all the good franchising opportunities, especially for minority-owned businesses.
More highlights from promoting franchising with lawmakers in Chicago at #DNC2024. IFA is proud to work with members of both parties on policies that support the franchise business model and its 9 million employees in the U.S. 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 called an “opportunity agenda” in her acceptance speech. It is encouraging that one of her first commercials features her time at McDonald's. If elected, Harris, along with her husband, Doug Emhoff, will have something in common with the 8th American,
who have worked at McDonald's. To truly support the franchise business model, here are five concrete ways Vice President Harris can engage the franchise community.
Related: Thinking about purchasing a franchise? Start now to find your personal list of franchises that fit your lifestyle, interests and budget.
Be an advocate of franchising
First, Vice President Harris should be a champion for franchising, using every day of her campaign to visit franchises in swing states – and everywhere in between – and meet with their employees. This will unlock franchising as part of the Opportunity Agenda, including the unique benefits of franchising for all stakeholders involved in the model.
The number of stakeholders is considerable – from the nearly nine million employees of America's 800,000 franchised companies (who receive higher wages and better benefits than non-franchise employees) to the franchisees themselves, who are more racially and gender diverse than non-franchisees.
Related topics: The crucial first 100 days of onboarding – What you are probably missing and what can make or break your new employee
Waiver of an extended rule for joint employers
Second, Vice President Harris spoke at the DNC about working with businesses and workers. Yet one of workers' top priorities was a joint employer provision that would effectively kill franchising. A Harris administration that wants to support small business creation must abandon efforts to implement an expanded joint employer provision.
Bipartisan majorities in Congress and a federal court have rejected an extension of the joint employer test to reserved and indirect control. Even Democratic supermajorities in the California legislature and their home state governor, Gavin Newsom, rejected joint employer liability. This opened the possibility of negotiating a law with unions that would ensure franchisees' ownership of their business and allow for predictable increases in the minimum wage.
Related: A franchise attorney and industry expert with 20 years of experience weighs in on the impact of the election on small businesses
Demand for a tax policy in favour of small businesses
Third, given the expired and expiring provisions of the Tax Cuts & Jobs Act (TCJA), Vice President Harris should call for tax policies that support small businesses. This includes expanding the qualified business income deduction (QBID), also known as the Section 199A deduction, and restoring a growth-promoting interest deduction standard that expired at the end of 2022.
Expanding the 199A deduction and passing the bipartisan Tax Relief for American Families and Workers Act—which received overwhelming bipartisan support in the House this year—would greatly benefit franchise owners. This bill would increase the amount of interest owners can deduct from their income taxes, allow temporary bonus depreciation for the purchase of equipment and short-lived capital assets, and include other business- and worker-friendly provisions.
These actions would give small business owners a competitive advantage over large corporations and show that Vice President Harris is committed to the needs of small business owners. She can forge a new path and extend an open hand to the business community by putting politics aside and working to expand policies they have come to rely on. If nothing is done, every business owner in the country will face a tax increase on January 1, 2026.
Related: Learn the Secrets of Running 20+ Businesses as a Side Hustle – Find and Promote Your “STIC Employees”
Increase in credit limits at the SBA
Fourth, increase Small Business Association (SBA) loan limits and improve access to the 7(a) Working Capital Pilot (WCP) program. In her acceptance speech, Harris promised to “provide small business owners, entrepreneurs and founders with access to capital.” Launched earlier this year, WCP is a loan product with an annual guaranteed fee structure that offers more flexibility than a traditional term loan to meet specific business needs.
In an environment of high interest rates, it is becoming increasingly difficult to raise capital. The SBA praised the concept as a means of breaking down barriers to self-employment. The franchise model is likely to continue to play an important role in this.
Related: Find out which brands have been on the Franchise 500 list the longest and earned a place in our new Hall of Fame.
Outline the future of the Federal Trade Commission
Finally, Harris should outline a future for the Federal Trade Commission (FTC) that includes modernizing the Franchise Rule, a federal regulation enforced solely by the FTC that governs the sale of a franchise. The Franchise Rule, which is currently under review by the FTC, has not been updated since 2007 – the year the first iPhone was introduced.
A study published in the Wall Street Journal found that it takes more than 20 years of education to understand a Franchise Disclosure Document (FDD), and a U.S. federal investigation found that many prospective franchisees don't read disclosures at all. This needs to change, especially during the pre-sale process when a prospective franchisee is deciding whether to invest significant financial resources in a franchise.
A Harris administration would be wise to correct the FTC's course to encourage entrepreneurial development in franchising and focus on the FTC's true mission – protecting consumers and potential franchisees. The franchise business model promotes workforce development and small business creation in local communities. We look forward to working with any administration and any political party toward 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 founder, Chairman and CEO of the Flynn Group and Flynn Properties and a board member of the IFA. With over 2,700 Applebee's, Taco Bells, Paneras, Arby's, Pizza Huts, Wendy's and Planet Fitness stores generating over $4.7 billion in revenue and employing over 75,000 people in 44 states and 3 countries, the Flynn Group is the largest franchise operator in the world.
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