October 2009 Franchising World

By Troy Flanagan 



Earlier this year, U.S. Reps. Leonard Boswell (D-Iowa) and Aaron Schock (R-Ill.) introduced legislation creating a tax incentive for franchisors to select veterans as franchisees. The Help Veterans Owns Franchises Act (HR 2672) was inspired by language in the 2009 American Recovery and Reinvestment Act (Stimulus) that provided a tax incentive for employers to hire veterans. Since the qualities of strong personal leadership and a structured environment are highly valued in both franchising and the military, this legislation asks the question: Why give a veteran a job when they can be given the keys to the store?



The HVOF Act is a natural compliment to the International Franchise Association’s popular Veterans Transition Franchise Initiative, re-initiated in 2002 to help those who have honorably served their country to seek the dream of business ownership. Since then, nearly 1,500 veterans have purchased a franchise through the program and the Help Veterans Own Franchises Act will further encourage veteran small-business franchise ownership.



Here’s a summary of the bill’s key provisions:

   • Incentivizes franchisors to offer discounted franchise fees to qualified veterans,



   • Establishes a tax credit worth 50 percent of the total franchise fee discount offered by the franchisor to the franchisee,



   • The franchisor must use his existing franchise fee deal, offered to all individuals, as the base calculation,



   • The credit would be capped at $25,000 per unit,



   • Establishing a tax credit for the franchisee veteran, equal to 25 percent of the remaining franchise fee,



   • Eligibility for both the franchisor and franchisee is capped at franchise fees of $100,000. 



In Their Own Words… 

Reps. Aaron Schock and Leonard Boswell’s statement:



“While franchises provide emerging entrepreneurs with important risk protections, a ready-made clientele, additional resources and guidance on how to operate a successful business within their community, these benefits are often outside the reach of veterans due to expensive franchise fees,” said Schock, a member of the House Small Business Committee. “By providing an incentive for franchises to discount the franchise fee for veterans, we can grow our nation’s small businesses’ and stimulate economic growth.”



“I am proud to introduce this bipartisan legislation to spur economic growth, create jobs and give life to the entrepreneurial spirit,” said Boswell, a 20-year veteran of the U.S. Army. “This thoughtful legislation will help veterans in Iowa and across the nation become business owners. As a new generation of veterans returns home from Iraq and Afghanistan, I hope others in Congress will join me and my Republican colleague from Illinois in supporting this legislation putting Americans to work and making the dream of owning a business a reality for these brave young Americans.”

Troy Flanagan is director of government relations of the International Franchise Association. He can be reached at 202-662-0792 or tflanagan@franchise.org  .