May 2010
Franchising World

Federal legislation would provide tax credit for franchises that offer vets initial fee discount. 

By Jason Straczewski 
     
Urging Congress to support legislation to help military veterans become franchise small-business owners, the International Franchise Association again took its message “building local businesses, one opportunity at a time” to Capitol Hill March 11.
  
Stressing the need for lawmakers to approve H.R. 2672, the Help Veterans Own Franchises Act, introduced by Reps. Leonard Boswell (D-Iowa) and Aaron Schock (R-Ill.) and co-sponsored by nearly three dozen other members of Congress, IFA delivered its plea to the U.S. House Veterans Subcommittee on Economic Opportunity. The bill would create a tax credit for franchise businesses that offer qualified veterans discounts of the initial franchise fee.
  
“Given the current economic climate,” IFA Vice Pres. of Government Relations David French noted, “many franchised businesses are finding it harder to access the capital they need to open new stores and recruit new investors. In order to encourage economic growth and make it easier for veterans to own their business, the IFA supports enactment of this tax credit for those franchise systems that choose to offer qualified veterans a discounted franchise fee.” 
  
IFA has long sought avenues for easing veterans’ ownership of franchised small businesses. Currently, more than 1,700 veterans have become franchisees via IFA’s award-winning “VetFran” program, a voluntary effort supported by nearly 400 association-member franchise systems which provide various financial incentives to honorably-discharged former military personnel.
  
VetFran gained prominent mention during the subcommittee’s hearing. The former director of the U.S. Dept. of Veterans Affairs’ Center for Veterans Enterprise, Scott Denniston, during his testimony said: “CVE was instrumental in establishing with the International Franchise Association   the very successful VetFran program which has helped over 1,700 veterans open franchises with reduced fees or additional support since 2002. Quite frankly, CVE became the ‘go-to’ organization for veterans wanting to establish or expand a small business in this country.” Denniston currently serves as program director for the National Veteran-Owned Business Association.
  
Tim J. Foreman, executive director of the VA’s Office of Small and Disadvantaged Business Utilization, told lawmakers: “Our work with the International Franchise Association to develop the Veteran Franchise Program has nearly 400 franchisors participating. More than 1,300 veterans have opened franchises through this program.”   
  
IFA said it would continue efforts to advance the bill whose tax credit would amount to 50 percent of the total franchise fee discount offered by the franchise company to franchisees, capped at $25,000 per franchise unit purchased. The measure would also provide a tax credit for the remaining initial franchise fee paid by the veteran-franchisee.
  
Jason Straczewski is director of government relations of the International Franchise Association. He can be reached at 202-662-0797 or 
jstraczewski@franchise.org  .