Enrepreneur | 5 Ways Kamala Harris Can Support the Franchise Community, According to Two Industry Leaders

Share

The CEO of the International Franchise Association and the world’s largest franchise operator outline five things the vice president can do to support the franchise industry.

By Matt Haller and Greg Flynn Edited by Carl Stoffers Aug 29, 2024
Entrepreneur

Opinions expressed by Entrepreneur contributors are their own.

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, the International Franchise Association (IFA) is neutral in presidential elections and we will work with whoever is in the White House for the betterment of our model. Just as we were in Milwaukee for the RNC, we were on the ground in Chicago, educating candidates and campaigns about all the good franchising provides, especially for minority-owned businesses.

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 an Opportunity Agenda. It is encouraging that one of her early commercials features her time working at McDonald’s. In fact, if elected, Harris, along with her husband Doug Emhoff, will share a common thread with the 1 in 8 Americans who have worked at McDonald’s. To genuinely support the franchise business model, here are five concrete ways Vice President Harris can appeal to the franchise community.

Be a champion for franchising

First, Vice President Harris should be a champion for franchising and use every day on the 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.

Those stakeholders are substantial — from the nearly nine million employees who work for America’s 800,000 franchise businesses (and earn higher wages and better benefits than non-franchised employees) to the franchise owners themselves, who are more diverse in race and gender than non-franchises.

Abandon an expanded joint employer rule

Second, Vice President Harris talked at the DNC about working with business and labor. Yet, one of labor’s top priorities has been a joint employer rule that would effectively destroy franchising. A Harris administration that wants to support small business creation must abandon efforts to implement an expanded joint employer rule.

Bipartisan majorities in Congress and a federal court have rejected expanding the joint employer test to include reserved and indirect control. Even Democratic supermajorities in the California legislature and her home state governor, Gavin Newsom, rejected joint employer liability. This created a pathway to negotiate a bill with organized labor that preserved franchisee equity in their business and created predictable increases in the minimum wage.

Call for pro-small business tax policies

Third, Vice President Harris should call for pro-small business tax policies, given the expired and expiring provisions of the Tax Cuts & Jobs Act (TCJA). These include extending the qualified business income deduction (QBID), also known as the section 199A deduction, and restoring a pro-growth interest deductibility standard that expired at the end of 2022.

Extending the 199A deduction and passing the bipartisan Tax Relief for American Families and Workers Act — which garnered overwhelming bipartisan support in the House this year — would greatly benefit franchise owners. This legislation would increase the amount of interest owners can deduct from their income taxes, offer temporary bonus depreciation for the purchase of equipment and short-lived capital assets and include other pro-business and pro-worker provisions.

These actions would provide small business entrepreneurs with a competitive edge over large corporations and demonstrate that Vice President Harris is committed to addressing the needs of the small business community. She can chart a new path and extend an open hand to the business community by putting the politics aside and commit to extending a policy they have come to rely on. Without action, every business owner in country wakes up on January 1, 2026, facing a tax increase.

Increase lending limits at the SBA

Fourth, increase lending limits at the Small Business Association (SBA) and boost access to the 7(a) Working Capital Pilot (WCP) program. During her acceptance speech, Harris pledged to “provide access to capital for small-business owners and entrepreneurs and founders.” Launched earlier this year, WCP is a line of credit product that features an annual guaranty fee structure that works to offer greater flexibility than a traditional term loan to meet specific business needs.

Accessing capital is increasingly challenging in such a high-interest rate environment. The SBA pitched the concept as a means of breaking down barriers seeking to start their own pathway to entrepreneurship, where the franchise model is poised to continue playing a major role.

Outline a future for 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 solely enforced by the FTC that governs the sale of a franchise. Currently under review by the FTC, the Franchise Rule hasn’t been updated since 2007 — the same year the first iPhone was introduced.

Research published in the Wall Street Journal showed it took more than 20 years of education to understand a Franchise Disclosure Document (FDD), and a federal investigation found many prospective franchisees did not read the 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 course-correct the FTC to foster entrepreneurial development in franchising and double-down on 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 any administration and any political party toward that important goal.

Matt Haller is the president and CEO of the International Franchise Association (IFA). Greg Flynn is the founder, chairman and CEO of Flynn Group and Flynn Properties, and an IFA Board Member. With 2,700+ Applebee’s, Taco Bells, Paneras, Arby’s, Pizza Huts, Wendy’s and Planet Fitness units generating $4.7+ billion in sales and employing 75,000+ people in 44 states and three countries, Flynn Group is the largest franchise operator in the world.

Search