Historically, franchise brands have been allowed to immediately recognize the initial franchise fees earned from incoming franchisees, which average $36,000, when all material services or conditions relating to the sale have been substantially performed or satisfied. For small business, “emerging brands,” the recognition of this income is critical to the financial stability of entrepreneurs who are beginning to grow their business.
Tax reform improves the business environment for franchisors, franchisees, and prospective investors. IFA frequently engages with Congress and Department of Treasury officials in addressing tax concerns facing franchise businesses. Most recently, IFA secured $8 billion in federal tax savings for franchise businesses each year as part of the Tax Cuts and Jobs Act.
IFA's advocacy efforts ensured more than 500 franchise brands and thousands of franchise business owners are eligible for a new 20% deduction on qualified business income as part of the new tax law.
By supporting a commonsense fix to the technical glitch in the tax law allowing for immediate depreciation on the costs of eligible remodels, renovations, and improvements, IFA seeks to improve the bottom-lines of thousands of franchise businesses throughout the United States.