As he prepares to take office, President-elect Donald Trump has outlined an audacious goal of returning to pre-pandemic rates of economic growth and a "golden age of America." After four years of being told the economy was better than how it hit our wallets, this is a welcome change of direction.
To achieve this objective, the new administration is going to need the private sector – something the Biden era not only mostly ignored, but whose regulatory agenda was downright hostile to the concerns of most industries. The franchise sector, which I represent and includes 800,000 small businesses supporting 9 million workers, is ready to get to work as a resource to the Trump administration.
Franchising played a starring role in the 2024 election, no more so than Trump’s turn behind the fryer of a Pennsylvania McDonald’s. While franchising is often associated with food, most (more than six in ten) are in another industry, ranging from hotels, salons, fitness, pet care and many more.
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Even after several punitive attacks on franchising from the Biden administration, the franchise sector is projected to have grown by 4% this year compared to 2.7% for the broader economy.
With a change in philosophy at the federal government, the opportunities for franchising’s animal spirits to be harnessed are ripe. Here are three things the Trump administration can do to supercharge its economic growth:
There is no bigger federal priority for franchising than clarifying the joint employer standard. The entire model hinges on the independence between the franchisor (the brand) and its individual franchisees. The former provides the concept, the framework and the branding for the latter, who is free to run their own business, in exchange for an agreed-upon fee and following the brand standards that consumers expect, whether in Palm Beach or Parsippany.
In 2023, the Biden administration’s National Labor Relations Board tried to reverse the 2020 Trump joint employer standard and remove the autonomy between franchisors and franchisees. As the name suggests, the goal was putting the franchisor on the hook for franchisee’s employees to increase legal liability and ease of unionization.
Thankfully, a Trump-appointed federal judge in Texas threw out the Biden overreach, but after four changes to this rule in the last decade, franchising needs a permanent standard for joint employment that codifies the Trump definition. Business owners can’t plan when the regulatory climate is always changing with the occupant of the White House. They need certainty.
In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), known colloquially as the Trump tax cuts. Contrary to opponents’ suggestions about "tax cuts for the rich," these policies became lifelines for small business owners, helping take the economy to new highs prior to the COVID-19 pandemic. Yet without action, they are all set to expire at the end of 2025.
One especially important component of the Trump tax cuts is Section 199A, which allows for a 20% deduction of qualified income for pass-through businesses. Since most franchise businesses are structured as a pass-through entity, 199A levels the playing field between small businesses and large corporations, who already enjoy a bevy of tax cuts.
To head off any last-minute "fiscal cliffs" like the recent showdown over government funding, the re-authorization of the tax cuts should be prioritized early in the new year. Not only would the action allow small business owners much-needed certainty, but it would also send a clear message that the days of putting off important action until the last moment are over.
Prior to Biden appointing Lina Khan to lead the Federal Trade Commission (FTC) in 2021, most Americans had never heard of the agency, and for good reason. Established a century ago to ensure a competitive business environment and protect consumers, the FTC under Khan morphed into a hyper-aggressive agency stepping outside the lanes of its authority.
Instead of standing up for consumers, Khan antagonized the business community. She launched countless lawsuits and investigations, forcing industry to spend precious time and resources fending off government regulators rather than growing their businesses.
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In 2023, Khan launched a sweeping Request For Information into franchising designed to elicit negative comments, and then extended its time period in the summer of 2024, when she didn’t get the desired results.
Trump named Andrew Ferguson as his replacement for Khan, and not a moment too soon. Already, there are promising signs that the tide is turning. The highly anticipated "junk fee" rule announced by the FTC was more narrowly tailored than its original iteration.
Achieving the "golden age of America" won’t be easy, but that should not deter us.
America didn’t become the envy of the world by settling for less. We didn’t heed President John F. Kennedy’s call of walking on the moon in the 1960s or President Ronald Reagan’s mission to "tear down this wall" in the 1980s by going small.
Reaching that 4% economic growth number will require everyone rowing in the same direction. The franchise community stands ready and willing to do our part.
