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As he prepares to take office, President-elect Donald Trump has outlined a strong goal of returning to pre-pandemic levels of economic growth and “America's golden age.” After four years of being told the economy is better than the way it arrived in our wallets, this is a welcome change in direction.
To achieve this goal, the new administration will need private industry — something that Biden not only ignored, but whose regulatory agenda was at odds with many industry concerns. The franchise industry, which I represent and includes 800,000 small businesses that support 9 million workers, is ready to begin serving as an asset to the Trump administration.
Franchising has played an important role in the 2024 election, and not just for Trump's chance behind a Pennsylvania McDonald's fryer. Although franchising is often associated with food, the majority (more than six in ten) are in another industry, from hotels, salons, fitness, pet care and more.
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Even after several punitive attacks on franchises from the Biden administration, the franchise sector is expected to grow 4% this year compared to 2.7% in the broader economy.
President-elect Donald Trump works the drive-through line during a campaign photo as he visits a McDonald's restaurant in Feasterville-Trevose, Pennsylvania on October 20, 2024. Even that short time of fast food is a strong reminder of the importance of franchisesto. the US economy. (Win McNamee/Getty Images)
With the change of philosophy in the federal government, the opportunities for the spirit of franchising to be used are ripe. Here are three things the Trump administration can do to boost its economic growth:
1. Make Trump's joint employer standard a law
Nothing is more important to the federal regarding franchising than to specify the joint level of the employer. The entire model relies on independence between the franchisor (the brand) and its individual franchisees. The former provides the concept, structure and branding of the latter, who are free to run their business, to earn an agreed fee and follow the product standards expected by consumers, whether in Palm Beach or Parsippany.
In 2023, the National Labor Relations Board of the Biden administration tried to roll back Trump's 2020 joint employer standard and eliminate independence between franchisors and franchisees. As the name suggests, the aim was to put the franchisor on the hook for franchisee employees to increase legal liability and union freedom.
Thankfully, a Trump-appointed judge in Texas struck down Biden's overreach, but after four changes to the law in the past decade, franchising requires a permanent collective bargaining agreement that includes Trump's definition. Business owners can't plan when the regulatory climate is constantly changing with someone in the White House. They need reassurance.
2. Reauthorize Trump's tax cuts
In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), collectively known as the Trump tax cuts. Contrary to the opposition's proposals about “tax cuts for the rich,” these policies became lifelines for small business owners, helping to bring the economy to its peak before the COVID-19 pandemic. But without action, they will all expire at the end of 2025.
One of the most important parts of Trump's tax cuts is Section 199A, which allows a deduction of 20% of qualified income for pass-through businesses. Since most franchise businesses are structured as pass-through businesses, 199A levels the playing field between small businesses and large corporations, which already enjoy tax breaks.
To avoid any last-minute “fiscal cliff” such as the recent dispute over federal funding, the reauthorization of tax cuts should be prioritized early in the new year. Not only will this action allow small business owners much-needed reassurance, but it will also send a clear message that it is time to postpone important action until the last minute.
3. Right ship at FTC
Before Biden nominated Lina Khan to lead the Federal Trade Commission (FTC) in 2021, most Americans had never heard of the agency, and for good reason. Established over a century ago to ensure a competitive business environment and protect consumers, the FTC under Khan has evolved into a more aggressive agency that pushes outside the bounds of its mandate.
Federal Trade Commission Chairwoman Lina Khan has come under fire from the business community for her aggressive approach. FILE: Khan testifies before the House Judiciary Committee in the Rayburn House Office building on Capitol Hill on July 13, 2023, in Washington, DC. (Chip Somodevilla/Getty Images)
Instead of advocating for consumers, Khan opposed the business community. He launched numerous lawsuits and investigations, forcing the industry to spend valuable time and resources defending government regulators rather than growing their businesses.
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In 2023, Khan launched an intense request for information on business transactions designed to receive negative comments, and then extended its period until the summer of 2024, when he did not get the results he wanted.
Trump named Andrew Ferguson to replace Khan, not for a second. Already, there are promising signs that the tide is turning. The much-anticipated “junk money” rule announced by the FTC was much less refined than its original iteration.
Business owners can't plan when the regulatory climate is constantly changing with someone sitting in the White House. They need reassurance.
Achieving “America's golden age” won't be easy, but that shouldn't stop us.
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America has not been the envy of the world for getting less. We didn't heed President John F. Kennedy's call to walk on the moon in the 1960s or President Ronald Reagan's mission to “tear down this wall” in the 1980s by doing little.
Achieving that 4% economic growth rate will require everyone to row in the same direction. The franchise community is ready and willing to do our part.
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