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As President-elect Donald Trump prepares to take office, he has set a bold goal of returning to pre-pandemic economic growth rates and “America's Golden Age“After four years of being told the economy was better than our governor, this is a welcome change in trend.
To achieve this goal, the new administration will need the private sector – something that the Biden era has not only mostly ignored, but whose regulatory agenda has been completely hostile to the concerns of most industries. The franchise industry, which I represent and which includes 800,000 small businesses supporting 9 million workers, is ready to serve as a resource for the Trump administration.
Franchising has played a major role in the 2024 election, and none more so than Trump behind a McDonald's fryer in Pennsylvania. While franchisees are often associated with food, most (more than six in ten) work in another industry, ranging from hotels, salons, fitness, pet care and many more.
An expert sounds the alarm about a “clear shift” taking place in American companies
Even after several punitive attacks on franchising by the Biden administration, the franchise sector is expected to grow 4% this year compared to 2.7% for the broader economy.
President-elect Donald Trump works in the drive-thru line during a campaign photo during his visit to a McDonald's restaurant in Westerville-Trevose, Pennsylvania on October 20, 2024. Even that brief stint in fast food is a powerful reminder of the importance of franchisees to the American economy. (Wayne McNamee/Getty Images)
With a change in philosophy in the federal government, opportunities to harness the animal spirit of privilege became available. Here are three things the Trump administration can do to boost its economic growth:
1. Turn the Trump Common Employer Standard into law
There is no greater federal priority for franchising than this one Clarifying the common standard for employers. The entire model hinges on the independence between the franchisor (brand) and the individual franchisees. The former provides the concept, framework and branding to the latter, who is free to run their own business, for an agreed-upon fee and following the brand standards that consumers, whether in Palm Beach or Parsippany, have come to expect.
In 2023, the Biden administration's National Labor Relations Board tried to reverse the 2020 trend Trump Common Employer Standard and removing independence between franchisors and franchisees. As the name suggests, the goal was to put the franchisor on the hook for the franchisor's employees to increase legal liability and ease of unionization.
Fortunately, a Trump-appointed federal judge in Texas rejected Biden's overreach, but after four changes to that rule in the past decade, the franchise needs a permanent cross-employment standard that codifies Trump's definition. Business owners cannot plan when the regulatory climate is always changing with the occupant of the White House. They need certainty.
2. Reauthorize Trump's tax cuts
In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), colloquially known as Trump tax cuts. Contrary to opponents' proposals for “tax cuts for the rich,” these policies have become a lifeline for small business owners, helping lift the economy to new highs before the COVID-19 pandemic. However, without action, they are all set to expire at the end of 2025.
One particularly important element of Trump's tax cuts is Section 199A, which allows a 20% deduction on qualified income for pass-through businesses. Since most franchise companies are organized as a pass-through entity, 199A levels the playing field between small businesses and large corporations, which already enjoy a range of tax deductions.
In order to avoid any last-minute “fiscal cliffs” like the recent showdown over government finances, reauthorizing tax cuts early in the new year should be prioritized. Not only will this measure provide small business owners with much-needed certainty, it will also send a clear message that the days of putting off taking important action until the last minute are over.
3. Right the ship at the FTC.
Before Biden appointed Lina Khan to lead the 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 Federal Trade Commission has transformed under Khan into an overly aggressive agency that is beyond its authority.
FTC Chairwoman Lina Khan has been widely criticized by the business community for her aggressive approach. FILE: Khan testifies before the House Judiciary Committee at the Rayburn House office building on Capitol Hill on July 13, 2023, in Washington, DC. (Chip Somodevila/Getty Images)
Instead of standing up for consumers, Khan antagonized the business community. Fired Countless lawsuits and investigations, forcing the industry to spend valuable time and resources fending off government regulators rather than growing its business.
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In 2023, Khan launched a blanket request for information about the franchise designed to spark negative comments, then extended its term in the summer of 2024, when she didn't get the results she wanted.
Trump appointed Andrew Ferguson as Khan's replacement, and it wasn't too early at all. Indeed, there are promising signs that the tide is beginning to turn. The FTC's long-awaited “junk charge” rule was more narrowly tailored than its original version.
Business owners cannot plan when the regulatory climate is always changing with the occupant of the White House. They need certainty.
Achieving an “America’s Gilded Age” will not be an easy task, but that should not deter us.
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America did not become the envy of the world by accepting anything less. We did not listen to President John 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 through small-scale action.
Reaching 4% economic growth will require everyone rowing in the same direction. The franchise community is ready and willing to do our part.
