Survey: 9 in 10 Franchisees Want Tax Reform

While franchise expansion is predicted to continue to outpace the overall economy in 2014, new research from the International Franchise Association suggests that comprehensive tax reform would spur even greater growth.

The latest Franchise Business Economic Outlook report predicts franchises will add nearly 200,000 jobs in 2014 – outstripping total private sector employment growth by 0.3%. The total number of franchise businesses is also expected to rise this year, with the IFA predicting the formation of almost 13,000 new businesses.

While over 75% of franchisors say business prospects will improve in 2014, it’s a different story for franchisees. Only 31% of franchisees predict business will improve in 2014, and over half say they intend to reduce their number of full-time staffers due to the Affordable Care Act.

The IFA says comprehensive tax reform would go a long way toward improving the outlook of both franchisees and franchisors. House Ways and Means Committee Chairman Dave Camp (R-MI) agrees.

“Fixing our broken tax code so that it is simpler and fairer is critical to achieving those goals and can provide the certainty and growth opportunities that job-creating industries like franchising need,” Rep. Camp wrote in a release.

According to the IFA survey, nine in ten franchisees and franchisors are in favor of a simplified tax code with lower rates for both corporations and individuals. Lowering the individual rate as well as the corporate rate is especially important, given that the 80% of franchisees file their business taxes on their individual returns.

“Given that small businesses create nearly two-thirds of net new jobs in the U.S., any tax reform package must address both corporate and individual rates to empower franchise small businesses as they drive the American economic recovery,” the IFA wrote in its 2014 Franchise Public Policy Report.