4 Things That Have Changed in the Franchising Industry Since President Trump’s Inauguration

It’s officially been one year since Donald Trump was declared the winner in one of the most unconventional Presidential elections. After defeating former Secretary of State Hillary Clinton to become the nation’s 45^th President, President Trump took the oath of office and kick started a new political landscape that businesses—including franchises—were anxiously anticipating.

At the time, members of the franchising community were hopeful that the new President would usher in an era that meant less government regulations for businesses. The International Franchise Association’s president and CEO, Robert Cresanti, even released a statement asking President Trump to support the industry going forward, saying, “We urge the President to strike the massive regulatory state created by the practice of legislation through executive order and for Congressional leaders to repeal these unnecessary, harmful and overly burdensome regulations, beginning with the newly-broadened joint employer standard and the Department of Labor’s overtime rule.”

There’s no doubt that it’s been an eventful first year in office for the President, but did President Trump listen to the franchising industry’s message? Here are the four major things that have changed for the industry since President Trump’s Inauguration on January 20, 2017:

1. Tax Reform

One of the biggest changes that President Trump’s administration has implemented over the course of his first year in office is tax reform. The $1.5 trillion tax package is the largest overhaul since the 1980s, and is widely considered to be the President’s first major legislative accomplishment. The bill will cut the corporate rate from 35 percent to 21 percent, and temporarily reduce the tax burden for most individuals.

The move was supported by members of the franchising community, including the IFA. When the Senate passed the bill, Cresanti said in a statement, “We applaud Senate Leadership and the Finance Committee members for listening to the concerns of business owners and working to ensure small businesses see tax relief. For years, the burdensome and complex tax code has held back small business owners and stifled new investments. With two-thirds of new jobs being created by small businesses and 80 percent of franchises filing as pass-through entities, important changes were made in the final days for these franchise small businesses."

2. Save Local Business Act

The Save Local Business Act is another major piece of legislation that has the potential to impact the franchising industry going forward. The legislation is aimed at overturning the National Labor Relations Board’s joint employer ruling that says franchisors are potentially liable for law violations conducted at the franchisee level. So far, the bill has successfully moved through the House of Representatives. The Senate still hasn’t unveiled its own version of the bill, but Lonnie Hegerson, president of Helgerson Franchise Group, expects the Senate to be on board.

He said, “Of course, we’re still waiting to see what will happen with the Save Local Business Act in the Senate. But from what I’ve been hearing, things are looking good.”

3. Healthcare Choice

In October, President Trump issued an executive order that is also changing the landscape for franchisors and their franchisees. In his Presidential Executive Order promoting healthcare choice and competition across the U.S., President Trump prioritizes improving healthcare where current regulations limit choice and competition, including small businesses.

“Another big win for us this year was the executive order on healthcare that President Trump ordered this year. It puts franchisors in a position to better educate their franchisees on their healthcare options and put together more affordable plans,” said Helgerson. “As long as I’ve been in franchising—which has been 30 some years now—that has always been a question that comes up with franchisees. Even during the discovery process, they want to know what they’re healthcare will look like. With this executive order, we’re moving in a really good direction to put things together and make it more advantageous for people to run their own businesses, particularly in franchising.”

4. The Economic Environment

Beyond legislation and executive orders, the overall state of the economy has changed since President Trump took office. With U.S. stocks consistently hitting new records, the number of jobs growing and unemployment falling, Helgerson notes that there’s been a noticeable shift across the board.

“We’re currently in an environment in which we have access to capital, are seeing market growth and are experiencing signs that the overall economy is continuing to grow. I believe that it’s been a bellwether year as far as getting things done that are of interest to the franchising community,” said Helgerson. “It’s been darn interesting so far on so many different fronts, and I think that for franchising, it’s been a winner. I’m looking forward to seeing what happens in 2018.”