Franchise News
Biden Administration to Increase Taxes on Franchise Brands
The IRS will soon collect a percentage on franchise fees and royalties paid to franchisors.
The Biden administration is reportedly preparing to announce a new tax on franchise businesses. The legislation arrives in response to new data showing that the U.S.’s 753,700 franchise companies output some $670 billion and employs 7.5 million people.
FranX spoke to a franchise industry insider in D.C. who said, “Obviously, there is a race to figure out how to win on minimum wage and the future of robotics in business. The Biden administration looked at the depth of dollars coming from franchising and figured that could be a good place to start.”
The new tax is actually two taxes: half of the franchise fee, regardless of state, will be immediately taxed at the franchisor level; and a new franchise royalty tax will be applied to all franchisees, regardless of unit count, equal to the percentage in royalties the franchisor charges. Additionally, under the new law, franchise brokers will have to pay taxes on all commissions above $10,000, surely creating a change in commissions paid going forward.
If you have made it this far without punching the computer, there is very good news for the franchise community. It’s April Fools Day.
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About the Author
Nick Powills
FollowNick Powills, CFE, founded No Limit Agency in 2008 and serves as Chief Brand Strategist for the Chicago-based firm. No Limit is a full-service communications agency that establishes and elevates brands by bridging Public Relations, Social Media, Marketing, Advertising, Digital, and a lot of creativity, to best strategize well-rounded and successful campaigns for 50+ global franchise brands. By presenting visionary ideas and building real relationships, No Limit is able to create effective media branding strategies to help companies grow. Nick currently leads a staff of writers, media strategists, designers, social media experts and digital producers in an office think-tank where brands are humanized for strong, compelling media stories. Prior to starting No Limit at the age of 27, Nick spent four years working at a franchise PR agency where he mastered the art of building rapport with media outlets and creating newsworthy pitches for earned media placements. He holds a Bachelor of Journalism from Drake University in Iowa.
