FranX | Biden Administration to Increase Taxes on Franchise Brands

The Next McDonalds (Big Idea)

How Youth Athletes United Franchisor John Erlandson Found Success

As a successful executive, John Erlandson had everything he needed. But after risking it all, he found what he wanted – in franchising.

Nearly four years ago, John Erlandson realized something important was missing as he reflected on a successful career spanning nearly two decades.

After spending 15 years working to develop businesses for other entrepreneurs, including growing an iconic brand management company from $100M to $8B in less than seven years, Erlandson had almost everything he needed in life – except a passion for his job.

“I was with an incredible company. For the last eight years, we grew it from basically nothing to the second largest licensor in the world behind Disney. And it was an amazing business. We were buying celebrity estates and fashion brands and sports brands. As much as I loved the business model – and we made a ton of money – I just didn't feel like I was doing what I was passionate about in the world,” Erlandson recalls.

After speaking with his partner, Adam Geisler, about the prospect of entering the youth sports industry through a company Geisler was investing in called Soccer Stars, Erlandson saw an opportunity to transform his passion for fitness into a meaningful career while making a difference in the lives of kids.

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Franchisees Kicking Ass: The Franchisee is King

The Great Franchisee Kristian Kint, Men In Kilts, Houston

The Marine Corps veteran and former construction professional is introducing the fast-growing exterior home cleaning franchise to the Greater Houston Area.

Kristian Kint, a local Marine Corps veteran is putting his construction experience to use and capitalizing on the real estate growth in Richmond with his newly launched Men In Kilts franchise. After working in carpentry and project management for six years in three different states, Kristian has now opened his own residential and commercial cleaning franchise with hopes to grow across the Greater Houston area. The growing brand offers exterior window cleaning, gutter cleaning, house washing, and pressure washing.

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Yo Broker, Sell My Franchise

Big Blue Swim School* Starts 2022 with a Splash, Reaches Goal of 50% Locations Sold Within Three Years

One of the nation’s fastest-growing swim schools shows no signs of slowing down, with Level Five Capital Partners purchasing 27 new locations.

Big Blue Swim School, one of the nation’s fastest-growing swim school franchises, announced today that it has reached its goal of 50% of locations sold within three years of beginning its franchising journey. With its aggressive growth plan, Big Blue Swim School sold 201 units in 23 states across the country. Brand investor Level Five Capital Partners contributed to the growth by purchasing 27 new locations. With a goal of reaching 100 open units by 2025, the brand is uniquely positioned to be the leader in the $3 billion learn-to-swim industry.

With its new commitment, Level 5 will open 27 units across California, New York, and Maryland, adding to its initial investment of 16 locations throughout the U.S. The partnership between Level 5 and Big Blue began in 2017 when Level 5 acquired a stake in the brand. Level 5’s mission is to change lives locally, which aligns with Big Blue’s unique teaching process that shows kids they can do anything by unlocking their full potential in the water.

“We are excited about the acquisition of 27 new Big Blue units as we continue our plans to grow alongside the brand,” said Scott Thompson, Managing Partner and CDO of Level 5. “Big Blue’s recession-resistant business model and their unique real estate strategy made them an attractive investment for us, and we are thrilled with the growth we have been a part of since joining the brand as a partner in 2017.”

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The Bottom Thoughts

The Biden Administration is, allegedly, planning to announce a new tax on franchise brands – said to be built after discovering that it is estimated that there are 753,700 franchise establishments in the United States, outputting some 670 billion U.S. dollars and employing 7.5 million people.

FranX reached out to a franchise insider in Washington who said, “Obviously, there is a race to figure out how to win on minimum wage and the future of robotics in business. Thus, 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 two-fold: Half of the franchise fee, regardless of state, will be immediately taxed at the franchisor level; and it is expected that a new franchise tax royalty will be applied to all franchisees, regardless of unit count, equal to the percentage in royalty that franchisors charge. Additionally, under the tax bill, 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.