Biden Administration to Increase Taxes on Franchise Brands

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.