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As he prepares to take office, President-elect Donald Trump has outlined a bold goal of returning to pre-pandemic economic growth rates and “the golden age of america.” After four years of saying the economy is better than it hit our wallets, this is a welcome change of direction.
To achieve this goal, the new administration will need the private sector—something that the Biden era not only largely ignored, but whose regulatory agenda was completely hostile to the concerns of most industries. The franchise sector, which I represent and includes 800,000 small businesses that support 9 million workers, is ready to go to work as a resource for the Trump administration.
Franchising has played a major role in the 2024 election, none more so than Trump’s arrival for a deep fryer at a McDonald’s in Pennsylvania. Although franchising is often associated with food, the majority (more than six in ten) are in another industry, ranging from hotels, salons, fitness, pet care and many others.
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Even after several punitive attacks on franchising by the Biden administration, the franchise sector is projected to grow 4% this year, compared to 2.7% for the broader economy.
President-elect Donald Trump works in a column during a campaign photo while visiting a McDonald’s restaurant in Feasterville-Trevose, Pennsylvania, on October 20, 2024. Even that brief stint at the fast food restaurant is a powerful reminder of the franchise’s importance to the U.S. economy. (Win McNamee/Getty Images)
With the change in philosophy of the federal government, opportunities to exploit the franchise’s animal spirits are ripe. Here are three things the Trump administration can do to boost its economic growth:
1. Make Trump’s joint employer standard into law
There is no higher federal franchise priority than clarifying the joint employer standard. The whole model depends on the independence between the franchisor (brand) and its individual franchisees. The former provides the concept, framework and branding for others, who are free to run their own business, in exchange for a negotiated fee and following the brand standards consumers expect, whether in Palm Beach or Parsippany.
In 2023, the Biden administration’s National Labor Relations Board tried to reverse 2020. Trump’s joint employer standard and remove autonomy between franchisor and franchisee. As the name suggests, the goal was to put the franchisor on the hook for the franchisee’s employees to increase legal liability and facilitate unionization.
Fortunately, a federal judge in Texas appointed by Trump struck down Biden’s overreach, but after four changes to the rule in the last decade, franchising needs a permanent joint employment standard that codifies Trump’s definition. Business owners can’t plan when the regulatory climate is always changing with the occupants of the White House. They need security.
2. Reauthorize Trump’s tax cuts
In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), colloquially known as Trump’s tax cuts. Contrary to opponents’ proposals for “tax cuts for the rich,” these policies have become lifelines for small business owners, helping to lift the economy to new highs before the COVID-19 pandemic. However, without action, they are all set to expire at the end of 2025.
One particularly important component of Trump’s tax cuts is Section 199A, which allows a 20% deduction for qualified income for pass-through businesses. Because most franchise businesses are structured as pass-through entities, 199A levels the playing field between small businesses and large corporations, which already enjoy a number of tax breaks.
To prevent any last-minute “fiscal cliffs” like the recent state funding showdown, reauthorizing tax cuts should be prioritized early in the new year. Not only would this measure provide small business owners with much-needed security, but it would also send a clear message that the days of putting off important action until the last minute are over.
3. Right the ship with the FTC
Before Biden appointed Lina Khan to head the Federal Trade Commission (FTC) in 2021, most Americans had never heard of the agency, and for good reason. Established a century ago to ensure a competitive business environment and protect consumers, the FTC has turned under Khan into a hyper-aggressive agency that oversteps its authority.
Federal Trade Commission Chairwoman Lina Khan has been widely criticized by the business community for her aggressive approach. FILE: Khan testifies before the House Judiciary Committee at the Rayburn House on Capitol Hill on July 13, 2023 in Washington, DC. (Chip Somodevilla/Getty Images)
Instead of standing up for consumers, Khan took on the business community. She launched countless lawsuits and investigations, forcing the industry to spend valuable time and resources defending against government regulators rather than growing its business.
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In 2023, Khan launched a franchise-wide request for information designed to elicit negative comments, then extended its timeframe into the summer of 2024, when it did not get the desired results.
Trump named Andrew Ferguson as his replacement for Khan, and not a moment too soon. There are already promising signs that the tide is turning. The long-awaited “junk fee” rule announced by the FTC was narrower than its original iteration.
Business owners can’t plan when the regulatory climate is always changing with the occupants of the White House. They need security.
Getting to the “Golden Age of America” won’t be easy, but that shouldn’t discourage us.
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America did not become the envy of the world by settling for less. We didn’t heed President John F. Kennedy’s call to walk on the moon in the 1960s or President Ronald Reagan’s mission to “tear down this wall” in the 1980s by downsizing.
Achieving that 4% economic growth figure will require everyone rowing in the same direction. The franchise community is ready and willing to do their part.
