IFA Government Relations Update - Monday, April 5th

GR Update

President Biden Unveils Infrastructure Plan Containing Anti-Franchise PRO Act & Tax Increases for Small Businesses

Last week, President Biden unveiled a $2 trillion infrastructure plan, the American Jobs Plan (AJP), which includes tax increases for small businesses and corporations in an effort to fund the multitrillion-dollar plan.

While no details of the bill have been released, its public roll-out highlighted a number of items of direct interest to IFA members and the business community, including a harmful provision specific to franchising: the passage of the Protecting the Right to Organize or PRO Act, which would codify the expanded joint employer standard and California's damaging ABC test for worker classification, essentially undoing franchising as a viable business model. To learn more about the bill's harm to franchises, click here

The following provisions are also included in the plan:

  • Raising the corporate tax rate to 28% from 21%
  • Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships
  • Raising the income tax rate on individuals earning more than $400,000
  • Expanding the estate tax’s reach
  • Home care sector reform that includes collective bargaining policies.

IFA will likely engage and relay our strong concerns with some of these provisions. While President Biden had already expressed support for the PRO Act, the inclusion of the PRO Act in the infrastructure pan is surprising, which comes on the heels of the enactment of last month’s $1.9 trillion COVID-recovery legislation, the American Rescue Plan. 


IFA Update on California's AB5 Litigation

Last week, IFA released a summary and an update on California's AB5 litigation.

Recently, IFA, along with the Asian American Hotel Owners Association (AAHOA), the Supercuts Franchisee Association, and the DD Independent Franchise Owners Association (DDIFO), an independent association of franchise owners within the Dunkin’ system, filed the First Amended Complaint with the U.S. District Court for the Southern District of California arguing that the state's controversial worker classification standard made law in AB5 threatens the franchise business model. The lawsuit seeks to stop the state from enforcing AB5 against franchises, arguing federal statutes including the Lanham Act and the Federal Trade Commission Act pre-empt AB5.

Read more on the background and the status of the litigation here.


IFA, Allies Express Support for Permanent Repeal of the Estate Tax

In an effort to continue to support repeal of estate taxes and secure permanence of Tax Cuts and Jobs Act (TCJA) estate tax provisions, H.R. 1712/s.617, the Death Tax Repeal Act, was re-introduced by Reps. Jason Smith (R-MO) and Sanford Bishop (D-Ga.) in the House, and by Sen. John Thune (R-SD) in the Senate.

IFA joined the Family Business Estate Tax Coalition (FBETC), a coalition designed to work for repeal of the estate tax. Made up of organizations that represent family-owned business, IFA's engagement helped secure the permanent $5 million exemption, spousal transfer and stepped-up basis that was passed as part of the American Taxpayer Relief Act of 2012 and the $11 million exemption put in in place through 2025 by TCJA.

IFA joined the coalition members to express strong support for both, the House and Senate bill.


IFA Names 7 New Members to its Board of Directors

Last week, IFA announced the addition of seven new franchisors, franchisees, and suppliers to its Board of Directors to expand its size to better pursue the association’s mission and priorities.

“I am thrilled with the addition of these new franchisor, franchisee, and supplier leaders to our Board of Directors,” said IFA Board Chair Catherine Monson. “Their insights, leadership, and enthusiasm will help the franchise community make wise use of its talent and resources this year and in the future.”

The following director began her term on March 1st, 2021:

Wanda Williams, Head of Global Franchising, Yum! Brands

Additionally, the following six newly elected board members began their terms on April 1st, 2021:

Marcus Banks, Senior Vice President of Litigation, Employment Law & Government Relations, Wyndham Hotels & Resorts
Greg Flynn, CEO, Flynn Holdings
James Holthouser, CEO, FOCUS Brands
Kenny Thompson, Head of External Affairs, PepsiCo
Earsa Jackson, Member, Clark Hill Strasburger
Jay Duke, National Managing Partner, BDO


Oregon Legislature Yet Again Postpones Vote on Anti-Franchise Bill

Last week, the Oregon House Business and Labor Committee once again delayed the vote on the franchise relationship bill, HB 2946. The vote will now be held tonight.

The proposed legislation would create ambiguity and undermine the enforcement of franchise contracts, promote litigation between franchise brands and franchise owners, and result in sub-standard services and products for consumers in Oregon.


ICYMI: IFA's Fight for Franchises & the Paycheck Protection Program (PPP)

To mark the one-year anniversary of the signing of the CARES Act and the creation of the Paycheck Protection Program (PPP), IFA members shared their thoughts and reflections on the pandemic. Thus far the PPP has provided $16 billion in crucial aid to franchise businesses and saved over 20,000 units from closure, impacting some 2.5 million jobs.