International Franchise Association releases its 2025 Franchise Policy Priorities List

January 9, 2025

Blog Post

On January 8, 2025, the International Franchise Association (IFA) released its 2025 policy priorities aimed at protecting, enhancing, and promoting the franchise business model as a key component of small business growth now and into the future. In its report, the IFA identified five specific policy areas it will focus on in the incoming Trump administration to incentivize growth and expansion of the franchise business model. The five policy areas are:

1. Codifying a joint employer standard that preserves franchisee independence and protects their equity:

The IFA supports a joint employer standard that requires direct control of narrowly defined essential terms and conditions of employment. An appropriate joint employer standard ensures franchisees continue to receive franchisor support and that brand standards can be enforced to protect the equity each franchisee has built in their business while preserving the autonomy of franchisees to independently manage employee relationships.

Click here for a link to McDonald Hopkins’ March 2024 update on the status of the NLRB’s joint employer standard.

2. Preserving a tax code that supports franchise development and wage growth:

The IFA is committed to addressing lingering tax concerns facing the franchise community, including interest deductibility, bonus depreciation, permanence of Section 199A, enhancement of the Work Opportunity Tax Credit (WOTC), repeal of the estate tax, the foreign-derived intangible income incentive, and continuation of the veteran tax credit. Further, IFA supports extending the benefits of existing tax policy to support all industries operating under the franchise model, including hair salons, fitness studios, restaurants and other business lines.

3. Improving franchise disclosure to promote responsible franchising:

The IFA supports increasing transparency in the franchise sales process and modernizing the disclosures required under the Federal Trade Commission’s Franchise Rule. In May 2024, IFA put forward a series of policy recommendations to improve pre-sale disclosure requirements and make due diligence more robust, facilitating a stronger foundation for all franchise relationships and to ensure that potential franchise owners have access to more fulsome information to make a sound financial investment.

4. Ensuring Main Street fairness and stopping burdensome regulations:

The IFA supports efforts to improve Small Business Administration lending programs, efforts to protect franchised small businesses from exorbitant credit card transaction fees, and establishing a national privacy law with a private right of action that applies equivalently to all businesses handling consumers’ information in an effort to avoid potentially unintended consequences that would unfairly burden small businesses. The IFA also supports challenges to the constitutionality of the Corporate Transparency Act (CTA).

5. Preventing the spread of misguided state-based policies at the federal level

The IFA has engaged in several state-level debates over the implementation of policies aimed at harming or ending the franchise model. Franchise businesses have higher rates of safety compliance, and IFA supports enforcement of laws to protect employees from wage theft and laws that ensure health and safety. However, the IFA opposes attempts to create new councils to regulate industries based on flawed data that harm small businesses and their employee

Although it is impossible to predict with accuracy all of the areas where the Trump administration may take action to protect the franchise business model, it is expected that once President Donald Trump takes office he will replace Jennifer Abruzzo, the current National Relations Board general counsel. President Biden removed Trump’s NLRB general counsel in January 2021. In addition, it is expected that the Trump administration may terminate the current Chair of the Federal Trade Commission, Lina Kahn. The FTC is made up of five commissioners serving seven-year terms which are nominated by the President and confirmed by the United States Senate. The FTC is not permitted to exceed three commissioners from one political party. With a Republican majority in the Senate, the Trump administration may have the opportunity to confirm Republican appointments to the FTC.

The recent decisions in the Pinnacle Foods bankruptcy case pending in the Eastern District of California highlight the difficulties that franchisees may have in filing for bankruptcy and seeking to assume a franchise agreement in jurisdictions where case law is not favorable or state law may conflict with the Bankruptcy Code.

In non-breaking news: making adequate disclosures in purchase agreements continues to matter. In a recent opinion stemming from a lawsuit for breach of contract and related claims, the United States Sixth Circuit Court of Appeals affirmed the district court’s award of summary judgment in favor of the defendants, former Wendy’s franchisees, who were sued by ultimate purchaser of their assets.

This decision only adds to to the growing circuit split on the application of the “hypothetical test” or the “actual test” in bankruptcy, and may lead a higher court to consider the issue. For franchisees in the Sixth Circuit who desire to reorganize in bankruptcy, however, this decision provides clarity about which test parties may use to determine if a contract could be assumed.