Franchisees mull hiring freezes if tax rates aren't extended

Dec. 10, 2012

According to a new survey of franchisees and franchisors, franchise business growth could grind to a halt if the current tax rates aren't extended beyond their Dec. 31 expiration date.

The results of IFA's annual Franchise Business Leader Survey, conducted Nov. 13-28, show 79 percent of franchisees and 73 percent of franchisors believe failure by Congress to extend current tax rates and avoid the "fiscal cliff" will have a negative impact on hiring and growth plans moving forward.

"What we need in this country is jobs, and the majority of that growth can come from the small business and franchising community if we avoid diving over the fiscal cliff," said Steve Caldeira, IFA president and CEO. "Congress and the administration must find a way to decrease spending and raise revenue without raising tax rates on job creators. While the President has been on a charm offensive with corporate CEOs, the interests of franchisees and other small businesses seem to be taking a back seat, despite his campaign rhetoric on the importance of small business growth to the economic recovery. What we need is for the small business community, which creates 65 percent of all net new jobs, to have a seat at the table in this debate."

IFA has called on Congress to address the impending fiscal cliff and urged lawmakers to commit to produce a comprehensive tax reform bill that lowers both corporate and individual rates by a certain date, which would create greater long-term growth for the franchise industry. Uncertainty seems to be the biggest concern for survey respondents.

"Our main concern is the inability to predict the future due to the inability of the political process in Washington, D.C. to develop rational taxing and business policies," said Joseph West, president of Brooklyn Water Bagels Franchise Company.

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Topics: Franchising & Growth , Operations Management , Staffing & Training

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