Election Results Frame Positive Future For Franchising Franchise companies and those looking to franchise can be optimistic.

This 2020 election season has been one like no other. The months leading up to election day — and indeed the days following election day — have been both passionate and tumultuous. With the election now over, the future for franchising is predictable and promising.

Covid Relief for Small Businesses

There is simply no way around it: Any president must and will make aid to small businesses like franchises a priority. Candidate Joe Biden promised more relief money to small businesses, with much of this assistance in the form of outright grants. His platform promised to reserve half of new small-business relief — whether via the Paycheck Protection Program (PPP) or future efforts — for businesses with 50 employees or fewer. His restart package promised additional support for rehiring and retaining employees, with a particular emphasis on safety. Increased safety measures for employees should afford a greater level of comfort for guests and, in turn, boost business. His plan also includes a tax credit for small businesses adopting workplace retirement savings plans, benefitting small businesses and their employees alike.

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In addition, Biden's plan included measures to increase minority business ownership and promote minority entrepreneurship. This is certainly good for franchising.

Although passage of additional Covid-19 relief to small business owners was stalled during the campaign, both the Trump and Biden campaigns pledged support through extension of PPP benefits and other measures. With the election behind us, there are presumably fewer obstacles to getting a relief bill passed. This will certainly benefit franchising by helping franchised businesses stay afloat and providing loan forgiveness. If the administration aids in keeping interest rates low, this allows prospective franchisees an attractive opportunity to move forward with business ownership. Many skilled management professionals lost their jobs during the pandemic. These professionals, with perhaps savings and other financial resources available to them, offer a widening pool of well-capitalized potential franchise candidates.

Joint Employment

The franchise industry applauded the more common-sense approach to joint employment that emerged under the Trump Administration. Under that new standard (which in fact was the old standard), a franchisor would not be considered a joint employer of the franchisee's employees unless it actually exerted direct and immediate control over the franchisee's employees. The years leading up to that were plagued with uncertainty for franchising, and this is a path the industry does not want to follow again. Under a Biden administration, the current NLRB will hold a conservative majority until the end of 2021, so it is unlikely that there will be national rulings on a federal version of AB-5.

While the regulatory landscape may shift under a Biden administration, the franchise industry has been through a challenging regulatory environment before and thrived. As an industry, we've done a better job of educating legislators on franchising and on how these laws could pose a devastating impact, something no one wants on their watch. And during the years that joint employment law was in limbo, franchisors revised their FDDs, operations and training manuals, and marketing messaging in anticipation of this, so we are not starting from scratch this time. And since these issues will always be company-specific, proper planning and execution can alleviate most future problems. At the end of the day, the nation needs our franchised businesses to provide employment and emerge from the pandemic, so there is little motivation for an administration to provide additional hurdles.

The Benefits of Certainty

This has been a long election season. There are measurable benefits to the certainty we have achieved over the last several days, as evidenced by positive gains in the stock market in the days immediately following the closing of the polls. And good news, like the recent announcement that the Pfizer vaccine will be coming sooner and will have greater efficacy than anticipated, will further stimulate growth.

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And while some races remained undecided and may require a January run-off election, the strong likelihood of a Republican senate should translate to an environment of compromise and collaboration that will result in more stability and less vitriol than in recent months. That stability will translate into stronger confidence in entrepreneurs' abilities to invest in a franchise, knowing that their 401(k)s and other sources of funds are performing well. A level of closure also allows companies to better project what their tax liabilities will be, what labor costs will be and how to safely open without the uncertainty of having to quickly close again. All of these factors lead to a better environment for franchise expansion, and we continue to predict that 2021 will be a banner year for franchise sales.