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Alisa Harrison, 202-628-8000
Matthew Haller, 202-662-0770
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mhaller@franchise.org
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WASHINGTON, Feb. 22-The International Franchise Association, representing the nation's 825,000 franchise establishments which support nearly 18 million jobs, today said the Obama Administration's proposal to lower the corporate tax rate from 35 percent to 28 percent and eliminate deductions for certain industries may negatively impact the more than 80 percent of franchise business owners who are pass-through entities such as S-corporations or LLCs and file their business income on their personal income tax return.

"Tax reform should only be addressed through a comprehensive approach," said IFA President & CEO Steve Caldeira. "We appreciate the President recognizing that corporate tax reform is needed to keep the U.S. competitive in a global economy, but we can't support corporate tax reform on the backs of the small businesses that represent the majority of job creators in this country."

An IFA survey shows job creation and growth by franchise businesses could be negatively impacted through an approach of corporate tax reform without individual reform, given individual rates for many small business owners are set to increase at the end of 2012. In the survey, 88 percent of franchisors and 73 percent of franchisees indicated that higher tax rates on households earning more than $250,000 per year will negatively impact their business. More than 40 percent and 25 percent, respectively, say the impact will be significantly negative. On the so-called "Buffet Rule" to permanently increase taxes on households earning more than $1 million annually, 72 percent of franchisors and 43 percent of franchisees say this would negatively impact their business, with 28 percent and 17 percent expecting the impact to by significantly negative. The survey results included 336 responses from franchisor CEOs and both single and multi-unit franchisees and was taken in late October, 2011.

The survey also showed a desire by franchise business owners to simplify the tax code by trading credits and deductions for a lower tax rate, but not if the effective tax rate for pass-through entities would increase.

"Leaving behind individual reform and pursuing only corporate reform would increase the uncertainty for franchise business owners at a time when the franchise industry is poised to be a leading driver of the economic recovery after three years of declines," said Caldeira.

IFA's 2012 Franchise Business Economic Outlook supports the optimistic sentiment by the franchise industry. The forecast, prepared by IHS Global Insight, projects the industry is poised for approximately 2 percent growth in 2012 in jobs (168,000) and franchise establishments (14,000).

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About the International Franchise Association
franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.