Here's What the 'One, Big, Beautiful Bill' Means for the Franchise Industry The legislation includes tax changes that affect more than 800,000 franchise businesses nationwide.
By Carl Stoffers Edited by Jessica Thomas
Key Takeaways
- The “One, Big, Beautiful Bill” includes tax provisions that could benefit small franchise businesses and their employees.
- Key changes include expanded bonus depreciation, adjusted business interest deductions and continued pass-through deductions.
- Franchise workers could see direct financial benefits from the bill through the proposed elimination of federal taxes on tips and overtime pay.
New federal legislation, dubbed the "One, Big, Beautiful Bill," is drawing attention for its potential impact on the franchise sector. Backed by the International Franchise Association (IFA), the bill includes tax provisions that could deliver significant financial relief for franchise small businesses and their employees.
According to IFA, the legislation would benefit the more than 830,000 franchise small businesses operating across the United States, which together employ millions of workers. On June 26, several franchise owners from around the country joined IFA president and CEO Matt Haller at the White House to discuss the bill's potential impact with President Donald Trump.
"The numbers are clear: The tax provisions in the One Big, Beautiful Bill will have a hugely positive impact on America's 830,000 franchise small business owners and their nine million employees across a range of industries, from restaurants to retailers to hotels and home services," Haller says. "IFA, our member brands and franchise owners have been laser-focused on ensuring permanent tax relief. IFA thanks President Trump for putting the importance of protecting franchise small business owners front and center, and lawmakers for their work to get this bill across the finish line."
The proposed legislation includes several tax changes with the potential to significantly impact the franchise industry. One key provision is the extension of the 199A deduction, which allows pass-through entities — such as LLCs and S corporations — to deduct a portion of their income. This is especially relevant to franchising, where most franchisors operate under pass-through structures.
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Another major provision is the continuation of bonus depreciation, which would enable franchises to expense an estimated additional $16 billion in the first 12 months after the bill takes effect — capital that could be put towards equipment purchases, renovations or new location development.
The bill also proposes a shift in how businesses calculate their interest deductions, moving from EBIT (earnings before interest and taxes) to EBITDA (which includes depreciation and amortization). This adjustment could allow franchise businesses to deduct an additional $6 billion in interest expenses.
For frontline workers, the legislation offers potential savings as well. A proposed elimination of federal taxes on tips could result in $6 billion in collective annual savings for tipped employees, while removing federal taxes on overtime pay could save franchise workers more than $300 million each year. Together, these provisions aim to boost both operational flexibility for business owners and take-home pay for employees across the franchise sector.
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