This Small Business Week, Protect Franchisees
 
This being Small Business Week, entrepreneurs, workers, and consumers have plenty to celebrate and plenty to be concerned about. While inflation remains stubbornly high and tariffs threaten economic growth, businesses continue to hire workers and offer opportunities for advancement. Small businesses and franchises lie at the heart of the American economy. According to the Bureau of Labor Statistics, small businesses account for the majority – 55% – of the net number of new jobs created. Franchisees, or small businesses that hold rights to use much larger companies’ brands, have been fueling this prosperity but are largely misunderstood by pundits and politicians. It’s long past time that policymakers recognized the importance of franchisees in keeping America charging forward. Many of the most successful companies in America (McDonald’s, United Parcel Service, Great Clips) have decided that micromanaging every one of their stores simply isn’t worth the price tag. These large corporations have been willing to cede control of everyday operations to local owners.
 
While some things (e.g., logos and menus) must stay the same between franchise locations, local owners have the flexibility of setting workers’ compensation policies and organizing and executing standard operating procedures. Franchisees are given the freedom and responsibility to experiment with things like digitization and incentivizing outstanding work, and don’t have to constantly answer to corporate for everything. And, the rewards can be substantial. On average, franchisees retain roughly 94% of their business revenue (with the rest going to the franchisor). These significant revenue gains accrue to some of the smallest businesses operating in the economy. Data from market research firm and consultancy FRANdata shows that more than 80% of franchisees are the owners and operators of just one location. Yet, these small locations generate considerable employment growth. These franchises are also an integral part of their respective communities. Thanks to the incentive structure created by the franchise model, franchise-related employment gains far outpace job gains in more conventionally organized businesses. But these gains should not be taken for granted. One analysis by the American Action Forum found that federal tampering with the franchise model (e.g., replacement with a more top-down structure) would lead to 1.7 million fewer jobs across the private sector. Even a handful of tax changes can have significant ramifications for franchisors and franchisees across industries.
 
The 2017 Tax Cuts and Jobs Act (TCJA) leveled the playing field for franchisees by lowering the top rate on ordinary income of individuals (e.g., franchisee owners) from 39.6% to 37% and allowing owners of sole proprietorships, S corporations or partnerships to deduct up to 20% of the income earned by the business off their taxable income. Enshrined in Section 199A of the Internal Revenue Code, this deduction ensured that franchisees were getting a substantial tax cut on par with larger companies – who also got a significant tax cut. Yet, these provisions are in jeopardy because of the impending expiration of the TCJA. Unless lawmakers act by the end of the year, franchisees’ taxes will increase significantly, hampering job growth and ensuring lower wages for workers and higher prices for consumers. The consequences of this tax hike are unfortunately lost on policymakers with a less-than-charitable view of franchisees. Members of Congress such as Rep. Bobby Scott, D-Va., will stop at nothing to impose sweeping liability on companies with franchises, and many lawmakers baselessly claim that the TCJA was little more than a giveaway to the very wealthy. But, it’s easy for lawmakers to villainize what they don’t fully understand. To some policymakers and pundits, franchises are oppressive fiefdoms that punish workers for demanding a fair shake. To the actual workers and franchise owners running the show, these jobs change lives and are a lifeline to more opportunities in the future. This Small Business Week, lawmakers must act to protect franchisees against runaway liability and ever-rising taxes. 
 
 
The Antitrust Stranglehold on America's Tech Sector
 
Economic policy matters a great deal, but it matters far less than economic policymakers flatter themselves to think. Human nature includes “the propensity to truck, barter, and exchange one thing for another,” wrote Adam Smith. Human beings will go about such activities, irrespective of the approbation or disapprobation of their governments. Man is a not only political animal but an economic one. Ill-crafted regulation can annoy or hinder individuals — misdirecting their scarce time and efforts — but they will persist in working to better their economic lot within the confines of the incentives of the regulatory structures and markets in which they operate. The river of human nature has many strong and fast currents, which can be dammed up only at great cost and effort. In one of the latest instances of private industry cheerfully disregarding regulatory intrusions, Google made public its acquisition of Wiz, a surging cloud cybersecurity vendor. Notwithstanding their great benefits to competition, mergers and acquisitions have become the object of misplaced regulatory ire in recent years. The antitrust authorities of the Biden administration adopted a “big is bad” posture towards business, emphasizing sheer corporate size over the competitive factors that have traditionally informed antitrust enforcement. In 2023, moreover, the Biden Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) crafted new guidelines in which the agencies expanded their conception of what kinds of mergers ought to be deemed illegal.
 
Although the Trump administration purports to have broken with the economic agenda of the previous administration, FTC Chairman Andrew Ferguson announced that he would not rescind the 2023 merger guidelines. The Trump antitrusters also echo the Biden antitrusters in their skepticism of Big Tech. Biden officials targeted many large technology companies — including Google, which the DOJ sued twice. These legal theories propounded in these cases had the structural integrity of a house of cards, notwithstanding a misguided ruling in the government’s favor in the case against Google Search liable for reversal on appeal.
 
The Google–Wiz news emerges amid — and despite — this storm of regulatory hostility and uncertainty. At $32 billion, Google’s largest acquisition yet, it also illustrates the indispensable economic functions this sort of transaction fulfills. Like most transactions agreed to voluntarily in the free market, mergers and acquisitions generally benefit both parties and conduce to robust competition, more innovation, higher product quality, expanded supply, and lower prices. To date, Amazon and Microsoft’s cloud services have outstripped the competition within the cloud, reporting revenues in 2024 of $107.6 billion and $105.4 billion, respectively. Google, meanwhile, has lagged, its cloud revenue coming to roughly $43 billion that same year. “This acquisition represents an investment by Google Cloud to accelerate two large and growing trends in the AI era: improved cloud security and the ability to use multiple clouds (multicloud),” Google said in its announcement. The benefits will reverberate beyond Google’s improved services. Amazon and Microsoft, squeezed by new competitive pressures, will find themselves compelled to redouble their own innovative investments, inciting innovation sector-wide. For Wiz, the deal pays returns on the investments and risks that attend the launch of any new business. The promise of eventual acquisition by a large incumbent fuels many a startup venture. Further, Google will make available vast reserves of capital — of the financial kind and otherwise — to the cybersecurity insurgent. “Becoming part of Google Cloud is effectively strapping a rocket to our backs: it will accelerate our rate of innovation faster than what we could achieve as a standalone company,” wrote Assaf Rappaport, Wiz’s co-founder and CEO. The customers of Google Cloud will, in turn, reap the benefits.
 
The obstinance of markets and entrepreneurs in the face of bad economic policy should not be taken as evidence that that policy has done no harm. Google has the necessary on-hand capital to acquire Wiz and pursue other innovative endeavors, but it and other technology companies bore the costs of Biden’s antitrust adventurism — sapping dynamism from the tech sector and the economy generally. Facing lawsuits and uncertainty, companies must divert funds and other scarce resources from innovation to compliance, from technologists to lawyers and lobbyists, from building new products to defending existing products in court. Also, uncertainty produces stagnation. The Trump antitrust agenda has yet to harden. If the administration is prudent, it will fulfil the president’s campaign promise to be unlike his predecessor. The technology sector, like any sector, is imperfect. Yet it is also as close as any to being the indispensable sector to modern America — to American prosperity, American technological dominance, and American national security. The fact that the Biden administrations overreaches and abuses failed to stifle the tech sector completely does not mean that the Trump administration’s perpetuation of that failed agenda cannot do great harm.
And that might be the bad news.
 

Media:
 May 1, 2025: Blaze Media ran TPA's op-ed, “Dogs shouldn't have to die for new medications”
May 5, 2025: RealClearMarkets ran TPA's op-ed, “The Antitrust Stranglehold on America's Tech Sector”
May 5, 2025: RiponAdvance.com mentioned TPA in their story, “JOBS for Success Act TANF reform sponsored by LaHood, Daines”
May 5, 2025: Florida Daily ran TPA's op-ed, “MEMO to SCOTUS: Postal Service is Not Above the Law”
May 5, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) interviewed me about Gov. Moore's ambitions state focus.
May 5, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) interviewed me about the superintendent's contract violation on taxpayers and parents.
May 6, 2025: MSN mentioned TPA in their story, “Gov. Moore's travels ignite debate on White House ambitions and state focus”
May 6, 2025: Tobacco Asia mentioned TPA in their story, “FCTC Under Fire on 20th Anniversary”
May 7, 2025: The Baltimore Sun (Baltimore, Md.)mentioned TPA in their story, “Moore's travels ignite debate on White House ambitions, state focus”
May 7, 2025: DC Journal ran TPA's op-ed, “Silver Lining in Supreme Court's Vaping Decision”
May 7, 2025: Issues & Insights ran TPA's op-ed, “This Small Business Week, Protect Franchisees”
May 8, 2025: STLtoday.com (St. Louis, Mo.) ran TPA's op-ed, “Opinion: There's a silver lining in Supreme Court's vaping decision”
May 8, 2025: The Boston Herald (Everette, Ma.) ran TPA's op-ed, “Harm reduction: Silver lining in High Court's vaping rule”
May 8, 2025: The Latrobe Bulletin (Latrobe, Pa.) ran TPA's op-ed, “COMMENTARY: Silver lining in Supreme Court's vaping decision”
May 8, 2025: The Baltimore Sun (Baltimore, Md.) ran TPA's op-ed, “Can the government be trusted with our health data”
May 8, 2025: The Boston Herald (Everette, Ma.) ran TPA's op-ed, “Marchand: Silver lining in High Court's vaping rule”
May 8, 2025: The Washington Reporter ran TPA's op-ed, “Americans deserve transparency in our healthcare system”
May 8, 2025: Filter Magazine (New York, N.Y.) ran TPA's op-ed, “New York City's Campaign Against Vapes Will Cost Lives”
May 8, 2025: WBFF Fox45 (Baltimore, Md.) interviewed me for their story on a new audit gf the Maryland Department of Juvenile Services.
May 8, 2025: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about taxes and tariffs.
 

Have a great weekend!



Best,

David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 500
Washington, D.C. xxxxxx