Franchisors and Franchisees Worrying about Fiscal Cliff

While franchise opportunities have served as an outstanding median for ordinary folks to own and run businesses with or without entrepreneurial experience, the shadow cast over franchising by the budgetary fiscal cliff deal is causing a stir amongst both franchisors and current franchisees.

Companies selling franchises for sale across the US claim that growth at their hotels, restaurants, retail shops, and other small businesses are likely to be impacted by tax hikes, as well as the more expensive health care rules.

According to the International Franchise Association’s economic outlook survey for 2013 – which was released before the Democrats and Republicans finalized their dealings — business growth for this year is bound to slow down even if the Congress and White House manage to come to an agreement on spending cuts and tax hikes.

“Franchise companies are poised for growth, but many of us are standing by, waiting to see what our economic policy is going to be in this country,” said Steve Joyce, president and CEO of Choice Hotels International.

“We want to grow. We want to hire. But how can you be a responsible business leader and make decisions if you don’t know what the rules are going to be?”

Joyce’s statement was made before the fiscal deal was finally settled, and unfortunately, the deal ended up disproportionate, as it entailed more taxes levied on the wealthy and middle classes, and no government spending restraint.

Despite the fact that franchisors would like nothing more to accelerate their growth plans, current economy problems are making that a little more difficult than it ought to be.

“We could be growing much faster, creating more new jobs and businesses, if Washington addressed the tax, spending and regulatory uncertainty plaguing the small business community in a meaningful way,” said Steve Caldeira, president and CEO of the IFA.

Caldeira explained that excessive government spending is causing a strain on the economy, and if the country’s leaders fail to address this issue (because they so far haven’t), their growth rates will be impeded for the start of this year.

This larger strain placed on Americans could either make them more open or closed to plausibility of improving living conditions through franchise opportunities. Studies show that the number of franchises of sale that are actually purchased are likely to decrease slightly this 2013.

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