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Capitol Required

Elections mean much to franchising, while tax cuts temporary


French leaving IFA: David French is leaving the International Franchise Association, but not Washington.

The IFA’s senior vice president of government relations and public policy was just promoted to the position in August 2010. However, he’s leaving his post January 14 to pursue new opportunities in “target-rich” Washington, D.C., he said.

“I’ve got some things in the works, but nothing firm at this point,” French said December 10. “But now is a good time to be a lobbyist.”

French listed his strong ties to House republican leadership, and across the aisle, as attributes. But as to why he’s leaving, French said simply: “I’m going to test the waters.”

French had reportedly applied for IFA president and CEO Matt Shay’s vacated seat, which was filled by Steve Caldeira last June.

Before his August promotion, French served as the IFA’s vice president governmental affairs. He started there March 13, 2006.

Pease Note: The only bias (intentionally) shown in the franchise version of the 2010 election round-up is for the few who have been featured in Capitol Required.

  • Former Cold Stone Creamery CEO Doug Ducey was elected as Arizona state treasurer. Ducey, a Republican, overcame attack ads featuring former franchisees to win handily. He will serve as the state’s CFO, and oversee $9.7 billion in assets.
  • After a nail-biter in 2008, Rep. John Fleming, (R-La.), was easily re-elected, netting 62 percent of the vote in his victory over David Melville. Fleming owns 30 Subways in northern Louisiana, and Fleming Expansions, which acts as a “sub-franchisor” for 130 UPS Stores across Texas, Louisiana and Mississippi.
  • Two-term Rep. Steve Kagen (D-Wis.) was defeated by businessman Reid Ribble for the Badger State’s 8th district seat. After his re-election in 2008, Kagen, an allergist, became a  founding member of the Congressional Business Owners Caucus. He was quoted as saying he thought he lost because of his support of “controversial Health Care Reform.”
  • Elsewhere, longtime franchise advocate Rep. Howard Coble, (R-N.C.), cruised to his 14th consecutive term, defeating Sam Turner by nearly a 3-to-1 margin.
  • And Capitol Required’s favorite Domino’s driver-turned-franchisee-turned-politician Brian DelGrosso retained his Colorado state House seat by garnering 16,683 votes, and defeating democrat Bill McCreary by 16 percent.

Elections a ‘good sign’ for franchising: Coalition of Franchise Association Governmental Affairs Director Misty Chally says franchisees she is regularly in contact with are “excited that there are closer margins in the Senate to help advance items,” and said the CFA “scored a big victory” after lobbying against Paycheck Fairness Act.

“It would have really interfered with franchisors’ ability to pay employees’ salaries,” Chally says. But democrats were two votes shy of the 60 needed to stop a republican filibuster. Rep. Mario Diaz-Balart, (R-Fla.) and Sen. Johnny Isakson, (R-Ga.), both of whom are “champions of franchisee rights” were re-elected.

Burger King’s National Franchise Association maxed out donations to Sen. Kelly Ayotte (R-N.H.), while fellow freshman Sen.-elect Pat Toomy (R-Pa.) will be another “pro-franchisee” addition, Chally says.

“We’re really looking forward to seeing what they can do,” says Chally, who was attending a Buffalo Wings National Franchisee Association meeting when elections results trickled in. “They were all very excited about the results of the election, and we’re looking forward to working (in 2011). It was a very good sign - Voters really wanted Congress well represented.”

Franchisees are also “very concerned” about the expiring tax cuts, Chally claims. However, the Bush-era tax cuts will likely stay in place - at least through the next presidential election. After first deriding the tax breaks, Obama compromised calling them “the right thing to do” for the middle class, for business owners and for the economy.

According to the White House, current tax rates would be extended for two years. The International Franchise Association says the extension keeps:

  • Tax rates at estates valued above $5 million set at 35 percent;
  • A 2 percent reduction in payroll tax for Social Security, now at 4.2 percent (employers’ share stays the same);
  • Capital gains and dividends tax rates for all earners at current rates;
  • The $1,000 child tax credit with the $3,000 refund threshold.

SCHMOTM: January’s Surprise Health Care Mandate of the Month should come as a surprise only because it has survived. The oft-maligned 1099 tax requirement - which would require U.S. small businesses to complete some $17 billion in paperwork over the next 10 years for individual vendors paid more than $600 annually - is still alive.

The Senate did not adopt language December 6 that would have repealed the rule, tucked away in last March’s Health Care Law. If passed, the 1099 requirements would have been attached to a food-safety bill, that as proposed, could greatly expand the Food and Drug Administration’s recall power.

Obama’s numbers plummeting - among children: Kids these days just don’t have the same appreciation for Burger King, President Obama and MySpace that they used to, according to a Smarty Pants study.

Burger King, riding a wave of Iron Man action-figure fervor, was No. 21 on the 2009 ranking of Kids’ Most Loved Brands list, only to fall to No. 61 in 2010. While Barack’s brand fell more than 100 spots to No. 224 in 2010.

Still, the President of the United States is more popular than MySpace, but just barely. The shark-jumped social networking site tumbled 80 spots last year in the eyes of the nation’s youth, the prestigious survey says.


Reach Steve at Spease@franchisetimes.com or catch him on Twitter @ExtraPease.

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