Prudent Planning Helps to Minimize State Tax Liabilities

Editor’s Note:  Here’s a must read article as your franchise increasingly appears in the cross hairs of states seeking new sources of income tax revenue.  Look for the complete article in Franchising World’s August magazine.

By Hugh W. Goodwin

The United States Supreme Court’s decision to decline review of the Iowa KFC decision will likely further embolden states to assert income tax nexus against out-of-state franchisors.  Franchisors can and should challenge unreasonable nexus assertions by state revenue agencies when the state’s position is unwarranted.  The changing state tax landscape, however, may force franchisors to deal with complex income apportionment and allocation provisions in multiple jurisdictions.   Franchisors that face increased state tax filing obligations in a post-KFC world can still minimize their tax liabilities by understanding the nuances of state income tax laws. 

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EU Franchising Directive Proposed

This guest column provides the views of Gray Plant Mooty Lawyer Carl E. Zwisler on a proposed “new legal regime for the European Union.” 

By Carl E. Zwisler

A column in the independent United Kingdom magazine Franchise World, which is unrelated to the International Franchise Association’s publication Franchising World, recently argued for a new legal regime for the European Union.

In the column, the author, attorney Mark Abell, Ph,D., co-chair of the Field Fisher Waterhouse franchise practice, writes that the lack of homogeneity in the regulation of franchise sales and franchise relationships in the EU creates technical barriers to franchising.  Civil codes in EU countries impose an obligation of good faith on franchisors which is often required to require franchisors to make presale disclosures to franchisees.  However, the interpretation of good faith disclosure obligations varies materially from country to country, and franchisors have no specific disclosure guidelines upon which they can rely.  Abell says neither self-regulatory schemes adopted by national franchise associations nor national laws provide adequate protection to franchisees. Thus, he argues, Europeans are reluctant to enter into franchising relationships.  He contends that franchising is underperforming in the EU when compared to the United States and Australia, and posits that the current regulation of franchising in the EU is at least partially to blame.

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SBA’s National Small Business Week to kick-off

IFA member Famous Dave’s to receive award

IFA is a sponsor of SBA’s National Small Business Week, which starts May 20 with events featuring SBA Administrator Karen Mills in Washington, D.C. One of the awards winners are franchisees of Famous Dave’s BBQ in Tennessee. The group, four life-long friends and entrepreneurs, are owners Mike and Tamara Lister, and Doug and Laurel Renegar. They joined to become owners of Famous Five Dining, a Famous Dave’s BBQ restaurant franchise, with the help of an SBA-guaranteed loan. Famous Five Dining later expanded to five successful Famous Dave’s BBQs restaurants in Tennessee.

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IFA Educational Foundation Announces new CFE scholarship program



John Reynolds, CFE, President of the IFA Educational Foundation and Shelly Sun, CFE, CEO & Co-Founder of BrightStar Franchising, LLC  announced today the establishment of the CFE Women’s Executive Scholarship Fund. This scholarship is funded through the generous support of BrightStar Franchising, LLC. The stipend will be for $2,500 to be applied toward the tuition for programs offered for ICFE credit. The scholarship will be awarded to a woman franchise executive currently enrolled in the CFE program.  The total amount of the scholarship must be used within a 3-year period.  Amounts not used are returned to the scholarship fund. 

“We are tremendously grateful for the support and leadership demonstrated by Shelly Sun and BrightStar in funding this scholarship opportunity,” said John Reynolds.  Shelly Sun added that “The Certified Franchise Executives (CFE) program was so beneficial in my franchising education and taught me how to do franchising right.  I was struck by the small number of women leaders in franchising and felt it was appropriate as a woman and a CFE to help other women achieve their potential.”

For information about the scholarship visit

IFA member speaks to the House Small Business Committee


As the Washington Post reported, IFA member Jamie Smith, franchisee of Mr. Rooter Plumbing of Greater Baltimore testified on behalf of IFA yesterday on the rising cost of gasoline.  Speaking to the House Small Business Committee Jamie focused on how the high costs are having an adverse impact on the bottom line of franchise small business owners. 

“Since opening my operation in 2010, I have seen a 29 percent increase in fuel prices, at a time when my sales and revenues have declined,” said Smith in his written testimony. “As a small business owner, I cannot leverage economies of scale to absorb cost increases like larger corporations. Absorbing these costs drastically affects my bottom line. I ask American policymakers to immediately invest in strategies for increased energy production, greater use of our existing resources and promotion of alternative energy options like natural gas and hybrid electric vehicles.”

While the majority of the hearing was dominated by testimony as to the cause of the rising fuel prices, Mr. Smith pointed out that the government inaction is overlooked in its role in exacerbating and prolonging the problem.  “Right now, with the gridlock and the red tape, what’s not happening is making sure there’s a plan in place to help the economy, help businesses, and help families”, he said.”

To view the full testimony click here and to see the full hearing video click here.

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