Today's Hotelier - February 2018 - 12

GOVERNMENT AFFAIRS 

The future of franchising is bright
With hoteliers keeping more of their hard‑earned money to grow
their businesses, growth prospects in 2018 are looking up.
by PETER CLERKIN
ECEMBER SAW TWO SIGnificant victories for the
hospitality industry.
First, on December 14,
the National Labor
Relations Board (NLRB)
returned to the historical definition of
joint employer by reversing the 2015
Browning-Ferris decision that upended
the industries and small business owners that rely on the successful franchise
business model. Second, the House and
Senate passed a historic overhaul of the
nation's tax system with numerous provisions that prioritize small businesses
and will allow for significant growth.
Many hoteliers will attest that the
franchise business model is one of the
quickest paths to realizing the American
Dream. Tens of thousands of immigrants
and minority business owners started
successful franchises in the hotel industry. Building off a recognized brand and
standards, hoteliers invest their own
capital, apply their own business sense,
hire their own employees, and develop
their unique management and business
strategies. Yet the NLRB's 2015 decision to
redefine joint employer sowed confusion
and uncertainty in the industries that
rely on this business model, for under
the ruling in the Browning-Ferris case,
the NLRB created an ambiguous direct or
indirect control standard that could have
allowed a hotel franchisor to be labeled
as a joint employer with its independent
mom-and-pop franchisee, who make all
the hiring, firing, wage and supervisory
decisions about their business.
The prospect of assuming responsibility for someone else's employees,
skyrocketing liability, and getting roped
into countless disputes that arise with
any small business put a damper on the
industry's incentive to franchise. More

than one-third of hotel employees work for franchises, and
the number of new jobs in
the industry fell from 1.9 percent
to 1.1 percent following the decision, according to a report by
the American Action Forum.
Fortunately, in an unexpected move,
the NLRB reversed the 2015 decision
and returned to the historical definition of joint employer. Hoteliers and
others who rely on a stable and clearly
defined relationship with franchisors celebrated the decision and
the bright red legal line that
ensures franchisees control
their own employees. While
the decision was welcomed,
AAHOA members continue
to lobby Congress to change the
law to a statutory definition of
joint employer. Last year, the House of
Representatives passed a bipartisan bill,
H.R. 3441, the Save Local Business Act,
which clearly defines an employer as
one who directly controls their employees. This legislation will prevent future
administrations from making politicallycharged decisions, like the NLRB did in
2015, without first seeking congressional
approval. The bill is being considered in
the Senate, yet it is without a cosponsor. AAHOA members must continue to
press the Senate to pass this measure
to ensure the stability of the franchise
business model is not dependent upon
the political whims of unelected government panels.
With the NLRB's decision to return to
the historical joint employer definition,
hoteliers are optimistic that franchisors
who backed away from expansion and
development projects will press forward
with confidence. The timing of this decision coincides with new tax legislation

12  | FEBRUARY 2018 | TODAYSHOTELIER.COM

that will be a boon to small
business owners. Just one
week after the ruling came
down, the House and Senate
passed the Tax Cuts and Jobs
Act, which will allow hoteliers
ample opportunity to reinvest in their
businesses and new development.
The tax overhaul contains many
of the provisions AAHOA members
requested. The bill includes a 20 percent reduction for pass-throughs, the
corporate rate is cut from 35 percent
to 21 percent, and the AMT is eliminated for businesses. The bill preserves
like-kind exchanges and allows full
and immediate expensing of business
assets. All these tax savings enable and
encourage hoteliers to reinvest capital
to expand their businesses, renovate
properties, invest in new construction,
increase wages and hire new employees
as their businesses grow.
The passage of the tax bill also saw
the top marginal tax rate slashed from
39.6 percent to 37 percent, and millions
of Americans will see their taxes fall
with the development of new brackets. Studies show that new discretionary income is spent disproportionally
on travel as more families take to the
road for vacations and business travel
increases as companies grow - which is
a boon to the hospitality industry.
With franchisors confident that the
relationships with franchisees are
clearly defined, hoteliers keeping more
of their hard-earned money to grow their
businesses, and more families spending
their tax savings on travel, prospects for
growth in 2018 are high.
■
Peter Clerkin is director of Government
Affairs Communications for AAHOA and
can be reached at peter@aahoa.com.

KOSTENKO MAXIM/SHUTTERSTOCK.COM

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Table of Contents for the Digital Edition of Today's Hotelier - February 2018

Letter From the Chairman
Letter From the President & CEO
Government Affairs
CEO View
The Great Extended-Stay Boom
12 Easy Pieces for a Hotel Renovation
Key Money Incentives: To Take or Pass?
How ADA Compliance Laws Affect Your Hotel Website
When Small Businesses Prosper, America Prospers
Hotel Financing Q&A
AAHOA @ Industry Events
Aahoa Founding Members
Aahoa Vendor Partners
Classifieds
Advertiser Index
Today's Hotelier - February 2018 - Intro
Today's Hotelier - February 2018 - cover1
Today's Hotelier - February 2018 - cover2
Today's Hotelier - February 2018 - 3
Today's Hotelier - February 2018 - 4
Today's Hotelier - February 2018 - 5
Today's Hotelier - February 2018 - 6
Today's Hotelier - February 2018 - 7
Today's Hotelier - February 2018 - Letter From the Chairman
Today's Hotelier - February 2018 - 9
Today's Hotelier - February 2018 - Letter From the President & CEO
Today's Hotelier - February 2018 - 11
Today's Hotelier - February 2018 - Government Affairs
Today's Hotelier - February 2018 - CEO View
Today's Hotelier - February 2018 - The Great Extended-Stay Boom
Today's Hotelier - February 2018 - 15
Today's Hotelier - February 2018 - 16
Today's Hotelier - February 2018 - 17
Today's Hotelier - February 2018 - 12 Easy Pieces for a Hotel Renovation
Today's Hotelier - February 2018 - 19
Today's Hotelier - February 2018 - 20
Today's Hotelier - February 2018 - 21
Today's Hotelier - February 2018 - Key Money Incentives: To Take or Pass?
Today's Hotelier - February 2018 - 23
Today's Hotelier - February 2018 - How ADA Compliance Laws Affect Your Hotel Website
Today's Hotelier - February 2018 - 25
Today's Hotelier - February 2018 - When Small Businesses Prosper, America Prospers
Today's Hotelier - February 2018 - Hotel Financing Q&A
Today's Hotelier - February 2018 - AAHOA @ Industry Events
Today's Hotelier - February 2018 - 29
Today's Hotelier - February 2018 - Aahoa Founding Members
Today's Hotelier - February 2018 - 31
Today's Hotelier - February 2018 - Aahoa Vendor Partners
Today's Hotelier - February 2018 - 33
Today's Hotelier - February 2018 - 34
Today's Hotelier - February 2018 - 35
Today's Hotelier - February 2018 - 36
Today's Hotelier - February 2018 - 37
Today's Hotelier - February 2018 - 38
Today's Hotelier - February 2018 - 39
Today's Hotelier - February 2018 - Classifieds
Today's Hotelier - February 2018 - 41
Today's Hotelier - February 2018 - 42
Today's Hotelier - February 2018 - 43
Today's Hotelier - February 2018 - 44
Today's Hotelier - February 2018 - 45
Today's Hotelier - February 2018 - Advertiser Index
Today's Hotelier - February 2018 - cover3
Today's Hotelier - February 2018 - cover4
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