    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                   A SMALL PART IN A BIG COMPANY: EXAMINING
                     THE POWER OF FRANCHISING IN THE
                     AMERICAN ECONOMY

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                  MAY 15, 2025

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 119-011
                 Available via the GPO Website: www.govinfo.gov

                                   __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    60-425                      WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                       HOUSE COMMITTEE ON SMALL BUSINESS

                        ROGER WILLIAMS, Texas, Chairman
                            PETE STAUBER, Minnesota
                            DAN MEUSER, Pennsylvania
                             BETH VAN DUYNE, Texas
                               JAKE ELLZEY, Texas
                             MARK ALFORD, Missouri
                             NICK LALOTA, New York
                            BRAD FINSTAD, Minnesota
                              TONY WIED, Wisconsin
                          ROB BRESNAHAN, Pennsylvania
                              BRIAN JACK, Georgia
                             TROY DOWNING, Montana
                 KIMBERLYN KING-HINDS, Northern Marina Islands
                             DEREK SCHMIDT, Kansas
                            JIMMY PATRONIS, Florida
                   NYDIA VELAZQUEZ, New York, Ranking Member
                           MORGAN MCGARVEY, Kentucky
                           HILLARY SCHOLTEN, Michigan
                          LAMONICA MCIVER, New Jersey
                            GIL CISNEROS, California
                           KELLY MORRISON, Minnesota
                            GEORGE LATIMER, New York
                             DEREK TRAN, California
                           LATEEFAH SIMON, California
                           JOHNNY OLSZEWSKI, Maryland
                            HERB CONAWAY, New Jersey
                        MAGGIE GOODLANDER, New Hampshire

                     Lauren Holmes, Majority Staff Director
                     Melissa Jung, Minority Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Roger Williams..............................................     1
    Hon. Nydia Velazquez.............................................     2

                                   WITNESSES

    Mr. Randy Cross, Franchise Owner, Fish Window Cleaning,
      Grandville, MI.................................................     5
    Mr. Craig Wright, Chief Executive Officer, Aqua-tots Swim School,
      Mesa, AZ.......................................................     6
    Ms. Jennifer Beaudoin, Franchisee, Buffalo Wild Wings, Stephens
      City, VA.......................................................     8
    Mr. Gary Kalman, Executive Director, Transparency International
      US, Washington, DC.............................................     9

                                    APPENDIX

    Prepared Statements:
        Mr. Randy Cross, Franchise Owner, Fish Window Cleaning,
          Grandville, MI.............................................    39
        Mr. Craig Wright, Chief Executive Officer, Aqua-tots Swim
          School, Mesa, AZ...........................................    44
        Ms. Jennifer Beaudoin, Franchisee, Buffalo Wild Wings,
          Stephens City, VA..........................................    52
        Mr. Gary Kalman, Executive Director, Transparency
          International US, Washington, DC...........................    58
    Questions for the Record:
        None.
    Answers for the Record:
        None.
    Additional Material for the Record:
        Executive Office of the President Office of Management and
          Budget.....................................................    70
        Fact Coalition Briefing Memo.................................    71
        Fact Coalition...............................................    79
        National District Attorneys Association (NDAA)...............    83
        National Fraternal Order of Police (FOP).....................    84
        National Narcotic Officer's Associations' Coalition (NNOAC)..    86
        Trump Tariffs................................................    87

                        A SMALL PART IN A BIG COMPANY:
           EXAMINING THE POWER OF FRANCHISING IN THE AMERICAN ECONOMY

                                  ----------

                             THURSDAY, MAY 15, 2025

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 10:00 a.m., in Room
    2360, Rayburn House Office Building, Hon. Roger Williams
    [chairman of the Committee] presiding.
        Present: Representatives Williams, Meuser, Ellzey, Alford,
    Finstad, Wied, Jack, Downing, Schmidt, Patronis, Velazquez,
    McGarvey, Scholten, McIver, Cisneros, Tran, Simon, Olszewski,
    Conaway, and Goodlander.
        Chairman WILLIAMS. Okay, good morning. And before we get
    started, I want to recognize Congressman Patronis from the
    great state of Florida to lead us in the pledge and prayer.
        Good morning, everyone. And I will now call the Committee
    on Small Business to order. Without objection, the Chair is
    authorized to declare a recess of the Committee at any time.
        I now recognize myself for my opening statement.
        Welcome to today's hearing, ``A Small Part in a Big
    Company: Examining the Power in Franchising in the American
    Economy.'' In today's hearing, we will hear from franchisors
    and franchisees on all aspects of the franchise business model.
    We will focus on how we in Congress can protect this model to
    ensure generations of Americans have a chance to achieve the
    American dream.
        Franchises operate in every corner of America. My family
    has been a part of the franchise model for over 80 years in the
    car business. I have seen firsthand the benefits to consumers,
    manufacturers in local communities, and, most importantly,
    individual citizens and people in the community. Whether you
    are in a small town or a big city, you are likely to encounter
    locally owned franchises that support and drive the local
    economy.
        Across the United States, there are an estimated 831,000
    franchise businesses employing nearly 9 million workers. These
    franchise establishments generate close to $900 billion in
    economic output, which is roughly 3 percent of the U.S. GDP.
    When the franchises thrive, the American economy thrives.
        Unfortunately, the franchise business model came under
    attack under the prior administration. The Biden Harris
    National Labor Relations Board, the NLRB, issued its disastrous
    Joint Employer ruling, which threatened to upend the franchise
    business model. Congress fought this misguided attack on a
    bipartisan basis, only to be met with Biden's veto. If the
    courts had not struck down this Joint Employer Rule, franchises
    would have incurred an estimated $33 billion in additional
    costs each year.
        Franchises face yet another uphill battle as Democrats are
    fighting tooth and nail to oppose extending President Trump's
    pro small business Tax Cuts and Jobs Act. Failing to extend the
    TCJA will result in the greatest tax hike on the American
    people in its history. Rather than being undermined through
    excessive regulation and being subject to Democrat tax hikes,
    the franchise business model should be supported. This model
    offers small business owners access to resources and tools to
    assist with many challenges and make the dream of becoming a
    business owner more attainable and also reliable.
        It is an honor to work alongside my colleagues and
    President Trump to create commonsense policies that uplift our
    nation's small businesses through deregulation, lower taxes,
    and greater access to capital. I would like to thank the
    witnesses to participate in this important hearing. We look
    forward to your testimony.
        Now with that, I want to yield to my friend and
    distinguished Member, Ranking Member from New York, Ms.
    Velazquez, for her opening remarks.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman. Today's hearing on
    the franchise business model gave us the opportunity to assess
    the issues franchises and other small businesses face in
    today's economy, so let me give you the facts.
        President Trump's economic on-and-off again economic
    policies are setting off alarm bells. Americans are becoming
    increasingly worried about the health and future of our
    economy. Recent economic data showed that our economy shrank by
    0.3 percent in the first quarter as the President's policies
    created significant uncertainty. Growth in consumer spending
    slowed considerably, with GDP down from the 2.4 percent growth
    the economy experienced in the fourth quarter of 2024.
        Despite lowering costs on day one, prices remain high. GDP
    data released at the end of April confirmed that prices are
    climbing as consumer inflation jumped 3.6 percent in the first
    quarter and core inflation rose 3.5 percent. When combined with
    a generally weakening economy, the uncertainty and higher costs
    caused by the President's tariff policies are beginning to
    force franchises and other small business owners to make
    difficult choices. Thirty percent of small business owners
    indicated in March that they plan to increase prices, the
    highest amount reported over the last year. Employment of small
    employers declined by 3 percent since President Trump took
    office, and 5 out of 12 federal reserve districts recently
    reported weakening manufacturing activity.
        Perhaps worse, small businesses report that they anticipate
    these challenges to grow and forecasters from across the
    spectrum are increasingly concerned about the chances of an
    economic recession. J.P. Morgan now places the odds of a U.S.
    and global recession at 60 percent and directly attributes that
    forecast to President Trump's tariff policy. Again, these are
    the facts.
        Combined with the Trump administration's decision not to
    enforce the beneficial ownership reporting requirements under
    the Corporate Transparency Act, the American economy is left in
    a particularly vulnerable state. Passed in 2021 with wide
    bipartisan support from a broad array of stakeholders,
    including from President Trump, the CTA requires the Treasury
    Department to develop and maintain a registry of the real
    beneficial owners of established businesses in order to crack
    down on the use of anonymous shell companies in the U.S.
        Mr. Chairman, I would like to include for the record a
    statement of administration policy from the Trump
    administration supporting passage of the CTA in 2019; a letter
    signed by the National District Attorneys Association, the
    National Narcotic Officers Association, and a list of 583 law
    enforcement, business, human rights, national security, and
    other experts supporting passage of the CTA.
        Chairman WILLIAMS. So moved.
        Ms. VELAZQUEZ. While there is no doubt that there were
    problems with FinCEN's rollout, establishment of the registry,
    and education to small businesses of their reporting
    obligation, that is not justification for not enforcing the
    statute. I will soon be leading other House and Senate
    Democrats in introducing legislation to improve the BOI
    reporting process for small businesses, and I encourage anyone
    who is interested to join me in this effort. The CTA is the law
    of the land and must be enforced.
        Franchises and other small businesses are especially
    vulnerable to tariffs and economic uncertainty, and the Trump
    administration's decision not to enforce the CTA expanding the
    use of anonymous shell companies, which harms fair competition
    for legitimate small businesses looking to compete in the
    marketplace. I look forward to exploring all of these and other
    issues here this morning.
        Thank you. I yield back.
        Chairman WILLIAMS. The gentlelady yields back. And we will
    now move to witness introductions.
        I recognize my colleague, Representative Scholten from the
    great state of Michigan, to briefly introduce her constituent
    who is testifying before the committee today.
        Ms. SCHOLTEN. Thank you so much, Mr. Chairman. I really
    appreciate the spirit of bipartisanship that dominates this
    committee and the opportunity to introduce my constituent here
    today.
        I am so pleased to introduce Mr. Randy Cross, the president
    of Fish Window Cleaning. Mr. Cross is a constituent of mine. We
    enjoyed a great conversation over at Fish Window Cleaning just
    a few weeks ago, and my boys are very interested in getting
    into the squeegee business at some point in the future. I have
    to say, they re very fascinated. Thank you for your
    hospitality.
        After opening his first Fish Window Cleaning franchise
    location in 2003, Mr. Cross has gained years of experience in
    the franchising world. He is now both a franchisor and a
    franchisee, providing a unique perspective on the ins and outs
    of this business model. As Co-Chair of the Franchise Caucus
    myself, I look forward to hearing from Mr. Cross on how
    Congress can do more to help entrepreneurs like him build up
    their businesses and, by extension, our nation's economy.
        Thank you. I yield back.
        Chairman WILLIAMS. The lady yields back.
        Our next witness here with us today is Mr. Craig Wright.
    Mr. Wright is the chief executive officer of AquaTots Swim
    School in Phoenix, Arizona. Mr. Wright has over 30 years of
    executive leadership experience and joined AquaTots Swim School
    in 2017. Prior to that, he served in multiple positions for
    Leslie's Pool Supplies and as senior vice president for Millard
    Refrigerated Services. He worked his way up in his career,
    starting as a box boy at Buttrey Food and Drug, all the way up
    to vice president of distribution, merchandising, and support.
    Mr. Wright graduated from Montana State University in Billings.
        I want to thank you for being here today and thank you for
    taking the time to bring your family with you, too.
        Our next witness here with us today is Ms. Jennifer
    Beaudoin. Did I say that right, Jennifer? Ms. Beaudoin is a
    franchise owner of multiple Buffalo Wild Wings locations in
    West Virginia and Virginia. Ms. Beaudoin has been a Buffalo
    Wild Wings franchisee for more than 25 years, founding her
    first restaurant with her family in 1999. Ms. Beaudoin serves
    as Vice Chair of the Franchise Business Services Board of
    Directors and is a co-owner of Black Rock Bar and Grill. She is
    a graduate of West Virginia University.
        And thank you for joining us today. I am looking forward to
    hearing your conversation.
        I now recognize the Ranking Member from New York, Ms.
    Velazquez, to briefly introduce our last witness appearing
    before us today.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        I would like to introduce Mr. Gary Kalman, Executive
    Director of Transparency International, U.S. In this role, he
    oversees the organization's U.S. operations, focusing on
    illicit finance and the U.S. role in global anti-corruption
    efforts. He was a founding member of the Financial
    Accountability and Corporate Transparency, FACT, Coalition, a
    nonpartisan alliance promoting policies to combat the harmful
    impacts of corrupt financial practices and served as Executive
    Director from 2016 to 2019. He is currently an Advisory Council
    Member for the International Coalition Against Illicit
    Economists.
        Mr. Kalman, it is nice to see you again. Welcome back to
    the Committee. Thank you.
        Chairman WILLIAMS. The lady yields back. And so thank again
    all of you for being here.
        Now, before recognizing the witnesses, I would like to
    remind them that their oral testimony is restricted to 5
    minutes in length, and we do stick with that. If you see the
    light turn red in front of you, it is over with. Okay. It means
    your 5 minutes have concluded and you should wrap up your
    testimony. If you continue to go, you will hear this, reminding
    you that you need to stop.
        I now recognize Mr. Cross for his 5-minute opening remarks.

        STATEMENTS OF RANDY CROSS, FRANCHISE OWNER, FISH WINDOW
    CLEANING; CRAIG WRIGHT, CHIEF EXECUTIVE OFFICER, AQUA-TOTS SWIM
    SCHOOL; JENNIFER BEAUDOIN, FRANCHISEE, BUFFALO WILD WINGS; AND
     GARY KALMAN, EXECUTIVE DIRECTOR, TRANSPARENCY INTERNATIONAL US

    STATEMENT OF RANDY CROSS, FRANCHISE OWNER, FISH WINDOW CLEANING

        Mr. CROSS. First of all, thank you to my congresswoman,
    Hillary Scholten, for the introduction. And thank you, Chairman
    Williams, Ranking Member Velazquez, and distinguished Members
    of the committee for inviting me here today. My name is Randy
    Cross and I am the president of Fish Window Cleaning, which is
    the nation's premier window cleaning service with more than 275
    franchise locations nationwide. It is a unique privilege to
    appear before you today alongside our fellow franchise business
    leaders to talk about this incredible all American business
    model of franchising.
        Mr. Chairman, as a franchisor, it is my honor to help
    aspiring entrepreneurs open and operate their own window
    cleaning business. But perhaps more importantly, I am also a
    franchisee in Grand Rapids, Michigan, and I opened the second
    Fish Window Cleaning location back in 2003. Today, I proudly
    employ 31 employees at my Fish franchise.
        I appear before you today on behalf of the International
    Franchise Association, where I also serve on the Board of
    Directors. Today's hearing is a great opportunity to highlight
    the power of franchising, a business model that supports nearly
    9 million jobs at 831,000 establishments in America,
    contributing a staggering $897 billion to our economy.
    Franchising is perhaps the most important business growth
    strategy in American history.
        Mr. Chairman and friends of the committee, my message today
    is this: franchising is small business. When you see in your
    communities a Fish Window Cleaning business, an AquaTots Swim
    School, or a Buffalo Wild Wings restaurant, what you are
    looking at is small business. The vast majority of our
    franchisees in the country are like me, and they operate a tiny
    enterprise. Over 80 percent of franchise owners own and operate
    just a single location. And for all the benefits of operating
    under that established brand, franchisees pay an average of 6
    percent royalty to a brand to sell that brand's products or
    services. This means franchisees retain an average of 94
    percent of their business revenue.
        So now that you understand most franchisees are very small,
    you also need to understand that the vast majority of
    franchisors are also very small enterprises. The majority of
    the nearly 3,500 franchise brands in operation today have less
    than 20 franchise units in their system. So franchising truly
    is a small business.
        And because we are a small business, we are far more
    affected by the government policies than multinational
    corporations are. The franchise community is very pleased that
    Congress is advancing tax policy that allows small businesses
    to flourish. Specifically, we are excited that the House Ways
    and Means Committee is advancing a bill to extend, increase,
    and make permanent the Section 199A deduction for passthrough
    businesses. This benefit will provide monumental certainty to
    small business franchisees and franchisors.
        Franchise business people are also very pleased about the
    extension of the bonus depreciation and estate tax provisions
    from the 2017 tax laws. These two policies, respectively, will
    allow businesses to immediately write off 100 percent of the
    cost of capital investments and prevent an unimaginable burden
    to a family in the event of a death of a franchise owner.
        Another policy I would like to discuss is the unnecessary
    impact of the Corporate Transparency Act enacted by Congress in
    2021. The CTA would require the smallest franchisees in America
    to report sensitive and personal information to the federal
    government. And while I certainly support the goal of reducing
    illicit activity, it is rare that policymakers pass a
    regulation that only affects the smallest businesses who are
    least able to understand how to comply. The IFA was pleased
    that the Treasury Department will not enforce that law, and we
    support a full repeal of the Corporate Transparency Act.
        Last but not least, the most important action Congress can
    ever take to pave a clear future for franchise small businesses
    is to finally write a commonsense law for what constitutes a
    joint employer. While franchise businesses are predominantly
    small, they are also independent businesses. And franchisees
    like me want to stay independent forever. That is why we
    entered into this line of work.
        Last year's expansive joint employer standard made no sense
    for the franchisor-franchisee relationship, and we can all be
    relieved that the IFA defeated that rule in court. The court
    defeat came after Congress also rejected the rule on a
    bipartisan basis last year through a Congressional Review Act
    resolution that passed both the House and the Senate last year.
    This year, Congress still has an opportunity to pass
    legislation, like the Save Local Business Act, to provide
    economic safety and security for franchise business families
    everywhere.
        Mr. Chairman, I cannot thank you enough for the invitation
    to appear at this hearing on franchising and I look forward to
    our discussion.
        Chairman WILLIAMS. Thank you very much.
        I now recognize Mr. Craig Wright. You can swim, can't you?
        Mr. WRIGHT. I can swim. I can swim, yes.
        Chairman WILLIAMS. I now recognize Mr. Craig Wright for his
    5-minute opening remarks.

          STATEMENT OF CRAIG WRIGHT, CEO, AQUATOTS SWIM SCHOOL

        Mr. WRIGHT. Thank you. Good morning, Chairman Williams,
    Ranking Member Velazquez, and distinguished Members of the
    committee. My name is Craig Wright and I am the CEO for
    AquaTots Swim Schools, a franchise based in Mesa, Arizona.
        AquaTots Swim Schools is a family-owned business that began
    in 1991 with a simple goal: to make quality swim lessons
    accessible, safe, and convenient for families. What started as
    a single lesson taught by a teenage lifeguard in Tempe,
    Arizona, has grown into one of the world's largest swim school
    franchises. Initially operating in backyard and hotel pools,
    AquaTots pioneered one of Arizona's first indoor year-round
    facilities. The success of this business laid the concept and
    foundation for the brand's expansion under the franchise model.
        In 2007, AquaTots launched its first franchise. Today,
    AquaTots is in over 170 locations, 14 countries. We have taught
    over 47 million swim lessons to 2-1/2 million children
    worldwide. The majority of our 75 franchise owner groups are
    made up of first-time business owners and families who are
    passionate about water safety and childhood development. Since
    2017, I have had the privilege of leading AquaTots as the CEO.
    It is an honor to be here today and give my perspective on the
    impact of franchising in its hundreds and thousands of small
    businesses.
        At its core, franchising is about the relationship between
    the franchisor and the franchisees, specifically how the
    franchisor supports its franchisees and how the franchisees
    meet their obligations to deliver products and services in
    accordance with the system's brand standards. A franchise
    relationship is a long-term relationship that spans a decade
    and in many cases more than 20 or 30 years. These long-term
    relationships only work when the parties can trust that the
    relationship and expectation each party has of the other will
    remain stable.
        While the franchisor provides the brand and the operating
    system and the training and the ongoing support, the franchisee
    is the one on the front lines making the daily operational
    decisions, managing their team, and building relationships with
    their customers. We see our franchisees as partners who bring
    the brand to life in their unique local markets. Their success
    is our success and that success is built on the foundation of
    their individual small business.
        The collective network of a franchise brand can be
    substantial, comprised of hundreds if not thousands, thousands
    of individual small business owners. These entrepreneurs are
    the backbone of the franchise model and significantly
    contribute to their local economies. As franchisors, we are
    proud to empower these individuals to achieve their dreams of
    business ownership and witness the positive impact they have
    every single day.
        When franchising is mistakenly painted with a broad big
    business brush, it can lead to misguided policies and
    regulations. Legislation aimed at large corporations can
    inadvertently harm the small business owner, hindering their
    ability to grow, create jobs, and serve their communities. To
    that end, I would like to highlight an issue that has clouded
    the franchise community for decades, notably the ever changing
    joint employer standard.
        Franchise businesses have faced four different definitions
    of the joint employer standard over the past decade and while
    there is reprieve from previous NLRB's Joint Employer Rule, I
    want to stress the importance that the current commonsense
    standard in federal labor law has on franchise businesses like
    AquaTots, and state that any action to towards permanently
    preserving the current NLRB rule would not only protect both
    businesses and workers, but also create the regulatory
    conditions that would allow both franchisors and franchisees to
    thrive, grow, create jobs, and serve in the opportunities in
    their local communities.
        Lastly, the SBA plays a critical role in the franchising
    success. The SBA and the access to capital that its lending
    programs provide are an instrumental part of the franchise
    success story. Historically, franchises have represented about
    20 percent of the billions of dollars in SBA loans. On April
    25, we welcomed the SBA's news that it would be reinstating the
    Franchise Directory. This directory which was, unfortunately,
    eliminated in 2023, is an essential and centralized tool for
    lenders to access SBA loan eligibility and financing for
    franchisees. It also serves as a beneficial tool for
    prospective franchises and as they evaluate franchise
    opportunities.
        I appreciate the attention that this committee has to this
    issue given the critical importance of SBA lending to new
    franchisees. I also appreciate your efforts to once again make
    the Franchise Directory available to both banks and borrowers.
        Mr. Chairman and distinguished Members of the Committee,
    thank you again for the opportunity to testify. I am happy to
    answer any questions you might have.
        Chairman WILLIAMS. Thank you. The gentleman yields back.
        I now recognize Jennifer Beaudoin for her 5-minute opening
    remarks.

     STATEMENT OF JENNIFER BEAUDOIN, FRANCHISEE, BUFFALO WILD WINGS

        Ms. BEAUDOIN. Good morning, Chair Williams, Ranking Member
    Velazquez, and distinguished Members of the committee. My name
    is Jenny Beaudoin and I am a proud small business owner. I
    operate four Buffalo Wild Wings restaurants, three in Virginia
    and one in West Virginia, as well as a steakhouse in Maryland.
        My story, like that of many small business owners, is a
    personal one. I literally grew up in a rest the restaurant my
    parents owned. We lived in the apartment above it. I saw
    firsthand the long hours, the financial risks, and the sheer
    grit it takes to make a small business succeed. There were no
    days off, no paid vacations, and every dollar earned was
    victory. That experience shaped my understanding of
    entrepreneurship and instilled in me a deep appreciation for
    the challenges and rewards of owning a business. I learned that
    being a small business owner isn't just about making a profit.
    It is about being part of a community, providing for your
    family and creating opportunities for others.
        When I was in college, my father, a seasoned restaurant
    owner, was looking to expand, but he wasn't sure how to do it.
    He was hesitant to take on more debt and replicate the
    challenges of starting from scratch. That is when I suggested
    franchising. I remember inviting him to a local Buffalo Wild
    Wings near my college campus. He was struck by the vibrant
    atmosphere, the loyal customer base, and the efficient systems.
    He saw a model that offered a potential for growth with a
    proven framework. In fact, he was so impressed that he called
    the number on the back of the menu to inquire about franchise
    opportunities. That decision changed our lives. We became part
    of the Buffalo Wild Wings brand 26 years ago. We were the 97th
    location and I opened my first franchise 24 years ago.
        Over the years, I have expanded my operations, always
    reinvesting in my business and my people. And now I am
    incredibly proud to say that my daughter has recently graduated
    from James Madison University and is preparing to join our
    family business. She also got engaged yesterday. Impressively,
    not uncommon in the franchising industry, she represents the
    third generation of our family dedicated to serving our
    communities, creating jobs, and building a legacy.
        This personal history is important because it highlights a
    fundamental truth. Franchisees are small business owners. We
    are not simply managers of corporate stores. We are
    entrepreneurs who invest our own capital, take on significant
    financial risk, and are deeply committed to our local
    communities. The franchise model offers a unique opportunity
    for individuals to achieve the American Dream of business
    ownership. It combines the support and brand recognition of a
    larger entity with the entrepreneurial drive and local
    knowledge of individual owners. It is a model that has proven
    to be a powerful engine for economic growth and job creation.
        However, it is crucial that policymakers understand the
    realities of franchising and recognize that franchisees are in
    fact small business owners. Policies that treat franchisees as
    large corporations or employees of the franchisor can have
    unintended consequences, harming the very small businesses that
    this committee is intended to support.
        To that end, some of the governmental policies that help my
    business and others like it thrive include: a clear and
    consistent joint employer standard that protects my business
    from the franchisor's legal liability affirming that I am, in
    fact, a business owner and not solely a manager of my
    restaurants. A strong, qualified business income deduction 199A
    that allows me to free up capital to reinvest in my restaurants
    and team members. One hundred percent bonus depreciation of
    assets that allowed me to recently remodel two locations and
    which allows me to pay my equipment suppliers upon delivery
    like they expect. Interest deductibility based on EBITDA, not
    just EBIT 163(j), that allows me and my fellow franchisees to
    secure access to capital to expand our businesses, which I hope
    to do soon by building two more restaurants with my family.
        I appear today on behalf of myself as a franchise owner of
    Buffalo Wild Wings through S&J Enterprises LLC. I also appear
    as Vice Chair of the Association of Buffalo Wild Wings
    Franchisees, the Buffalo Wild Wings Franchise Business
    Services. I am grateful for the opportunity to share my story
    and advocate for pro-franchising policies for me, my daughter,
    and for countless other franchise owners in the U.S. supporting
    their communities and their families and their dreams.
        Thank you for your time and attention. I would be happy to
    answer any questions that you have.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Gary Kalman for his 5-minute opening
    remarks.

      STATEMENT OF GARY KALMAN, EXECUTIVE DIRECTOR, TRANSPARENCY
                           INTERNATIONAL U.S.

        Mr. KALMAN. Thank you. Chairman Williams, Ranking Member
    Velazquez, and distinguished Members of the Committee, thank
    you for inviting me to testify today, on behalf of Transparency
    International U.S., I appreciate the opportunity to discuss the
    critical role of the Corporate Transparency Act in providing
    law enforcement with necessary tools to do their jobs and keep
    us safe. I also hope to share how this law benefits small
    business and to help dispel some of the unfortunate
    misconceptions that have surfaced.
        When I testified before this Committee last spring, I
    offered more than a dozen examples in my written testimony in
    which anonymous companies were used to cover up the laundering
    of proceeds of drug trafficking, human trafficking, sanctions
    evasion, counterfeiting operations, and scams that harm small
    businesses, including stolen contracts and disruptions to
    supply chains. The current administration has made clear its
    prioritization of disrupting, even dismantling, drug cartels
    and transnational criminal organizations. Any suspension of
    enforcement or weakening of our anti-money laundering rules
    undermines their ability to deliver on that promise.
        Since then, studies and investigations with new and
    previously underreported evidence continue to surface. Consider
    that a new April 2025 GAO study found that fraud is a
    significant and persistent problem in federal procurement
    practices and that some of this fraud is perpetuated by
    companies obscuring beneficial ownership information when they
    compete for contracts and apply for federal benefits. The GAO
    detailed several examples, including anonymous companies
    implicated in the diversion of contracts for small businesses
    and for veterans-owned businesses that were otherwise
    ineligible for those contracts.
        The effective implementation of the CTA is also integral to
    the President's tariffs plans. Whether one supports or opposes
    tariffs, we should all be able to agree that additional
    uncertainties in supply chain integrity and price variability
    created by tariff-dodging via anonymous shell companies is
    harmful to small businesses already trying to navigate the
    policy change. The Financial Times recently reported that
    Chinese logistics managers told Asian media last month that
    they were creating shell companies to evade the tariffs.
        The FT also reported that Customs and Border Protection
    said that enforcement will include the most severe penalties
    permitted by law. While the intention is no doubt genuine, they
    cannot prosecute what they cannot find. Without the CTA, this
    tariff dodge creates gaps for law enforcement and raises
    serious questions for small businesses about their role in
    undermining federal tax policy.
        Since this week is Police Week and tens of thousands of
    officers and their families are in D.C., it seems fitting to
    mention the strong support for the CTA from police associations
    and law enforcement officials in all levels of government. I
    would also add that prior to the House vote, the first Trump
    administration issued, as the Ranking Member suggested, a
    Statement of Administrative Policy that said the CTA would
    assist law enforcement in detecting and preventing illicit
    activities, such as terrorist financing and money laundering.
        On March 21st, the Treasury Department issued an interim
    final rule that narrows the scope of the law to apply only to
    certain foreign companies that register to do business in the
    United States. The exemption for domestic companies from the
    CTA is not consistent with a risk-based approach to countering
    financial crime. We strongly urge the Treasury Department to
    return the scope to the intent of Congress and provide law
    enforcement with the tools necessary to protect Americans from
    both foreign and domestic threats. The current rule does
    neither.
        Small business trade associations we spoke with seem to
    agree that compliance is not actually a major concern for their
    members. Small Business Majority wrote that small businesses
    across America are grappling with the impact of tariffs and
    cuts to vital programs supporting entrepreneurial innovation.
    Enforcement of this law is quite simply not close to a major
    concern for the main street small business owners with whom we
    are in contact every day. I would suggest that there seems to
    be a disconnect between K Street and main street on the top
    challenges facing America's entrepreneurs.
        Finally, we recognize that there are improvements to the
    implementation that could be made. We have suggested FinCEN
    simplify the reporting form for the smallest businesses and
    adopt instant verification to reduce filing times and improve
    data quality. And Congress should provide these financial
    police with the resources to make these changes and expand
    outreach and education to small businesses.
        Thank you for the opportunity to present this testimony and
    I look forward to answering your questions.
        Chairman WILLIAMS. The gentleman yields back.
        And before we get started, just as a reminder, you may see
    some Members coming and going and back and forth. It is not
    because they are mad at anybody or whatever. Lots of times
    there are other hearings going on. So you will see possibly me
    and the Ranking Member will have to get up and come back. So be
    aware of that.
        I now recognize myself for 5 minutes.
        Mr. Cross, you began your career as a franchisee in 2003
    and transitioned to the corporate structure of Fish Window
    Cleaning in 2008, as you said. And this experience provides you
    with a unique perspective from both the franchisee and the
    franchisor side, because there is a big difference. So how has
    your experience as a franchisee impacted your thoughts and
    decision making as a franchisor?
        Mr. CROSS. Thank you, Congressman. I would say that I live
    and breathe the business each and every day. And as a
    franchisee myself, I am blessed to help lead the corporation.
    So my overall answer is I know what it takes to be a successful
    small business in this country and a franchise owner out of
    West Michigan. So just what we want to do is support our
    franchisees in any way possible.
        And I know we keep coming back to this joint employer. That
    is why I am here today. That is what is on my heart is this
    joint employer issue. These regulations are getting in the way
    of my ability as a franchisor to be able to support our
    franchisees. We would like to do more. I should have brought
    two hats. One as a franchisee and one as a franchisor.
    Sometimes it is difficult, but as a franchisee, I want as much
    support as possible from the franchise headquarters' offices.
    And as a franchisor, I want to provide as much support to our
    franchisees. They send royalty dollars our way and they expect
    and demand support for them.
        So I am here to hopefully clear up this issue so we can get
    back to just providing window cleaning services to our great
    customers all across the country.
        Chairman WILLIAMS. Thank you. Mr. Wright, one benefit to
    owning a franchise is that it provides a means for ambitious
    entrepreneurs to enter into business ownership with structure
    and a developed business model. At the same time, laws and
    regulations, such as the Franchise Act and the Joint Employer
    Rule, place limitations on the relationship between franchisees
    and franchisors. So how do you currently work with your
    franchisees to help them develop and be successful?
        Mr. WRIGHT. Oh, that is a great question. That is really
    what we do every day. It is the core of what I do and my team
    does. And, you know, a lot of times we are using the word
    ``communication,'' like back and forth, and that is not what we
    want to do. We want to build community, we want to build
    relationships with our franchise owners.
        And it is a formal process where we have monthly calls, we
    have roundtables, we have owners forums. And it is a process
    where my team, on a weekly, on a monthly basis, has specific
    schools that they are calling and working with and
    communicating to. We also have a Franchise Advisory Council
    made up of nine franchise owners where we talk about
    operations, training, and marketing. Because it is really
    important to us that the processes that we are putting in
    place, the new technology that we have, all aligns with what is
    in the best interest of our franchise owners.
        Chairman WILLIAMS. As a car dealer and franchise owner
    myself, I have noticed there is a misconception that
    franchisees are just extensions of the franchisor, and
    certainly not in my business. And when people see a Chrysler,
    Dodge, Jeep, or Ram dealership, they often think it is owned
    and operated by Chrysler. This couldn't be further from the
    truth. In fact, back in the 1930s, my father, Jack Williams,
    started a car dealership that is still in the family today,
    fourth generation. And our dealership is active in our
    communities. We support local charities, first responders and
    more. And simply put, our business operates just as any other
    nonfranchise business.
        So, Ms. Beaudoin, could you please tell us how your
    business positively impacts the community that you serve in
    West Virginia and Virginia?
        Ms. BEAUDOIN. Yes, sir. We are honored that we are the
    place that people come to when they need something, whether it
    is a meal for a football team before a game or if it is--we
    took wings this week to the police, local police force just as
    a thank you. We make ourselves visible in the community as much
    as possible. We recently had sponsored a community day within
    our locations where each location got to pick a charity that
    was on their heart, anywhere from a local animal shelter to the
    Boys and Girls Club. And we paid our team to go and actually
    volunteer at those locations. So we really do pride ourselves
    and we are the place that people come to after their Little
    League games or just to celebrate whatever it is that is going
    on in their lives. And we value the opportunity to do that.
        Chairman WILLIAMS. And you are also the first one to get to
    work and the last one to leave, right?
        Ms. BEAUDOIN. Absolutely. My team works harder than anybody
    I know, especially during COVID. That was a time where we
    really shined within our communities and gave people a respite
    and a place to come and relax.
        Chairman WILLIAMS. And sometimes the last to get paid.
        Ms. BEAUDOIN. Yeah, yeah, for sure.
        Chairman WILLIAMS. Right? That is the way it works.
        Ms. BEAUDOIN. Yeah. The franchisee definitely is last to
    get paid.
        Chairman WILLIAMS. So quickly, in the time remaining, what
    are your future plans for the future of your business?
        Ms. BEAUDOIN. We are hoping to expand two more locations.
    We are looking at two locations in Virginia that we are hoping
    to expand.
        Chairman WILLIAMS. Okay. I yield back.
        I now recognize the Ranking Member for 5 minutes of
    questions.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Mr. Kalman, shortly after the Trump administration
    announced the Treasury Department will not enforce the legally
    mandated penalties or fines against domestic reporting
    companies and individuals that intentionally failed to complete
    their beneficial ownership information reports, the Treasury
    Department quickly turned to exempting all U.S. companies and
    individuals while maintaining the requirements solely for
    foreign firms. This announcement is contrary to Congress'
    intent, correct?
        Mr. KALMAN. Yes, we believe it is.
        Ms. VELAZQUEZ. What was Congress' intent?
        Mr. KALMAN. Congress, when it passed the law, created what
    we call a risk-based approach. That is, what are the greatest
    risks for money laundering that could harm the American people?
    There are numerous examples of--and case studies and other
    reports where companies were created in the United States, both
    from U.S. citizens, but also from foreign actors that simply
    create a company in the United States. Iran created companies
    in New York, in California; you have Venezuela creating
    companies in Miami. So there are numerous examples of where
    that risk exists.
        Ms. VELAZQUEZ. The Corporate Transparency Act passed by a
    wide bipartisan vote, didn't it?
        Mr. KALMAN. Yes.
        Ms. VELAZQUEZ. What was the vote?
        Mr. KALMAN. I believe it was 260--270--249 to 173.
        Ms. VELAZQUEZ. By a big margin.
        Mr. KALMAN. Over 70 votes.
        Ms. VELAZQUEZ. The Trump administration supported it during
    House passage, arguing, and I quote, ``represents important
    progress in strengthening national security, supporting law
    enforcement, and clarifying regulatory requirements.'' Correct?
        Mr. KALMAN. Yes.
        Ms. VELAZQUEZ. So, Mr. Chairman, I would like to enter into
    the record an article from the Financial Times that at the end
    says, ``Chinese logistics managers told Nikkei Asia last month
    that they were creating shell companies to evade tariffs.'' The
    FT also reported that Chinese exporters were attempting to
    avoid tariffs by shipping goods via third countries.
        Chairman WILLIAMS. So moved.
        Ms. VELAZQUEZ. Mr. Kalman, in my opening statement you
    heard me mention that the President's on-again, off-again
    tariff policies are causing significant uncertainty for small
    businesses and their suppliers. Can you speak to why the CTA
    and BOI reporting is even more important in this uncertaint
    economic environment?
        Mr. KALMAN. Yes. So, as you mentioned, the Chinese
    companies are already telling Asian media that they are setting
    up companies to avoid tariffs. They could set them up overseas
    and create a web of companies. They could also set them up in
    the United States. We have also seen other reporting in the
    Washington Post and other media showing that other countries
    are trying to figure out how they could game the system using
    anonymous companies.
        Ms. VELAZQUEZ. Mr. Kalman, this committee recently passed
    H.R. 2966, the American Enterprise Act, which requires the SBA
    7(a) and 504 program loans only be made to small businesses
    that are 100 percent owned by a U.S. citizen, national, or
    lawful permanent resident. Can you explain how the SBA is
    supposed to certify that a business is 100 percent owned by a
    U.S. citizen, national, or permanent resident without knowing
    who the beneficial owner is?
        Mr. KALMAN. I don't see how they can do that. I think they
    would have to set up a parallel system and businesses would
    have to both, you know, enter their data to the Treasury
    Department and the Small Business Administration redundantly.
        Ms. VELAZQUEZ. So then you agree that it is inconsistent to
    be supportive of H.R. 2966 while opposing the Corporate
    Transparency Act's beneficial ownership information reporting
    requirements?
        Mr. KALMAN. It does seem to be an inconsistency, yes.
        Ms. VELAZQUEZ. If you take the position that 7(a) and 504
    program loans should only be extended to small businesses that
    are 100 percent owned by a U.S. citizen, national, or permanent
    resident--can you explain how the beneficial ownership
    information registration process can help ensure the
    requirement is carried out?
        Mr. KALMAN. Well, having a central register means that
    businesses would only have to register once. I think the intent
    of the bill shows the value of the information and that the SBA
    may find it valuable and other agencies may find it valuable to
    ensure that they are dealing with U.S. citizens. So having a
    central register that agencies can check, I think simplifies
    the bureaucracy.
        Ms. VELAZQUEZ. Thank you. I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Finstad from the great state of
    Minnesota for 5 minutes.
        Mr. FINSTAD. Thank you, Chairman Williams. Thank you for
    holding this important hearing today, and thank you to our
    witnesses for being here.
        Across rural America, entrepreneurs have worked hard to
    pursue the dream of owning their own businesses. The franchise
    model provides entrepreneurs with that opportunity, the
    opportunity to achieve this goal and to bring an established
    brand to their local communities. I represent a pretty rural
    district, and it is on the front page of the news when an
    O'Reilly's Auto Parts comes to town or when a Culver's or when
    a Buffalo Wild Wings comes to our communities. And so we are
    very appreciative of this model.
        On main streets across our country, franchise owners
    collectively employ thousands of Americans. You all sit on
    local chamber of commerce boards, other community
    organizations, and, Mr. Chair, most importantly, they sponsor
    things like local town ball baseball teams. Unfortunately, for
    years franchise owners have been subject to misguided
    regulations, as was pointed out in your opening testimonies,
    these regulations coming from bureaucrats at the federal and
    state levels, which limit your ability to grow and operate.
        So with that being said, Mr. Wright, someone who has
    fostered significant growth in your businesses throughout the
    franchise model, can you maybe talk to us about how challenging
    the changing regulatory environment on the federal and state
    level have been to you and what impacts that has had on your
    ability to expand and to grow?
        Mr. WRIGHT. Yeah, sure. Especially the Joint Employer Act
    is probably the greatest impact on us. As I stated in my
    opening remarks, a franchisee purchases a franchise because
    they need the help. They want the help. And that is what we
    want to do. That is what we were created for, that is what we
    are wired for. That is what they pay us to do in their
    royalties. So anything that puts in jeopardy our ability to
    give them 100 percent of our attention and our training and our
    operations, because with the Joint Employer, there is risk
    associated with that. There have been many lawsuits associated
    with that.
        We conduct trainings in our headquarters where owners fly
    in general managers and aquatics managers, and we don't want to
    stop doing that. We think it is critical that we continue to do
    that. And so any rule that puts that in jeopardy hurts us,
    hurts the franchise owner, and hurts the communities in which
    they are serving.
        Mr. FINSTAD. Thank you for that. In your opening comments,
    you also talked, Mr. Wright, about having locations, many
    locations across several states. I believe you have two
    locations in the state of Minnesota. So my question is, in your
    experience in multistate franchise model, what has been some
    challenges and do some states work better than others in
    regards to this model, your model?
        Mr. WRIGHT. Certainly the biggest challenge we have within
    the states is the local health rules and regulations because in
    a lot of times they don't understand what a commercial swimming
    pool is. And so they put rules and regulations that are more
    like a hotel swimming pool. And that absolutely causes us to
    have lots of conversations and issues in making adjustments to
    both the physical pool itself and the entry and exit into the
    pool.
        Mr. FINSTAD. Thank you for that. All right.
        Now going to Mrs. Beaudoin. I would like to say that this
    body was in part built by Buffalo Wild Wings, but I don't want
    to hurt your brand so I won't say that. But I appreciate all of
    the risks that you have taken and, you know, the story that you
    talked about in regards to your family and I think that is
    great.
        So you mentioned that your hope is that your newly engaged
    daughter, newly graduated daughter, was going to come into the
    family business. I am a small business owner myself. I have
    seven children, so it is something that is on my mind quite a
    bit. What are the biggest challenges that you face or that you
    are facing in regards to bringing that next generation into
    business?
        Ms. BEAUDOIN. So in regards to bringing her in, one of the
    concerns we have is really, and we haven't addressed it yet, is
    with the estate tax and what that is going to mean for her
    taking over our business and even for me taking over when my
    parents--my parents are 50 percent owners in my business and
    what--the business that I already own, what I am going to have
    to pay on the estate tax to just acquire the rest of my
    business. So I would say that is a big concern.
        Another one is just around the administrative burden that I
    have had to acquire lately. And then with Joint Employer, our
    franchisor cannot provide any human resources related--anything
    human resources related. So I have to take an additional
    expense to get outside counsel for handbooks and anything else
    with our team members where we run into issues.
        Mr. FINSTAD. I appreciate that. Thank you again for each
    and every one of you for being here. Thank you for the risks
    that you take day-in, day-out. Thank you for the jobs that you
    provide our neighbors and just the great, really part of the
    fabric of our local communities that you really bring each and
    every day.
        So with that, Mr. Chair, I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Ms. Scholten from the great state of
    Michigan for 5 minutes.
        Ms. SCHOLTEN. Thank you so much, Mr. Chairman. And thank
    you to all of our great witnesses. I am a huge fan of BDubs. My
    constituent services director is a former BDubs server. He says
    nothing prepared him more for this job than doing that. And we
    frequent our local BDubs after my boys Little League games.
        So I am also thrilled, as I said in my intro, to have my
    constituent here, Mr. Cross, just weeks after I visited his
    business. And I appreciate his willingness to come to
    Washington to express concerns that so many franchisors have
    communicated to me. While Mr. Cross and I might not align on
    every single issue, that is okay. That is what these hearings
    are about to hash out some of the most important issues that
    are facing our country when it comes to small businesses.
        I support having beneficial ownership reporting
    requirements within the Corporate Transparency Act because we
    need to ensure that American businesses are protected from bad
    actors who have taken advantage of our nation's business-
    friendly environment to the detriment of our entrepreneurs'
    security and access to fair markets. But I understand that my
    constituent and other witnesses here today may have a different
    perspective. That is not something to be afraid of. That is
    something to discuss and figure out how we can do it better. I
    look forward to hearing what he and many others have to say.
        Fundamentally, I believe that we should work to make these
    reporting requirements easier to navigate so legitimate hard-
    working businesses, like the ones here today, are rewarded for
    playing by the rules.
        With that said, Mr. Cross, thank you for being here today.
    My first question is for you. I had the pleasure of touring
    your business back in West Michigan just a month ago. Can you
    tell me about your experience with the franchising ownership
    model and how it has benefited you, your family, and our
    community?
        Mr. CROSS. I don't think I have enough time to answer that
    question, but I will tell you that I would not be here today
    without the franchise business model. I can look myself in the
    mirror and tell you that I did not have what it takes to start
    a business from scratch, off the ground, the tremendous things
    that go into that process, the uncertainties. So when I met the
    Merrick family, the owners and founders of Fish Window
    Cleaning, and they showed me this simple model that I could
    follow to be a business owner, it has been absolutely life-
    changing for me. I have been able to support my family, my
    beautiful wife Betsy and my talented son Alex. We have been
    blessed with hundreds of employees that have used our job to
    put themselves through school or as a steppingstone position to
    whatever is next in life. I have been able to support the local
    community.
        As you know, Congresswoman, I am very supportive of Hope
    and Calvin in the area. And I also have to stop and pause and
    say thank you so much for what you have done for franchising. I
    appreciate what you have done with the joint employer issue. I
    thank you for your service as franchise Co-Chair. And I do want
    to continue to put that plug in. I look forward to teaching
    your boys how to use those squeegees the moment they turn 18
    years old. There is an application waiting.
        Ms. SCHOLTEN. Thank you. Thank you. Well, and we are so
    grateful for everything you have done for our community.
        In your written testimony, you talk about the CTA reporting
    requirements and you refer to them as being confusing and
    burdensome. And I think that you and I both agree on the
    importance of transparency and security in our financial
    system. According to the FBI, each year an estimated 300
    billion in illicit proceeds make their way through the U.S.
    financial system, including assets linked to terrorism
    financing and human trafficking. No one wants that. I am
    committed to achieving the goals of the CTA in a way that is
    not overly burdensome for small business.
        In your view, can you help us understand what tools or
    clarification should these reporting requirements have to make
    them easier for businesses to navigate?
        Mr. CROSS. Well, unfortunately, because I have 31
    employees, that particular piece of law would not have affected
    my own franchise location. So I am sorry, but I haven't studied
    up on that issue. I would say, in general, with my franchisor
    hat on, what I am concerned about for my franchisees is the
    fact that they are very small business, and Jennifer alluded to
    it, they don't have in-house counsel to help them navigate
    these issues. And they are really just busy trying to find new
    customers and hire employees and clean more windows. And so
    anything that gets in the way of that is very difficult.
        And so, again, you know, we are blessed to be part of the
    International Franchise Association. And while I can't answer
    your question directly, I would be happy to put you in touch
    with them and we can work together on that issue.
        Ms. SCHOLTEN. Thank you. I had so many more questions, but
    I am afraid we are out of time. So, Mr. Chairman, I will yield
    back. Thank you all.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Downing from the great state of Montana
    for 5 minutes.
        Mr. DOWNING. Thank you, Mr. Chairman, and thank you to the
    witnesses.
        You know, the franchise businesses are critically and
    rapidly growing part of the American economy. In my home state
    of Montana, franchise businesses were responsible for almost 15
    percent of job growth between 2023 and 2025. And this is
    despite the fact that our franchises currently employ, you
    know, less than 5 percent of the total job force in our state.
    And Republicans in Congress are fighting to ensure small
    businesses, including franchisees, are unburdened by the
    crippling taxes and regulations. So one of our main priorities
    is to extend the Tax Cuts and Jobs Act, the TCJA, and its small
    business provisions.
        So I am going to start with Mr. Wright. In your testimony,
    you highlight the importance of TCJA Section 199A deduction,
    which allows passthrough business owners to deduct 20 percent
    of business income from their taxes. So can you explain in
    further detail how the Section 199A deduction has specifically
    benefited your business' operations?
        Mr. WRIGHT. Absolutely. Anything within the--in our
    franchise process or any franchise process, the more capital
    that can be introduced, interjected into the business is going
    to fuel growth. It is going to fuel growth for building new
    locations, it is going to fuel growth for expansion, it is
    going to fuel growth for higher wages and benefits. And so that
    tax deduction puts more capital into the hands of the franchise
    owners.
        Mr. DOWNING. Well, thank you. And if this were to expire,
    if this 199A deduction were to expire, how would that affect
    employees at AquaTots Swim School and--or the franchisees? How
    would they be impacted?
        Mr. WRIGHT. Yeah. So this isn't theoretical. Our franchise
    owners have been talking about that and they are actually
    putting on pause, potentially, some of new leases they are
    looking at opening because they are concerned about the impact
    that that is going to have on their ability to invest in new
    schools.
        Mr. DOWNING. Thank you. You know, Ms. Beaudoin had
    mentioned something about the estate taxes. Can you tell me how
    the TCJA's estate tax provisions have impacted your
    franchising?
        Mr. WRIGHT. Oh, it is the same thing. So the--I think you
    said it perfectly there. We are a younger franchise
    organization that right now is looking at passing it on to the
    next generation. Those estate taxes would have a--they would
    probably have to sell their locations rather than passing them
    on to their family, and that is a really, really sad thing.
        Mr. DOWNING. Yeah, it is. Thank you. In my home district,
    many Montana business owners, particularly in rural
    communities, struggle to access capital to fund their business
    ventures. And as I am sure everybody on this panel understands,
    I mean, one of the biggest limiting factors in building or
    growing a business is access to capital.
        So recently, I introduced the Expanding Access to Capital
    for Rural Job Creators Act, and this is to help address these
    issues. This legislation requires the Securities and Exchange
    Commission's Office of the Advocate for Small Business Capital
    Formation to report on capital access issues faced by rural and
    small businesses. You know, the franchise model offers a
    potential solution for some of these capital access challenges.
        I am going to move on to Ms. Beaudoin. Can you expand on
    how the franchise system provides unique opportunities for
    aspiring business owners to achieve their dream of business
    ownership?
        Ms. BEAUDOIN. Yeah. So being part of a bigger brand is why
    banks talk to us. Otherwise, it really wouldn't be a
    conversation, especially in the restaurant environment right
    now. Restaurants' margins are so tight that banks are very,
    very hesitant to lend. But because we are part of a bigger
    brand and have an even bigger parent brand of Inspire brands
    behind us, they will enter into the conversation.
        We do sometimes, because we are such a small franchise, my
    father personally guarantees a lot of our loans, so there is a
    weight on me that I have my parents personally guaranteeing
    loans as well as trying to support my children. So it is a
    heavy burden. But again, because we are a Buffalo Wild Wings
    franchisee, we have access to many banks that will lend to us.
        Mr. DOWNING. Yeah. Thank you. I have to admit, I had a
    bonding moment with my daughter when she was in college and
    wanted to go to dinner to BDubs. I am going what is BDubs? Is
    that by that Buffalo Wild Wings over there?
        Ms. BEAUDOIN. That is the Buffalo Wild Wings.
        Mr. DOWNING. So what advantages in those last few seconds
    here do you think the franchise model can bring for aspiring
    business owners coming from rural backgrounds who are, you
    know, often isolated from, you know, these sources of capital?
        Ms. BEAUDOIN. Yeah, I mean, I think that it gives them an
    opportunity of a proven brand and a proven business model that
    they don't have to invent from scratch. They can work on--focus
    on operating their businesses while the franchisor is
    developing, for example, in the restaurant business, developing
    the menu and the sauces and that type of thing, and they can
    really just focus on building their culture and their business.
        Mr. DOWNING. Excellent. Well, thank you. And on that, Mr.
    Chair, I yield my time.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mrs. McIver from the great state of New
    Jersey for 5 minutes.
        Mrs. MCIVER. Thank you, Mr. Chairman and Ranking Member,
    for convening this hearing. And thank you to our witnesses for
    being here today.
        The franchise business model plays a critical role in
    providing an avenue for entrepreneurs to become their own
    bosses and create jobs in their communities. This model is
    sometimes overlooked, but it is essential that federal policies
    create an environment where these types of small businesses can
    thrive. But, as we all know, the Trump administration is
    continuing on its path to make every part of the federal
    government less transparent, more corrupt, and totally
    ineffective. Continuing the work he started during his first
    administration, Trump is ignoring the laws Congress passed,
    like the Corporate Transparency Act and the Anti-Money
    Laundering Act, that are meant to prevent corruption and
    criminal activity in our economy. We must ensure our small
    businesses are not used as pawns in global money laundering
    schemes or as a cover for criminal enterprises. They deserve a
    level of playing field, not one rigged by Trump and corruption.
        With that being said, Mr. Kalman--am I saying that right? I
    want to make sure I am pronouncing it right. Mr. Kalman, under
    the Corporate Transparency Act, reporting companies must
    provide the beneficial owner's full legal name, date of birth,
    current address, and unique identifying number from an
    identification card. What is excessively burdensome about these
    reporting requirements?
        Mr. KALMAN. We don't think they are. In fact, most business
    owners that we--when we went to look at state registrations,
    most business owners actually provide this information to their
    state. It is--most of the information is out there, so we don't
    actually think it is--it has not proven to be a burden. I will
    also say this, that FinCEN had estimated that it would cost $85
    for an initial registration. And then after that, if your
    information doesn't change, never for the history--for the rest
    of the eternity of your business, would you have to think about
    the CTA ever again.
        Mrs. MCIVER. Can you give us an example of when a
    legitimate business would be incapable of providing this
    information?
        Mr. KALMAN. You know, this was actually raised during the
    debate and the passage of the law as a potential possibility.
    And in 10 years of debate, no one ever put forward an example
    of a company that couldn't provide this information.
        Mrs. MCIVER. Okay. Under the statute, companies are
    required to report updates to the information--to the
    information on file within 30 days of changes. Some claim that
    this will subject reporting companies to harsh penalties if
    they forget to update their information. Is this true?
        Mr. KALMAN. No.
        Mrs. MCIVER. Okay, thank you. With that, I yield back.
        Chairman WILLIAMS. Gentlelady yields back. I now recognize
    Mr. Meuser from the great state of Pennsylvania for 5 minutes.
        Mr. MEUSER. Thanks, Chairman. Thank you all very much. It
    is a nice conversation and appreciate your--your information.
    So the Ways and Means Committee yesterday marked up their
    portion of the one big, beautiful bill. We are delivering
    critical tax relief to franchise businesses, small businesses.
    The bill has many provisions in it, such as 100 percent bonus
    depreciation, Section 199A for a small business deduction, R&D
    tax credits, et cetera. Are these provisions helpful? Critical?
    On a scale of 1 to 10, how important are they to your growth
    and sustainability, Mr. Cross?
        Mr. CROSS. Very important, Congressman. Thank you for the
    question. Yes, any--any additional funds that we can have to
    reinvest back into our businesses, in my case, we look at
    vehicles and additional labor to go out and do more work, are
    always much appreciated.
        Mr. MEUSER. Do others agree, Mr. Wright?
        Mr. WRIGHT. Oh, 100 percent. Yes, exactly. Being able to
    take that and invest back in the business is critical to the
    growth of small business.
        Ms. BEAUDOIN. A scale of 1 to 10, I would give it about a
    25.
        Mr. MEUSER. Very good. Thank you. That is what we thought.
    I wish everybody thought that way, but we were working on it
    because the real world is where it matters, not in the, the
    theoretical bubble that tends to exist in certain--certain
    places here in Washington. Small businesses franchise, you
    know, I get it. I was in small business and lucky enough to
    grow it into a larger business over time. I recall with the
    PPP, for a temporary period, franchises were not included in
    availability for PPP because you were considered a larger
    corporation. We fixed that pretty fast. Is there anything else
    that franchises do not gain versus small businesses that you
    would like to see corrected, Mr. Wright?
        Mr. WRIGHT. I can't think of anything off hand.
        Mr. MEUSER. Okay, all right. Because we differentiate quite
    deliberately. But as the Chairman was saying, you are small
    businesses, and we, you know, many of us understand that. I am
    just making sure that there is nothing that you are not
    receiving because you are a franchise. And I was curious to
    hear about the personal guarantees, Ms. Beaudoin. I would think
    that being a franchise, that wouldn't be as--as----
        Ms. BEAUDOIN. Yeah. Well, again, because we are our own
    business, we are not Buffalo Wild Wings corporate. They just
    want to make sure that we have the capital to back our loans.
        Mr. MEUSER. Sure. And I signed many in my day as well, so I
    understand. The tax provisions, 199A, obviously affect your
    long-term planning and your investment strategies for your
    businesses? Okay. So, very important.
        You know, onto this beneficial ownership rule. Listen, when
    it was, well, you know, when it was passed, there were four
    questions that, on a regulatory basis, the Biden Department of
    Treasury turned it into 52 questions. All right? And by the
    time January 1st, 2025, came around, when it was--when it was
    supposed to go into effect, there was something like 25 percent
    of small businesses actually submitted. And yet, and meanwhile,
    domestic companies were now excluded, which was, I certainly
    think, the right thing to do because of the level of fines and
    other penalties that were being expressed, but foreign
    companies must still abide by it. Why would you think that that
    would be something that should have been implemented or express
    to me why you are very happy it wasn't? I will start with you,
    Mr. Cross, and we will go down if you can answer in a short
    period of time.
        Mr. CROSS. Again, Congressman, thank you for the question.
    I think it is just the uncertainty of how to comply and the
    fear of the fines. And again, I mentioned it in my previous
    response. We don't maintain on-site legal counsel to help us
    navigate these issues.
        Mr. MEUSER. Right
        Mr. CROSS. And with my franchisor hat on, because of the
    limitations of the joint employer, I as a franchisor am limited
    with the support that I can provide our franchisees to help
    coach and guide them through it.
        Mr. MEUSER. Thank you. Mr. Wright?
        Mr. WRIGHT. I think that was said very well. There is not a
    single franchise owner that we have has any legal counsel at
    all. And they will absolutely have to have some help in getting
    that documented completed.
        Mr. MEUSER. Ms. Beaudoin?
        Ms. BEAUDOIN. Yeah. And we are thankful to have the
    franchise association that kept us abreast of this issue. That
    being said, though, it is just another administrative burden
    that small business--if I were not part of a franchise, I pray
    for the small business owners daily of what they are missing,
    and it is the fear of what am I going to miss and what am I
    going to be--have an exorbitant penalty for. And I am not sure
    the penalties around this, but there are just so many
    administrative things that franchisees or small business owners
    can miss.
        Mr. MEUSER. Thank you for your honest real-world
    information so we can base policy and support for small
    business based upon it. Thank you very much.
        Chairman WILLIAMS. Gentleman yields back. I now recognize
    Mr. Cisneros from the great state of California for 5 minutes.
        Mr. CISNEROS. Thank you, Mr. Chairman. And as a former
    franchisee, I appreciate the witnesses being here today to
    share their views with us, but I--I need to take a few moments
    to make a note that we have been asking for months to have the
    SBA administrator come speak before the committee about the
    policies and changes at the SBA that affect our small
    businesses. My colleagues and I have sent multiple letters to
    the SBA that have gone unanswered. Legislation about the SBA
    has been pushed through this committee with no input or insight
    from the SBA on how it will be implemented. It is important
    that the SBA administrator come in person to answer questions
    like, you know, what was the extent of the DOGE access to SBA
    headquarters and systems, and what was done by the SBA to
    ensure the systems were not abused or accessed by individuals
    without clearance? What specific offices or departments within
    the SBA are affected by the reduction in the workforce and
    where are the gaps? Where is the SBA relocating the six
    regional offices and will any others be closed in the future?
    What is the SBA's plan to handle $1.7 trillion in student loan
    portfolios while cutting 43 percent of their staff and also
    having staff not trained to work with such a complex student--
    complex student loan system?
        So, that being said, I want to thank the Chairman and the
    committee staff for finally making it happen and getting the
    administrator on our calendar for the first week of June. If it
    took this long for the--for Members of Congress to get ahold of
    the SBA, I am very concerned about how long, you know, any help
    from the SBA is taking to get to our small businesses. So I
    sincerely hope the administrator comes with actual answers as I
    look forward to working with the SBA to help small businesses
    in my district and throughout our great nation.
        So, that being said, Mr. Kalman, many opponents of the
    beneficial ownership information reporting requirements claim
    the penalties for small business owners who do not comply with
    the BOI reporting requirements are overly punitive, with prison
    sentences up to two years and fines up to $10,000. Yet the
    statute only provides penalties for willful failure of
    deception and reporting. Why is this inclusion of the word
    willful so important and how does it impact small business
    owners?
        Mr. KALMAN. Thank you for the question. I think in the
    lead-up to the passage of the bill, there was a lot of
    discussion. Nobody wanted a negligence standard. No one wanted
    a reckless standard. For those that are not familiar with these
    terms, all the sort of `` I forgot, `` `` I didn't know the law
    existed, `` and ``I didn't realize that that was what I was
    supposed to report, `` those are not punishable under the
    system. It is a willful standard. The original standard was
    knowing, and they changed it to a willful, which is even a
    higher bar. So we felt confident that we are only going after
    people who know about the law and knowingly, willfully, you
    know, whatever the term, choose to violate the law. And we
    think that that is a safer standard and therefore the
    punishments are appropriate.
        Mr. CISNEROS. So if a small business owner accidentally
    makes a mistake on their submission, what are the consequences?
        Mr. KALMAN. Nothing.
        Mr. CISNEROS. All right, thank you for that. As I stated,
    the SBA administrator is going to be here the first week of
    June. I would love to hear from our franchisees if there is
    anything specific that you would like us to address with the
    SBA administrator that could go and help your businesses.
        Mr. WRIGHT. I would like to thank the SBA for once again
    opening up the SBA directory for both banks and lenders and
    potential franchisees to be able to see that information.
        Mr. CISNEROS. Anyone else?
        Mr. CROSS. Anything that could be done to streamline the
    process for our prospective franchisees. Franchisees that are
    using SBA funds, it typically takes--it is an onerous process
    to get them through it.
        Ms. BEAUDOIN. I tried to apply for an SBA loan with my
    steakhouse, and it was such an onerous process that I backed
    off, and I found other investors to come in and help me get it
    started.
        Mr. CISNEROS. All right, well, thank you for your
    testimony. I will make sure that we address those issues when
    she is here. And I yield back.
        Chairman WILLIAMS. Gentleman yields back. I now recognize
    Mr. Jack from the great state of Georgia for 5 minutes.
        Mr. JACK. Thank you, Mr. Chairman, and thank you for
    convening this hearing. And I will start with Ms. Beaudoin. Is
    that the right pronunciation?
        Ms. BEAUDOIN. It is Beaudoin, but anything works.
        Mr. JACK. Beaudoin. Yeah, I say that because I know a lot
    of our colleagues on both sides of the aisle have already tried
    to affirm their loyalty to the franchise that is Buffalo Wild
    Wings. But I suspect I am the only Member of this committee
    that has eaten at perhaps one of your restaurants within the
    last week. So very excited that you are here. And I, you know,
    I think what is important--important about this hearing, in all
    seriousness, is that, you know, for so many of our colleagues,
    it is instructive to know that, you know, franchisees are small
    businesses. You think of these massive corporations with these
    huge brands, trillions of dollars in brand value, but
    ultimately, they are small businesses. And I am just curious,
    you know, states such as Oregon and Illinois have instituted
    minimum wage laws that treat franchisees as if they were part
    of their franchisor. This includes attributing the franchisor's
    total employee count to the local franchisee. What say you to
    that and is this treatment of franchisees fair?
        Ms. BEAUDOIN. It has been tough on my colleagues in those
    states for sure, to where they are looking at different ways to
    handle their service models. They are working on ways to cut
    team members. They are looking at automation. They are looking
    at using computers to, or for servers, to have tablets to cut
    servers on the floor. So, yes, I know it has been extremely
    burdensome on those franchisees in those states.
        Mr. JACK. Mr. Wright, I will give you a chance to comment.
        Mr. WRIGHT. Yeah, I agree. Anything that we are doing to
    hinder the growth of the franchise owners is--it is--it is just
    not common sense. The process, in my opinion, and the
    regulation is just not common sense.
        Mr. JACK. Sure. And to help me understand scale as it
    relates to just how many. I think you noted, ma'am, that you
    have got five restaurants, and given your leadership across
    Buffalo Wild Wings writ large, what is the average size of a
    small business that operates a few restaurants? Is it three,
    four, five? What do you see the average being for the
    franchisee?
        Ms. BEAUDOIN. Across Buffalo Wild Wings, I believe the
    average is around 14. I don't know for sure.
        Mr. JACK. That is great. And Mr. Wright, curious about
    Aqua-Tots?
        Mr. WRIGHT. Yeah, the average franchise owner is three
    schools.
        Mr. JACK. Three schools.
        Mr. WRIGHT. Mm-hmm.
        Mr. JACK. And Mr. Cross?
        Mr. CROSS. Mostly single unit operators with six to eight
    employees.
        Mr. JACK. Got it. Okay, very helpful. One of the things we
    are talking about today is that many Members of our leadership
    are meeting with folks right now to talk about the extension of
    the Tax Cuts and Jobs Act. You have seen it over and over and
    over across this hearing, but also across the communications
    that come out of our conference as to how important that is to
    revitalize our communities, to generate and incentivize
    investment. And I would just love to start with you, Mr. Cross,
    and work our way down. What is the impact of us passing the
    extension of these tax cuts going to do to small business?
        Mr. CROSS. For me personally, I am going to get to reinvest
    more in my operation with additional management staff, with
    additional sales staff, with vehicles to go out and perform the
    service.
        Mr. JACK. Wonderful, thank you. Mr.----
        Mr. WRIGHT. Yes, we will be able to reinvest back in our--
    in our team members as well to provide greater support for our
    swim schools.
        Mr. JACK. Wonderful.
        Ms. BEAUDOIN. And we are looking at opening two additional
    locations, so this will help us invest in that.
        Mr. JACK. Perfect. The only other question I have is when
    we talk about regulations, one of the things that I am really
    proud of having accomplished this Congress is ensuring the
    passage of a bill that repealed a regulation that drastically
    impacted a factory in my district. And we see the regulatory
    burden being incredibly complex, especially because as an
    administration is leaving in this case, as the Biden
    administration was leaving, a lot of regulations are foisted
    upon businesses across the country right before that
    administration ends. I am just curious if you could all three
    of you speak just very briefly to how we can best serve you as
    it relates to in ensuring there is a regulatory environment
    that enables you to thrive. We will start with you, Mr. Cross.
        Mr. CROSS. 54 seconds isn't enough. It is the Save Local
    Business Act and making sure this joint employer legislation
    goes away. It is detrimental to franchising and it threatens to
    take away the retirements of thousands of small business owners
    across the country.
        Mr. JACK. Thank you. Sir?
        Mr. WRIGHT. I would say the Joint Employer Act as well.
    Holding a franchisor responsible for franchisee employment
    practices is just not good process at all.
        Mr. JACK. Absolutely, thank you. Ma'am?
        Ms. BEAUDOIN. And I would agree it is the joint employer
    standard that needs to be loosened up.
        Mr. JACK. Wonderful. Well, Mr. Chairman, I applaud you for
    convening this hearing, and, as so many of our colleagues on
    both sides of the aisle have noted, there is a point of pride
    in a lot of communities when some of these brands move in and
    have an opportunity to serve the constituents we represent. So
    grateful for everyone's testimony today, and likewise your
    service to your communities. And with that, Mr. Chairman, I
    yield back.
        Chairman WILLIAMS. Gentleman yields back. Now, I recognize
    Mr. Tran from the great state of California for 5 minutes.
        Mr. TRAN. Thank you, Mr. Chairman, Ranking Member for the
    panel today and the hearing today. Panelists, welcome. I
    appreciate you being here. My first question is for Mr. Kalman.
    Recent SBA reporting determined there are more than 34.8
    million small businesses in the U.S., making up 99.9 percent of
    all U.S. businesses. Despite this number, it seems to be a
    common misconception that cyber threat actors who commit
    ransomware attacks only target large companies or that small
    businesses on America's main streets don't have to worry about
    Russia, the Chinese Communist Party, or North Korea targeting
    their small firms, their hardware stores, or their investment
    advisory companies. First, can you explain why smaller
    businesses or firms might attract or are more likely to be
    victims of ransomware attacks?
        Mr. KALMAN. Yeah. In our discussions with a number of small
    business organizations, and I think it is something that my
    colleagues on the panel here have alluded to, is they don't
    actually have in-house counsel. They are not large
    institutions. Large institutions are much more likely to try
    and fight back. They are likely to protect their brands. They
    are likely to have the resources to do that. So while any
    individual attack might be a smaller amount of money, it is
    much more likely that a small business owner might go, I am
    going to pay this amount rather than higher legal costs to try
    and fight it.
        Mr. TRAN. Thank you. And then follow-up to that, can you
    explain how the Trump administration's decision not to enforce
    the Corporate Transparency Act's beneficial ownership
    information reporting requirements makes legitimate small
    businesses more vulnerable to these types of attacks?
        Mr. KALMAN. Well, if one were to try and go to law
    enforcement to try and get help or actually try and pursue some
    remedy, they would hit a brick wall. Without beneficial
    ownership information, these companies open up and shut down
    overnight. They can move across the street, they can move
    across the globe, and there is no way of tracking them.
        Mr. TRAN. And what could Congress do to help small business
    owners who are likely targets of ransomware attacks carried out
    by North Korea or China?
        Mr. KALMAN. I mean, I think there are two things. One is to
    reinstate the law as we have it here in the United States. But
    also the United States has been a leader globally in moving
    anti-corruption legislation. There are now 100 countries around
    the world that have pledged to start beneficial ownership
    directories so that we could begin to track this stuff across
    countries and across continents. I would urge us to get back
    into that and follow up with all those countries.
        Mr. TRAN. And Mr. Kalman, your organization published a
    fact sheet with numerous examples of shell companies from the
    fentanyl drug trade, which is currently killing about 80,000
    Americans per year. Can you explain how small--how shell
    companies are being utilized in the fentanyl drug trade? And
    how would the Corporate Transparency Act help reduce their
    prevalence in this illegal market?
        Mr. KALMAN. So anonymous companies are not just a mistake
    or an occasional use by drug cartels. It is a feature of how
    they operate. And the President, for example, in his latest
    budget, has proposed to increase funding for border and customs
    protection. That is only part of the problem. It is just trying
    to stop drugs that come into the country. There are numerous
    ways in which they are going to get here. But bankrupting the
    drug cartels is actually seen by DEA agents, if you ask them,
    as a more effective way of shutting down these operations. The
    Corporate Transparency Act is going to be critical to do that.
        Mr. TRAN. Thank you for that. Mr. Wright, the government
    guarantee provided by the SBA in the 7A, the 504, and other
    capital access programs enables lenders to offer more
    affordable loans with more advantageous repayment terms than
    they would otherwise have. This helps small businesses--small
    business borrowers overcome many of the economic pressures we
    are discussing here today. And I am always looking for ways to
    improve awareness of the SBA's capital access programs and the
    benefits they provide. How do you think we can help the SBA
    improve awareness of these programs for franchisee owners and
    small business borrowers?
        Mr. WRIGHT. I would say working with the IFA, making sure
    that you are providing that information to the International
    Franchise Association, who does a fantastic job of
    communicating to all of the small businesses and the
    franchisors about this opportunity. We do that. We, as part of
    our process of onboarding a new franchise owner, we provide
    them with a pretty large list of opportunities, usually through
    lenders who are working that process across the country. So it
    has been--SBA has been vital to the growth of our business.
        Mr. TRAN. Thank you so much for that, Mr. Chairman. I yield
    back the rest of my time.
        Chairman WILLIAMS. Gentleman yields back. Now recognize Mr.
    Alford from the great state of Missouri for 5 minutes.
        Mr. ALFORD. Well, thank you very much, Mr. Chairman, and
    thank you, Ranking Member Velazquez. As a previous small
    business owner, I know firsthand one of the most difficult
    parts of starting any business is staying in business is your
    branding and your marketing. And of course, capital franchising
    offers a ready-made pathway towards creating their small
    businesses. The franchise model provides a pathway for
    Americans who want to be their own boss to achieve that dream.
    Here in the Small Business Committee, we are focusing on
    helping all small businesses, franchise and otherwise, succeed
    on main street. I am proud to be on this committee.
        Mr. Wright, in your testimony you mentioned that franchises
    typically represent about 20 percent of SBA loans by $ volume.
    I am currently working on legislation that would seek to raise
    the current maximum loan of SBA backed loans. How could raising
    the limit on 7A and 504 loans benefit entrepreneurs looking to
    start small businesses?
        Mr. WRIGHT. That is a great question.
        Mr. ALFORD. That is why I asked.
        Mr. WRIGHT. Literally this past week I was talking to a
    franchise owner who is up against that $5 million cap because
    of multiple schools that they have owned. And they are looking
    to grow, and they are looking at options other than the SBA to
    do that. So it would absolutely be beneficial to our owners who
    are opening multiple locations.
        Mr. ALFORD. We got to get that done. Missouri represents
    about 16,000 franchise establishments contributing to about
    170,000 jobs in the Show Me State. And we are proud in our
    district to have Fish Window Cleaning headquartered there. Mr.
    Cross, are there any policy changes at the federal level that
    you believe would significantly benefit small franchise owners
    like yourself?
        Mr. CROSS. Yes, Congressman, thank you for the question. I
    appreciate the red tie, that is our branding.
        Mr. ALFORD. That is why I wore it.
        Mr. CROSS. I appreciate it. It goes back to the joint
    employer. Again, it is the single biggest issue that is
    affecting us as franchisors to being able to support our
    franchisees and their pursuits of small business ownership.
        Mr. ALFORD. Ms. Beaudoin, is that how you pronounce it? Did
    I get it right? Oh my goodness.
        Ms. BEAUDOIN. That is perfect. That is the French version.
        Mr. ALFORD. Brian Jack told me how to pronounce it. He
    looked it up.
        So thank you. Thank you for being here. How many wild wings
    do you own, Buffalo Wild Wings?
        Ms. BEAUDOIN. I have four.
        Mr. ALFORD. Four?
        Ms. BEAUDOIN. Yes.
        Mr. ALFORD. How did you get into that business?
        Ms. BEAUDOIN. So I started in college. My father--I went to
    West Virginia University, and my father was looking at getting
    into a different type of restaurant. He had started a
    restaurant when I was three, and we grew up in it. And I told
    him there was a place he should check out, and he called the
    number on the back of the menu.
        Mr. ALFORD. All right. I looked this up on Guac or Grok.
    You know, on X, Grok. The hottest sauce at Buffalo Wild Wings
    is the Blazin' Knockout.
        Ms. BEAUDOIN. Yeah.
        Mr. ALFORD. It is made with nine of the spiciest peppers,
    including Devil's Breath, Carolina Reaper, Scorpion, Ghost,
    Habanero, red and green peppers, jalapenos, Chile de Arbol, and
    cayenne. This sauce is so intense, it comes with a warning for
    potential skin and eye irritation and is served with ice cream
    to cool the heat. It is designed for extreme spice lovers and
    is significantly hotter than other sauces like wild or hot. My
    question to you, Ms. Beaudoin, have you had this hot sauce?
        Ms. BEAUDOIN. I have. I have. Actually, I tested four
    blazin' sauces, four versions of a blazin' sauce, at one FAC
    meeting. I would like to tell you I was the only member that
    tried all four. And yes, and I frequently have participated in
    the Blazin' Challenge with my team members.
        Mr. ALFORD. How long does it take to get your taste buds
    back after they are burnt off your tongue?
        Ms. BEAUDOIN. It is a few days, yeah. It is--it is--yeah.
        Mr. ALFORD. I have got about a minute and a half left. Just
    for the folks who may be tuning in or maybe watching this on
    one of our social media channels later, kind of describe how
    the franchise model works. A lot of people don't realize, I
    think, that it is--it is not a corporate-owned store.
        Ms. BEAUDOIN. Correct. No, we are--we are our own
    businesses. I wear many hats in my business. I coordinate the
    contractors and the architects when we build. I am the last one
    that checks payroll. I oversee our bookkeeper. I am head of HR.
    I am the operations manager. They report up to me. So I wear
    marketing, our local store marketing. I do have somebody that
    handles our local store marketing, but again, she reports up
    to--to me, and I handled that myself for many years. But that
    being said, we also have resources that we can draw on from the
    corporate office so that I don't have to reinvent the wheel.
    Thankfully, I don't have to do the menu development piece. I do
    set my own pricing. We have been very conservative in our
    pricing, which has led to increased sales the last few years,
    but we definitely run our own businesses well.
        Mr. ALFORD. To all the witnesses here today, thank you for
    coming here, as I like to say, on your own time and on your own
    dime. Your time is an investment in the future of what we do
    here, making main street great again under the leadership of
    Chairman Williams. So thank you so much.
        Ms. BEAUDOIN. Thank you.
        Mr. ALFORD. And with that, Chairman, I yield back.
        Chairman WILLIAMS. Gentleman yields back. I now recognize
    Dr. Conaway from New--from the great state of New Jersey for 5
    minutes.
        Mr. CONAWAY. Thank you, Mr. Chairman, and thank you,
    witnesses, for presenting yourself today to offer information
    on this important issue. Enacted in 2020, the Corporate
    Transparency Act increases transparency in business ownership
    in order to combat certain financial crimes like tax evasion,
    money laundering, terrorist financing, the trafficking in labor
    and in the sex trade. These are important goals that protects
    our country, protects the interests of small businesses and
    individuals. The administration, however, last month decided
    they would no longer enforce penalties and fines against
    domestic companies and individuals that intentionally--that is
    an important part of it--intentionally and willfully fail to
    complete their financial ownership information. Information
    that involves a name, address, perhaps a driver's license. It
    takes 20 minutes to do, $85 to file, and you never have to do
    it again once done. I view this action as reckless, and I think
    I am joined by many in this, because I understand that the
    American people have an interest in preventing drug lords from
    flourishing and terrorists from gaining a foothold and
    basically attacking freedom, attacking our country. Can you,
    Mr. Kalman, speak to how these actions taken by the
    administration will weaken national security?
        Mr. KALMAN. Thank you for the question. There are numerous
    examples of bad actors in the U.S., adversaries setting up
    companies in the United States to exploit our financial system,
    whether that be Chinese companies setting up in California to
    access and purchase or get their hands on sensitive information
    from our Defense Department. There was actually a Defense
    Department contract at one point in Afghanistan--in which a
    U.S. company was getting funding through the Defense Department
    to provide services to the troops. That company--secretly had
    ties to the Taliban. We were literally giving money to the
    people who were shooting at our troops. These are the kinds of
    horrific stories that we want to make sure we are doing
    everything in our power to counter.
        Mr. CONAWAY. Thank you for that. We have--there have been a
    lot of concerns raised about the burden of complying with this
    law, and there have been--it took 10 years for this law to be
    passed. There were a lot of interest groups and law enforcement
    agencies who were involved in its passage, good government
    people, people concerned about national security. Can you put
    more clothes on the coalition that came together to get this
    law passed?
        Mr. KALMAN. Yeah, I actually put this together because I
    often get asked this question. So if you don't mind, I am just
    going to quickly read that the coalition included police,
    chiefs of police, sheriffs, prosecutors, national security
    experts, anti-human trafficking organization, faith-based
    networks, business trade associations, banks, real estate
    associations, consumer and housing advocates, accountable
    governance organizations, and scholars at both conservative-and
    liberal-leaning think tanks. It was a wide coalition.
        Mr. CONAWAY. Broad coalition, and that, I think, is a
    testimony to how--to the strength of the desire to get this
    bill passed and to bring security to the American people and to
    protect small businesses from attack by these foreign
    corporations. And indeed, in this climate of increased tariffs,
    broad-based tariffs, people who can go unidentified will make
    domestic shell companies here in order to get around the
    tariffs and confound the administration's desire to collect
    these tariffs and then pass it along to the wealthiest in our
    country.
        I met with small businesses in my district a couple of
    weeks ago to talk about tariffs and the impact on small
    businesses. This sort of whirlybird, back and forth and
    uncertainty. I heard repeatedly from car dealers and people
    involved in selling all sorts of items, insurance brokers, and
    the like about how these are raising costs. Many small
    businesses buy--make their products from items purchased
    overseas and also sell overseas. So they get hit coming and
    going, and of course the consumer pays for all of these. Can
    you comment on how this--this--the CTA, helps with the terror
    problem that--that so many of us are facing?
        Chairman WILLIAMS. Time is up.
        Mr. CONAWAY. I don't know if you can answer that now?
        Chairman WILLIAMS. Time is up. I now recognize Mr. Patronis
    from Florida, from the great state of Florida, for 5 minutes.
        Mr. PATRONIS. Thank you, Mr. Chairman. I got to admit, I
    was really excited when you had a restaurateur come up. My
    family, my great granddaddy was in the restaurant business. My
    granddad, my dad, and now my family. And you know, just to be
    able to pick your brain and maybe empathize a little bit. Is
    it--oh, I am sorry. First timer, rookie problem. Horrible. No
    excuse. Does my clock start over? Nobody heard what I was
    saying. Thank you, sir. But as I like to tell people, the
    restaurant business is intoxicating, but it is also the most
    competitive business that exists. People could go anywhere for
    their birthday, their anniversary, maybe in your case to watch
    a playoff game, and what you have to do to ensure your product
    is always on the mark in order to get that consistent return
    customer. And I struggle sometimes, and I think about the days
    of pre-COVID and how it seems like life was so much better back
    then and then how the workforce has changed so dramatically
    since then. And then I want to get you to elaborate on
    specifically, because of the competitive nature of your
    industry and what you have dealt with in your family's
    evolution, how much help did you get from the government when
    you decided to open up your first restaurant?
        Ms. BEAUDOIN. Our first restaurant, none.
        Mr. PATRONIS. Yeah. You know, and I mean, you took that
    risk.
        Ms. BEAUDOIN. My father did. My father, he financed it. I
    mean, after 30 years of working in the restaurant business, he
    saved every penny he had. We rarely went on vacation. Well, we
    went on one vacation a year to the beach.
        Mr. PATRONIS. Sure.
        Ms. BEAUDOIN. And the restaurant closed that week. But
    yeah, so he funded our first restaurant.
        Mr. PATRONIS. Yeah, I relate. Our restaurant would close in
    the month of December and that is when dad would take us on our
    trip.
        Ms. BEAUDOIN. Yep.
        Mr. PATRONIS. And all of the hundreds of jobs that you have
    created, the families that you have put to work, any assistance
    from the government in any way, shape, or form?
        Ms. BEAUDOIN. I mean, through Covid with PPP----
        Mr. PATRONIS. PPP.
        Ms. BEAUDOIN.--and RRF, yes. Otherwise, no.
        Mr. PATRONIS. Yeah. What are some of the--if you had a
    magic wand and say, you know what, if I could change this one
    element, and I don't care if it is state, local, or government,
    what would make your life easier when it comes to growing your
    business?
        Ms. BEAUDOIN. I think it is two things, actually. I think
    it is access to capital without having to personally guarantee
    it. That is a burden that my father takes on, and I am grateful
    for. But also, I think it is the amount of administrative
    duties and the constant--I feel like I constantly wear a cloud
    over my head of what am I missing or what am I forgetting, and
    what are the penalties going to be if I check the wrong box on
    a form, honestly, when it comes to government regulation.
        Mr. PATRONIS. And do you ever look around at other
    businesses and get envious of assistance they may receive in
    comparison to what you are eligible for?
        Ms. BEAUDOIN. I think I focus on my restaurants and just on
    my--on my road, yeah.
        Mr. PATRONIS. The restaurant business, I tell people, and I
    would tell mom all the time, look, if you don't take care of
    the customer, somebody else will.
        Ms. BEAUDOIN. Correct.
        Mr. PATRONIS. But when you get into government, it is hard
    to have that type of attitude. So I have always been in front
    of my coworkers and my employees, and anywhere I have been in
    government, my attitude has always been, if you don't take care
    of the customer, I am going to find somebody else that will.
    And it is a culture that doesn't happen overnight. But you
    know, you build out a team, and as all these Members up here,
    they--they have, you know, the teams they lead are trying to be
    responsive to our constituents by telling you still have to
    be--hold us accountable, you know, and what else can we do? And
    I mean, just hearing your concerns about access to capital, to
    be able to grow the business, to be able to make that risk, you
    have got a proven track record. It is obvious, you know, what
    you are doing. Otherwise, you wouldn't continue to expand the
    way you have. What about supply chains?
        Ms. BEAUDOIN. Supply chains have got, again, if I did not
    have a franchisor, I don't know what we would have done through
    COVID. There was a point where we had no wings. That has gotten
    drastically better. But as a small business owner, if it
    weren't for the franchisor, we would not have been able to
    survive.
        Mr. PATRONIS. Well, congratulations on getting your
    daughter into the business.
        Ms. BEAUDOIN. Thank you.
        Mr. PATRONIS. So my dad had four boys. My three brothers
    are still there. I am the baby of the four. And up until 2017,
    my brothers still do--they clock in and clock out every day. If
    you want a paycheck, you are taking care of the customers.
        Ms. BEAUDOIN. Yeah.
        Mr. PATRONIS. So, anyway, it is just a real treat to have
    you come up and give some reality to this group.
        Ms. BEAUDOIN. I appreciate you guys having us. Thank you.
        Mr. PATRONIS. I yield back.
        Chairman WILLIAMS. Gentleman yields back. I now recognize
    Ms. Simon from the great state of California for 5 minutes.
        Ms. SIMON. Thank you all so much, and this has been a great
    panel. To the gentlewoman who came in thinking about you. My
    daughter got married a year and a half ago, and you will be
    employing a lot of small businesses to make that wedding go. I
    am telling you, from the flowers to the bar to the tablecloths,
    you all are providing such an incredible service in the
    community. I ran a youth program some years ago for a long time
    for young women, really young women who are struggling. So many
    of their first jobs out of foster care, out of the juvenile
    justice system, were in local small business franchises. So
    thank you so much for lifting up, really, what is so important.
        You know, I have a few short comments, and I want to make
    sure that, you know, I associate my comments to the comments of
    Ranking Member Velazquez. You know, although I was not in
    Congress when the Corporate Transparency Act was passed, I
    understand and agree with Mr. Kalman and your remarks earlier
    this hearing. Mr. Kalman, I was extremely concerned listening
    to your testimony about the potential consequences of rolling
    back the law. And I am committed to working with this committee
    and, again, our partners on the ground and communities to
    making sure that we get it right.
        Now, while my Republican colleagues are using this hearing
    to justify really what is happening here in the House this week
    and the tax cuts and gutting the Corporate Transparency Act,
    you know, I want to highlight how this administration's actions
    are actually impacting small businesses and franchises on the
    ground. Unlike big companies, small businesses and franchises
    can't absorb these costs. Restructuring supply chains in a
    lobby for exclusions. You know, when shipments are delayed or
    prices soar like they are right now in many communities, small
    businesses are the first to feel the brunt and the pain because
    their margins are much smaller. In my district at the Port of
    Oakland, we saw shippers rush cargo through in April before the
    tariffs took effect. And these port sellers, they are now
    experts; they are expecting--these experts are expecting 20
    percent fewer ships to call into the port in June. This is a
    catastrophe. That translates to fewer outbound vessels for
    exports and higher cost for imports. This will certainly hit
    small businesses the hardest, as they won't be able to win the
    bidding war for container space against multinationals.
        Now, I have a question for one of our witnesses, but I do
    want to say, in meeting with so many franchise owners and--and
    so many small business owners in my district, we know that
    approximately in this country, 30 percent of the employees that
    are employed by franchises, food service workers, et cetera,
    they are able to access Medicaid. Many of them are half-time
    workers. Many of them, again, are paid a low wage. And their
    health and their family's health are contingent upon them
    being--having this resource. And I am so afraid for our small
    business community across the country that in just weeks to
    come, the viability of their workforce will be harmed. So I am
    hoping that this committee and others that we band together to
    support small business owners, franchise owners, and the good
    people that are working for them.
        I do have a quick question. And actually our Ranking
    Member, she lifted up and talked about an article before I go
    further, the Chinese exporters, the Financial Times article. I
    would encourage us all to read that article so that we know
    what is at stake. And in my short question, Mr. Kalman, would
    you quickly explain how U.S. law enforcement would identify
    shell companies, we talked about these before, in the wake of
    the Trump administration's decision not to enforce the
    Corporate Transparency Act's beneficial ownership registration
    requirement?
        Mr. KALMAN. It will make it very difficult. I mean, we have
    the experience prior to the Corporate Transparency Act being
    passed of law enforcement running into a brick wall. It is the
    reason that they all rallied around this bill for 10 years and
    worked with us to get it passed. So I think we will return to a
    time where it is very difficult.
        Ms. SIMON. Thank you very much, and I will yield back.
    Before I go, would anyone like my time? I have 32 seconds. All
    right, there you go. Thank you, Mr. Chairman.
        Chairman WILLIAMS. Did you give--go ahead. Okay. Gentlelady
    yields back. Gentlelady yields back. And I recognize Mr. Wied
    from Wisconsin, the great state of Wisconsin, for 5 minutes.
        Mr. WIED. Thank you, Mr. Chairman, and of course, the
    witnesses who came here today to share their experiences with
    us. As a former franchise owner myself, I know the firsthand
    the benefits of this model for both the franchisee and the
    community that they live in and work in. Whether it is fast
    food like McDonald's, gyms like Planet Fitness, or even hotels
    like Motel 6, the opportunity to become a franchise owner
    exists across many industries. For first-time entrepreneurs,
    becoming a franchisee allows access to a recognizable brand,
    the framework to begin their business, and potentially other
    resources from the franchisor. This allows first-time business
    owners to develop the skills to run their business while
    receiving support from their franchisor. This type of increased
    support makes the American dream more possible for thousands of
    Americans across this great country.
        The most important point I make is that franchises are
    small businesses, and they should be treated as such. However,
    Biden era policies such as beneficial ownership information
    requirements and the joint employer rule, as well as other
    state laws that misinterpret the relationship between
    franchisees and their franchisors, actively hurt these small
    businesses. My Republican colleagues and I are committed to
    advocating for franchise owners and their businesses just like
    any other small business.
        Mr. Cross, Fish Window Cleaning. I love good, clean
    windows. Definitely love that on my businesses and at home. But
    as you know, maintaining and replacing equipment can be very
    costly for a small business. How would the reinstatement of 100
    percent bonus depreciation under the Section 168, the K, allow
    you to reinvest in your small business?
        Mr. CROSS. Yeah, great question and thank you. And yes,
    everybody loves clean windows.
        Mr. WIED. Oh yeah.
        Mr. CROSS. It keeps us in business. Congressman, for me
    particularly, again, it goes back to vans. Additional equipment
    are the primary ways that additional--the depreciation expense
    would help me there.
        Mr. WIED. Great.
        Mr. CROSS. Purchasing more vans.
        Mr. WIED. Yeah, absolutely. So, Mr. Bode--Mrs. Beaudoin,
    well, Buffalo Wild Wings, which is obviously amazing. My kids
    love it as well. We have it often. There are many examples of
    laws across our country that treat franchisees as part of their
    franchisor. How do these laws negatively impact the owner of a
    franchise like you?
        Ms. BEAUDOIN. Yeah, as I spoke earlier, it is really under
    our human resources policies. So we have to employ outside
    counsel for our handbooks and to--for our workplace safety
    training, for sexual harassment training. The franchisor can't
    give us any feedback on that. If we have even a brand damaging
    issue that is caused by one of our team members, we really have
    to handle that and kind of navigate it with a really light
    touch from the franchisor.
        Mr. WIED. Also, what impact do higher minimum wage laws for
    franchisees have on, you know, like businesses and especially
    in the rural areas?
        Ms. BEAUDOIN. Yeah, it is interesting. So I am in the
    panhandle of West Virginia. I am on the 81 corridor. So you can
    get to three states in about 45 minutes there. And so I am in
    Virginia, West Virginia, and Maryland. We have a really hard
    time hiring in the panhandle with the lower minimum wage, even
    though our starting wage is higher than the other two states.
    Just because it is--the other two states have a higher minimum
    wage. But at my back of house, the kitchen wage is actually
    lower in those states because there is a perceived--there is a
    perception that they are going to get paid more. But I am
    trying to attract workers in the lower minimum wage state. So
    really, I am paying more in the state with a lower minimum
    wage.
        Mr. WIED. Well, thank you all for all that you do. You are
    the heart--the heart of America. The small businesses and you
    are main street. So appreciate that, and----
        Ms. BEAUDOIN. Thank you.
        Mr. WIED.--thank you all for being here today. I yield
    back.
        Chairman WILLIAMS. Gentleman yields back. I now recognize
    Ms. Goodlander from the great state of New Hampshire for 5
    minutes.
        Ms. GOODLANDER. Thank you, Mr. Chairman, and thank you to
    our witnesses for being here today. You know, I really
    appreciate your--your testimony, especially tracing the roots
    in the history of the franchise model. It is a deeply American
    idea. The word, I learned recently, franchise comes from a
    French word, but it is an American idea at bottom. But the
    French word it comes from basically means to make free. And I
    come from the Live Free or Die State. And our state really does
    have a long history with franchising and the franchise model.
    We call Bill Rosenberg one of our own. And Bill Rosenberg, of
    course, the founder of Dunkin Donuts. I am very upset to learn
    that Dunkin Donuts is going to be leaving the Longworth House
    office building. I learned that this morning. We will try to
    fight that. But he helped to actually bring about the
    International Franchise Association, and he left a long legacy
    in New Hampshire.
        We are also home to the McDonald's brothers. And before I
    came to Congress, I worked at the Department of Justice in our
    antitrust division. And one of the cases I worked on that had a
    real impact on me that I felt deeply about was a case involving
    a woman, Leinani Deslandes, who worked--she started out her
    career as a crew worker in a franchisee-owned McDonald's. She
    was making $7 an hour. She worked really hard. And you know, I
    think one of the powerful things about the franchise model is
    the people who work in franchises have dreams of actually
    becoming small business owners too. And you know, she said
    someone who is making your fries today in 10 years could be
    running six or seven McDonald's. That is what she believed.
    That is at the bottom of what makes this such a powerful model.
        She worked hard throughout her career. She got a pay raise.
    She was making $12 an hour. And, you know, eventually a
    management job opened up in another McDonald's not too far
    away. She was prevented from actually even pursuing that job
    because of a clause in a franchise agreement that is known as a
    no-poach agreement. It basically restricts franchisees from
    hiring workers from other franchises. This is at odds with the
    antitrust laws in our country, which promote competition and
    protect workers as equally as they protect small businesses. I
    wanted to ask about this because, you know, this is a problem
    that we have seen across the American economy and in a number
    of different types of franchises. But I wanted to ask you about
    this, Ms. Beaudoin. To your knowledge, do you have any
    employment contracts or franchise agreements that include no-
    poach provisions?
        Ms. BEAUDOIN. Not to my knowledge.
        Ms. GOODLANDER. But at one point there were such clauses in
    agreements that Buffalo Wild Wings?
        Ms. BEAUDOIN. I can't--I am not sure. I don't know the
    exact provisions if there are.
        Ms. GOODLANDER. Any of our other witnesses, are you aware
    of any--any of those types of clauses?
        Mr. WRIGHT. No, we do not have an anti-poach in our
    agreement.
        Mr. CROSS. And I am not--I am not aware.
        Ms. GOODLANDER. Good. Well, can you help us understand
    why--why those types of clauses might have been put into
    contracts?
        Ms. BEAUDOIN. I didn't develop it, so I really couldn't
    speak to it. And again, if it is in my contract, I am not aware
    of it.
        Ms. GOODLANDER. So your testimony today is you see no need
    for these types of agreements? From your perspective, from the
    perspective of small businesses who are trying to make it work
    and work for your workers, you don't see a need for these types
    of agreements?
        Ms. BEAUDOIN. I think we are in the most competitive
    employment environment that we have ever been in, and so I can
    understand team members going back and forth. And as a
    franchisee, having some security would be amazing. But again, I
    understand, though, that we want to get the best help possible.
    And if there is a better opportunity for my team members
    elsewhere, I understand why they would go searching for it.
        Ms. GOODLANDER. Well, I appreciate that. And I know, you
    know, I have, talking to small businesses in my state, I know
    there is--it is--it is a challenging moment right now. You are
    facing a whole lot of uncertainty. I wanted to ask you about
    the impact that tariffs have had on your bottom line in recent
    weeks and what you would urge this committee to consider as we
    are looking, as many of us are looking, to restore the
    important role that Congress should be playing in the
    imposition of tariffs.
        Ms. BEAUDOIN. For me, it is just really providing more
    certainty. As I shared in my opening testimony, restaurant
    ownership is not for the weak. We work hard for every dollar
    that comes through our doors, and so margins are thin. Anything
    that increases cost raises concern. Uncertainty brings a lot of
    discomfort. So really, for me, as far as the tariffs go, I
    mean, in any of these tax provisions, just anything that can be
    done to eliminate that uncertainty for the franchisee would be
    phenomenal.
        Ms. GOODLANDER. Well, I appreciate your testimony. I see my
    time is up, so I yield back, Mr. Chairman.
        Chairman WILLIAMS. Gentlelady yields back. I now recognize
    Mr. Olszewski from the great state of Maryland for 5 minutes.
        Mr. OLSZEWSKI. Thank you very much, Mr. Chairman, to our
    Ranking Member, and to all of our witnesses really appreciate
    your time here today and your feedback. Also appreciate the
    contributions you are making both within your communities and
    across this great country through your franchises. In my home
    state of Maryland, we have over 15,000 franchisees and
    franchise locations, which employs over 155,000 people. The
    type of ecosystem that we know helps Marylanders and helps all
    Americans.
        I know we talked a lot about the CTA today, so I will try
    not to talk too much about it, but do want to reinforce that. I
    think this is just critical legislation that provides law
    enforcement with those fundamental tools to help keep us safe
    from criminals laundering funds and setting up shell companies
    to wire money to criminal organizations. Here with Police Week,
    I want to especially thank my younger brother Jordan, who is in
    law enforcement back home, for his service, along with the men
    and women across this country who serve us all.
        I do think it is a timely conversation that we are having
    around the idea of countering corruption, though. Just this
    week, our President publicly announced the possibility, floated
    the possibility, of taking a $400 million gift from the
    government of Qatar. A luxury plane that would be used first as
    Air Force One and then donated to his presidential library. But
    just worry that, you know, in this governing world, that the
    public is rightly asking the questions about do these types of
    things affect our decision-making. So, unfortunately, it seems
    in Congress, we are getting to a place where we are picking and
    choosing which reporting requirements we require and which ones
    we don't. We discourage global interaction that can foster new
    ideas in the classroom. On the business side, however, we are
    sitting and watching as this administration fails to enforce
    legally mandated penalties or fines.
        So I guess I want to sort of ask, just sort of generally to
    all of you, you guys all follow whatever applicable rules and
    regulations that are out there, whatever they are, as best you
    can, right? Yeah. And then generally for business, right,
    knowing the goalposts, whatever they might be, even if we
    disagree, is helpful so that we can plan for and work around
    those? Okay.
        And so I guess my point to my colleagues here is, you know,
    we can disagree with whether or not it was the right idea, but
    I think we have a well-established process. I know it was a 10
    year, we talked earlier in testimony, this was a 10 year,
    bipartisan, multi stakeholder effort to get this passed. And if
    we think that there are flaws, we should come back through this
    Congress, make those changes, and we can do things like
    simplifying the reporting form. If there are improvements to be
    had, we can do instant verification. We can do sufficient
    resources if there are questions. Would that be something that
    would be helpful if we were to take up that conversation? You
    guys are being so succinct in your answers, and I really
    appreciate it.
        So since you have been so great with me and gracious with
    me, I will just turn the floor open to all of you. In addition
    to following the process so that we can address this issue,
    both fighting crime, but also being good partners to our small
    business leaders, is there anything new that we should be
    thinking about that would best help you create more franchises
    across this country? Anything new that we should be thinking
    about?
        Mr. CROSS. I think it has all been covered. Access to
    capital to give potential franchise owners. Streamlining that
    process, clarifying the joint employer standard, making it
    easier for small businesses. I think I can speak for myself,
    you know, when I started this business early on, it was me, one
    other person, and a window cleaner. And we were out there just
    hustling to make it happen, to drum up new business, to hire
    employees, and to build that business. And I had very little,
    if any, time to go out and worry about some of these other
    things that we have discussed today. So clarifying those things
    and making it easier for those businesses that are simply just
    trying to get this off the ground and put food on the table for
    their families would be appreciated.
        Mr. WRIGHT. Yeah. Removing burdensome regulations is
    critical to the process. So we have talked a lot this morning
    about the joint employer, but I would also add that the tax
    policies that are going to--that are being reviewed right now
    are also critical to the growth of the franchise committee.
        Ms. BEAUDOIN. Yeah, I would agree. It is the tax policies
    and also one that we have talked about but haven't really
    talked about thoroughly is the increased estate tax as well as
    addition--in addition to the 199A and the EBITDA standard. And
    then just really it was--I appreciate Mr. Kalman explaining the
    difference between willful negligence. That being said, that is
    not true of all the provisions that franchise owners and small
    businesses face. So it is just--it is really what we don't
    know, what we don't know as far as some of these things that
    come along administratively.
        Mr. KALMAN. Very quickly I just want to reiterate that if
    there are improvements to streamline the system for small
    business, we would be first in line to join that process.
        Mr. OLSZEWSKI. Hear, hear. Me too. Thank you all again so
    much for your time. I yield back.
        Chairman WILLIAMS. Gentleman yields back. And I want to
    thank the witnesses today for your testimony and for your
    appearing before us. And without objection, Members have 5
    legislative days to submit additional materials and written
    questions for the witnesses to the Chair, which will be
    forwarded to the witnesses. So I want to ask the witnesses to
    please respond promptly. If there is no further business,
    again, I want to thank all of you. You did a great job today.
    It is a great hearing. I think you see we have got a really
    good committee here representing you here in Washington. So
    with that, done. Thank you.
        [Whereupon, at 12:00 p.m., the committee was adjourned.]

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