[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.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]