Working with a franchisor and a renowned brand helps a company to establish its name in a market dominated by cutting edge competition quite easily. While franchisee owners enjoy a lot of benefits owing to the brand's popularity with which they are associated, but, sometimes the association with a well-liked brand proves to be a costly affair. For instance, if the franchisor decides to undertake a brand upgrade, then, it will require the associated franchises to remodel their work place too.
A mandatory remodeling can be costly, but, the new tax breaks can give you a sigh of relief.
Remodel Safe Harbour Rule Enables Higher Deductions
When the "Remodel Safe Harbour Rule" was not there, the remodelling of franchises only fetched a deduction of 66%, but with the new rule, a franchise can get a 75 % deduction in the first year itself and this can save millions off the franchise tax bills.
Qualifying For The Remodel Safe Harbour Rule
In order to qualify for the remodel safe harbor rule, needs to possess the audited financial statements or the franchises need to be publicly traded. A reliable and experienced tax advisor would be of great help for the franchises trying to avail the tax benefit.