ERC for Franchises
Franchise companies have the opportunity to access cash relief through the Employee Retention Credit (ERC)
Many franchises, particularly those operating as restaurants, were greatly impacted by the COVID-19 pandemic. Some faced full or partial closures while others were subjected to restrictions on alcohol sales and reduced operating hours. In an effort to comply with social distancing mandates, many franchises also had to limit customer capacity. These restrictions, combined with government orders that caused disruptions in vendor supply chains, contributed to significant revenue losses for franchises in 2020 and 2021. Fortunately, these businesses may be eligible for Employee Retention Credits (ERC) due to these challenges or the overall economic impact of the pandemic.
The Employee Retention Credit (ERC) presents a significant opportunity for relief to businesses affected by the COVID-19 pandemic, with the potential for up to $26,000 per employee during the years 2020 and 2021. Eligibility for the ERC can be determined by actual closures, restrictions imposed by government orders, or by demonstrating a reduction in gross receipts of 50% or a 20% decline in gross receipts for specific quarters in 2020 and 2021, compared to the same quarters in 2019. It is important to note that the ERC can still be accessed even if a business has already received PPP loans, and newly established businesses after February 2020 may qualify for up to $100,000 in refundable credits in 2021 under specific ERC provisions.
While it's unclear if Congress will extend other pandemic relief for franchise companies, the ERC remains available now. The government restrictions have impacted various business operations in the franchise industry and you could be one of the many employers entitled to significant cash benefits. Don't miss out on the opportunity to see if your franchise qualifies for the ERC. Contact us today!
Click here to learn more about ERC for franchises.
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