I can’t tell you how many franchise owners I’ve worked with who were blindly following their franchisor’s advice—only to find out later they’d overpaid the IRS by thousands of dollars.
If you’re a franchisee, and you’re sick of working hard just to break even, keep reading. I’m going to show you how we’ve fixed this exact issue for countless clients—and how you can start keeping more of what you earn.
Not sure if your franchisor’s setup is costing you more than it should?
Book a free 15-minute call with one of our client advisors to talk strategy.
We’re Not Just Your Lawyers—We’re Your Partners in the Dream
Let’s get real for a second: Owning a franchise isn’t just about flipping burgers or printing banners—it’s about running a business within a business.
Sure, I love the franchise model. You get the branding, systems, and support—it’s like business with a playbook. But here’s the problem: too many franchisees are taught to follow the operational manual and completely ignore the financial one.
And guess who ends up writing the biggest checks to the IRS every year?
You do.
Franchisees are some of the most overlooked and overburdened small business owners when it comes to tax strategy—despite often writing some of the biggest checks to the IRS.
That’s where we come in.
When you bought your franchise, it wasn’t just about the product or the logo on the sign. It was about something bigger: freedom, financial independence, building a family legacy—a dream.
But for far too many franchisees, that dream gets buried in compliance headaches, confusing structures, and tax bills that are way higher than they need to be.
Our law firm helps you stop merely managing someone else’s system and start actually owning a business that works for you—not just the franchisor.
We don’t believe in cookie-cutter advice. We’re not here to throw you a one-size-fits-all LLC template and wish you luck.
We’re here to build a real relationship with you—understand where you are now, where you want to go, and walk with you through every phase of your franchise journey.
Because this isn’t just legal paperwork. It’s the foundation of your dream. And we take that seriously.
Most Franchisees Are in the Wrong Structure—and It’s Costing Them
Let’s cut through the noise.
If you’re a franchise owner—there’s a very real chance you’re losing thousands without even realizing it.
Because no one ever sat you down and said,
“Hey, here’s how to structure this business properly from Day One.”
This is where the right strategy and team makes all the difference.
We help franchisees set up the right entity at the right time—no guesswork, no templates.
Get personalized help from our team at KKOS Lawyers!
We’re here to help you build a long-term structure that saves taxes, protects your assets, and supports your journey as a business owner. And we’re not just here for the setup—we’re here to walk beside you as you grow, pivot, and scale. Think of us as your go-to legal and tax wingman for the long haul.
So… LLC or S-Corp?
Here’s the deal: When you’re launching your franchise, you’ll usually start with either:
-An LLC, or
-An S-Corp
Sounds simple, right? It is—but only if you understand what you’re doing. Let’s break it down.
Start With the LLC – Your Business Foundation
Almost every franchisee should start with an LLC. It’s the smart move early on, because it gives you:
–Liability protection – so your personal assets aren’t on the line
–Flexibility in ownership and structure
–Privacy (more in some states than others)
-And it keeps your options open for future tax planning
But the magic really happens when…
Your Franchise Starts Making Real Money ($40K+)? Time to Pull the S-Corp Trigger
Once your franchise is netting $40,000 or more in annual profit, it’s time to shift gears and make the S-Corp election. Why?
Because now you’re paying more than you should in self-employment taxes—and the IRS is happy to keep collecting unless you make a move.
Here’s what an S-Corp election lets you do:
-Pay yourself a reasonable salary (which is subject to payroll taxes)
-Take the rest of your profits as distributions (not subject to self-employment tax)
-Qualify for additional tax deductions like QBI (Qualified Business Income)
-Set up a retirement plan and contribute as both the employer and the employee
Bottom line? An S-Corp can easily save franchise owners $5K–$20K or more per year in taxes.
Wait—So Am I an LLC or an S-Corp?
Here’s where people get tripped up.
You don’t have to choose between an LLC and an S-Corp.
You can have an LLC and be taxed as an S-Corp.
That’s right. It’s a best-of-both-worlds situation:
–Your legal structure is still an LLC (so you get the asset protection)
–Your tax structure is an S-Corp (so you get the tax savings)
This is the setup we recommend for most profitable franchise owners—and we’ll help you time it just right.
The Two-Entity Strategy Every Franchisee Needs
If you are wondering:
“Why does it feel like everyone’s making money but me?”
You’re not imagining it. Most franchisees are overpaying on taxes and leaving serious money on the table.
Why? Because you were told to “keep it simple.” Just operate under one LLC. Don’t complicate things. Trust the model.
Well, I’ve got news for you: simplicity is expensive.
One of the most powerful (and underutilized) strategies we implement for franchise owners is the Two-Entity Structure:
✔️ An Operating Entity – typically an S-Corp – where all the day-to-day income and expenses flow through.
✔️ A Passive Income Entity – usually a separate LLC that owns the building, equipment, or even intellectual property that your operating entity leases.
Why does this matter?
Because by separating these roles, you:
-Shift income from a high-tax environment (active business income) into a lower-tax one (passive rental income)
-Unlock bonus depreciation on the real estate or large equipment you own
-Protect your assets by isolating liability
-Qualify for additional tax deductions—especially through something we call the “Dash 4 Loophole”
Introducing: The “Dash 4 Loophole”
Here’s a powerful but often overlooked strategy we call the “Dash 4 Loophole”—shorthand for how passive income entities can receive rent from operational businesses and, depending on how it’s structured, still qualify for the QBI (Qualified Business Income) Deduction under Section 199A.
When done right, it means you’re potentially shaving 20% off your tax bill on passive income.
You need a legally binding lease agreement between your two entities. And it needs to reflect fair market rent, appropriate terms, and rock-solid documentation. That’s where our legal team steps in.
We Draft the Structure. You Save Big.
We don’t just tell you what to do—we set it up for you. Our team can:
✅ Create your Operating and Passive Income entities
✅ Draft a customized lease agreement that meets IRS guidelines
✅ Ensure your structure is legally compliant and audit-ready
✅ Work with your CPA or tax advisor to align the strategy with your overall tax plan
This isn’t a “set it and forget it” strategy—it’s an integrated business approach. And franchise owners who get this right enjoy greater control, cash flow, and peace of mind.
Protect the Legacy You’re Building: Estate Planning
Franchise owners often build impressive businesses and real estate portfolios—but they pour everything into growth and overlook what it takes to protect it.
Entities like S-Corps and LLCs can be notoriously difficult to pass down if your trust and estate planning isn’t squared away. That’s why we offer Comprehensive Estate Planning Services designed specifically for business owners like you —those who are serious about protecting their wealth, their legacy, and their loved ones.
Here’s what’s included:
–A custom living trust designed to hold all of your titled assets, including your business and real estate interests
–Wills, financial and healthcare powers of attorney, living will/advance directive, and all essential supporting documents
–Succession planning to keep your business running, even if you can’t
–Our exclusive Trifecta Diagram – a clear, visual breakdown of your assets by how they’re taxed, plus tailored strategies to reduce taxes, build wealth, and stay protected
And let’s be clear: a trust is the only way to avoid probate—a long, expensive, and public process that can tie up your estate for months or even years.
You’ve worked hard to build something meaningful. Now it’s time to protect it—not just from taxes—but from probate, creditors, and chaos.
You Build Your Business. We’ll Build the Structure Beneath It.
Franchise ownership is complex—but your tax and legal planning doesn’t have to be. If you’re ready to own your business (instead of it owning you), we’re here to help.
Our job is to help you build the legal and tax foundation that supports your dream and grows with you—year after year.
Build a Franchise That Builds Wealth – We’ll Show You How.
Ready to stop overpaying and start building wealth through your franchise?
Start with a free consult—we’ll help you build the right structure to ensure success!