By KATHLEEN JOHNSONAssociated PressThe pizza chain Pizza Hut has been under increasing pressure to change its business model and reduce its taxes amid a nationwide franchise tax revolt.
Pizza Hut, which owns about 4,500 locations, has been facing a nationwide crackdown on the practice of franchizing, a practice in which franchisees sell their restaurants to other companies, typically for as little as $50 a year.
The company’s corporate structure has drawn criticism from lawmakers who say the practice is unfair to franchisees and the company’s owners.
Pizzagate, the theory that a conspiracy of influential people is conspiring to destroy the U.S. Constitution, has become the main theme in the U-turn, with the hashtag #PizzaGate trending on Twitter and on social media.
Penny Fox, the president of the National Restaurant Association, said on Friday that a number of companies have been affected by the nationwide franchise ban, including Pizza Hut, Target and Target’s competitor Chipotle Mexican Grill.
Presto Pizza, which has about 2,300 locations, said it had no immediate plans to change the way it operates.
It has had a long history of franchises and has operated in a manner that is compliant with state and federal laws, including the franchise tax law, the company said in a statement on Friday.
The franchise tax has been in place since 1997.
It is one of several tax changes that have been considered in the wake of the national uproar over the “Pizzapocalypse.”
The changes include requiring restaurants to pay sales tax on the majority of their sales, including food and beverages, and banning restaurants from operating under their own name or in another company’s name.
A federal judge on Thursday temporarily halted a law that would have reduced the number of locations that can be franchised, a measure that was to take effect later this month.
The federal government is appealing a decision by the U and New York state that found the state’s law was too broad and did not go far enough in curbing the franchise growth.
In a statement Friday, the National Franchise Tax Council, an industry group, called the pizza chain’s decision to shift its business from franchising to a partnership a good one for the industry and the economy.
“In the short term, this will help to drive up our company’s tax burden, as well as our business, revenue and profits,” said the group’s president, Chris Wysopal.