Multi-Unit Franchisee Magazine Issue II, 2015 | Page 88
NLRB Overreaches
“However, the recommendation by the
NLRB’s General Counsel, if it goes forward, will halt franchisee expansion and
the jobs they create. Our economy simply
cannot afford this ill-conceived and politically motivated ruling.”
“The issue at hand is the amount of
influence that a franchisor has on a franchisee’s employees,” said Catherine Monson, CEO of FASTSIGNS International,
in a press release in March. “Franchisors
provide the brand, systems, training and
marketing to the franchisee through a legal
agreement. The franchisee is then responsible for the hiring, wage rate, methods
The NLRB actions
could wreak havoc
on franchising—and
severely diminish
the economic benefit
franchising brings
to communities
and the national
economy.
and timing of payment, HR processes,
discipline, supervision, promotion, and
direction of their employees.”
Franchisees simply want to own and
operate their own businesses as part of
the American dream. Redefining “joint
employer” threatens that dream and, no
matter what the intent of the change,
the ultimate losers may very well be the
customers and employees of franchised
businesses.
There’s a lot on the line. To learn more
about this issue and how you can get involved, visit www.franchise.org for the
latest news from the IFA.
Consequences of the NLRB Joint Employer Rule for Franchisees
If the recommendation of the NLRB’s General Counsel becomes a new interpretation of the law, franchisees would suffer the following
consequences, according to the Job Creators Network.
You could lose your autonomy and
independence
Franchisors provide important guardrails and support to a franchisee; however, the day-to-day
employment decisions are made at the local level.
You could lose direct support from the
franchisor
p
Franchisors could reduce or eliminate sup ort from software programs that help with
scheduling, compliance, payroll functions, labor and employment law, and other sup ort under
p
current franchise agreements.
You could essentially become a “general
manager” to the franchisor
d
Franchisees didn’t risk their life’s savings to have the franchisor looking over their shoul er
about day-to-day hiring decisions.
You indemnify the franchisor and are
responsible for paying any fees or verdicts
assessed to the franchi or
s
Franchisors will simply pass the costs of any verdicts or fees under joint employer back to the
franchisee, taking money away from you to grow your business.
You could pay increased financial
requirements to open a franchise, more
expensive insurance, higher deductibles, and
higher liquidity requirements
Franchisors will have to require more capital and insurance if they are going to be liable for
the day-to-day decisions at the local level. This will choke off opportunities for new franchisees
looking to open their first store.
You may have to pay increased franchise
fees and have fewer franchise opportunities
Franchisors, facing more liability, would likely raise franchise licensing costs and reduce
franchising opportunities for new or inexpeienced entrepreneurs. Why take a chance on the
r
little guy? Franchisors will open more corporate stores.
You may see a decrease in the valuation of
your franchise
If the mistake of one franchisee could affect the entire franchise, the value of the business
could be affected negatively.
You may see damage to your brand as a
result of another fran hisee
c
Social media, national media, and word-of-mouth attacks on the national brand increase risks
to local franchisees of employment litigaion.
t
SOURCE: JOB CREATORS NETWORK
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