A recent ruling by the National Labor Relations Board (NLRB) could mean
major changes to how franchises operate in the future. As reported in
The Business Journals, the NLRB ruled on Aug. 27 that a company can be considered a “joint
employer” if it has any type of control over workers’ employment
terms and conditions — even if that control is indirect or never
The new ruling opens the door for franchisors and outsourcing companies
to be considered partially responsible for workers employed by their franchisees,
staffing companies, etc. According to The Business Journals, the International
Franchise Association has expressed concern that this could push franchisors
into taking a greater level of control over the hiring and employment
practices of their franchisees, which the organization said could be a
turn-off for small business owners (the franchisees) who would normally
oversee these practices on their own. Many believe that the new ruling
could damage the current franchise model and stunt economic growth.
Another concern that many have is that the new ruling can make it easier
for employees of fast-food franchises to unionize, or for unions to take
action directly against franchisors. This already became an issue of concern
in the past when the NLRB named the McDonald’s Corp. a joint employer
in certain cases involving allegations of unfair labor practices against
some of its franchisees. Business and franchise groups are expected to
take action to challenge the recent ruling.
Legal Support for Franchisees
At Franchise Legal Support, we remain up-to-date on the latest issues that
affect the franchising industry. We also stand ready to assist franchisees
with various types of legal issues, whether they involve the process of
purchasing a franchise, establishing a legally sound franchise agreement,
or dealing with breach of contract issues. If you have any franchise-related
legal concerns, please do not hesitate to consult with our California
franchise law attorney.
Contact us today for a free consultation!