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The New “Joint-Employer” Standard in Franchising

By December 16, 2015December 16th, 2022Legal

In August, the National Labor Relations Board (NRLB) changed decades of policy for the franchising industry with their new “joint-employer standard” that could hurt restaurants, retailers, manufacturers, construction firms, hotels, cleaning services, staffing agencies and more. Many of those impacted are small business owners.

The joint-employer standard will likely negatively affect national franchisors and franchisees. The NLRB is seemingly trying to undermine the successful franchise business model by involving itself in labor relations and tying the franchisor to the franchisees in this area. The changes stem from a 2014 issue with McDonald’s where several complaints were filed for alleged unfair labor practices against franchisees and McDonald’s USA as joint employers. The NLRB general counsel is asking to impose liability on McDonald’s USA for the labor relations of individual franchisees, which is a major change in the board’s previous rulings regarding the franchisor/franchisee relationship. The NLRB suggests that because the franchisor establishes the basic operational and brand procedures, such as marketing, for the franchisees that they should be liable for employment infractions. This goes against the laws regarding the franchising business model.

If franchisors, like McDonald’s USA, are determined to be joint employers, they would be liable for individual franchisee’s employment practices. This could turn the franchise model on its ear and have significant impact on franchising.

MarathonHR is working with key stakeholders to modify Georgia law to protect our small businesses and prevent this overreach. If you’d like to learn more about HR services for franchisees, please call us at 678-208-2802.

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