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Franchise Group Demands Explanation for “Joint Employer” Ruling

Date: 11/25/2014 | Category: General | No comments


The sad reality is that more than ever politics‚ political ideology  and politically motivated rulings are undermining the franchise business model. Last summer Richard Griffin Jr.‚ General Counsel of the National Labor Relations Board (NLRB)‚ ruled that McDonald’s can be held jointly liable for its franchisees’ employment practices‚ although the major fast food company owns only a small fraction of the restaurants. Controversy soon followed.

President of the International Franchise Association (IFA) Steve Caldeira admonished the decision‚ saying that it would “open a Pandora’s box of dangerously and needlessly costly and time-consuming labor complaints.”

His words have proven to be quite prescient.

Since the pivotal ruling was made‚ there have been 61 charges involving 27 other franchise companies or franchisees filed with the NLRB. Concerned with this development‚ Caldeira and the IFA along with 129 members of Congress are demanding that Griffin provide an explanation for his ruling.

In a letter to the General Counsel‚ Caldeira wrote‚ “In an unprecedented move‚ you appear to have ignored decades of established law governing joint employment and franchising.”

For the first time‚ Griffin did publicly address the controversial ruling in October‚ albeit broadly. He admitted that an NLRB complaint naming McDonald’s as a “joint employer” could prove to be problematic in a legal sense. He also stated that the NLRB has not yet reached a conclusion on how to resolve these cases.

Our nation and the wealth of our society has been driven by the many hard working men and women who have created businesses‚ great products or services for their customers and jobs for their employees. Franchising – as a business growth model – has played a significant role in the expansion story of so many businesses and brands. These entrepreneurs – as employers‚ franchisors and franchisees – should be valued and not attacked by politically appointed bureaucrats.

As this political policy making decision “takes root” I am sure that there will be many cases and legal precedents to come. We will certainly keep you updated.

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