Senate HELP Committee Examines “Ambush” Election Rule

Yesterday the Senate Committee on Health, Education, Labor, & Pensions (HELP) held a hearing titled “Ambushed: How the NLRB’s New Election Rule Harms Employers & Employees,” to discuss a controversial new National Labor Relations Board (NLRB) rule to speed up union representation elections. In December the NLRB reissued a previously invalidated rule that dramatically decreased the amount of time employers and employees have to prepare for a union representation election. Many in the business community argue that the accelerated election schedule would prevent business owners from developing a complete response to a union proposal and compromise both workers’ privacy and ability to make an informed decision.

HELP Committee Chairman Lamar Alexander (R-TN) strongly condemned the reissued rule. “I refer to this as the ‘ambush election rule,’ because it forces a union election before an employer has a chance to figure out what is going on” Alexander said in his opening statement. “Even worse, it jeopardizes employees’ privacy by requiring employers to turn over personal information including email addresses, phone numbers, shift hours and locations to union organizers. Today more than 95 percent of union elections occur within 56 days of the petition-filing. But under this new rule, elections could take place in as few as 11 days.”

Senator Tim Scott (R-SC) echoed the Chairman’s concerns, adding “I would tell you that this rule is radical, it is ridiculous, and it is oppressive and it applies to all employers no matter how many employees you have… If there’s any sense of an ambush, as an employer trying to create jobs, help families, this rule stands front and center to that point.”

Earlier this year, the Coalition for a Democratic Workplace (CDW) filed a lawsuit to prevent the NLRB from implementing this new rule, which becomes effective on April 14. IFA sits on the management committee of CDW. A decision on the case is expected this spring.

Achieved video of the hearing, along with the witnesses’ testimony, can be found here.

Local Franchise Owners Warn Senate HELP Committee that Proposed NLRB Joint Employer Changes Will Reduce Entrepreneurship Opportunities

Today, the Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing to examine the impact that National Labor Relations Board (NLRB) general counsel Richard Griffin’s recent actions could have on small businesses all over the country. Last year, Griffin filed an amicus brief in the Browning Ferris Industries case that recommended franchisors be considered joint employers with franchisees. Later, he authorized dozens of complaints against a franchisor, naming it as a joint employer with franchisees. The hearing, titled Who’s the Boss? The “Joint Employer” Standard and Business Ownership, featured testimony from two franchisees who told the committee members of the negative impacts that changes to current joint employer standards would have on their small businesses.

Gerald Moore, the owner of five The Little Gym franchises in Tennessee, North Carolina and South Carolina, explained that such a radical change to established labor law would fundamentally undermine the franchise relationship, saying that it “would mean that my franchisor would be jointly responsible for all of my employment-related liabilities… This will mean increased control and more day-to-day involvement by The Little Gym International.”

John Sims IV, who owns a Rainbow Station franchise in Richmond, Va., added that the general counsel’s actions were already having a negative impact on his business’ plans. “My wife and I have often talked about opening a second Rainbow Station location,” Sims explained. “However, the uncertainty as to what the future holds for franchisees and other small businesses has forced us to put that plan on hold. It simply does not make sense to try and grow our business at a time when we do not know what the future of our business will be.”

Although some Democratic members of the committee claimed the impact of such a change would be limited, HELP Committee Chairman Lamar Alexander (R-TN) agreed that a dramatic change in joint employer standards would have negative consequences that reached far beyond the franchise community. “This case doesn’t just affect franchisees, it will affect every business that uses a subcontractor or contracts out for any service.  That includes most of the 5.7 million businesses under NLRB jurisdiction in America – because most businesses contract for some service.”

You find an achieved webcast of the hearing, along with the witnesses’ testimony, here. If you would like more information on the joint employer issue, please visit IFA’s Labor and Workforce Hub. You can also be a part of IFA’s nationwide grassroots efforts to preserve the franchise model by joining the Franchise Action Network.

IFA Survey Finds Optimism About the Economy, but Concern Over Regulation and Joint Employer Issues

Last week’s blogpost helped point out data you could use from the Franchise Business Economic Outlook: 2015 with meetings with your elected officials and policymakers to make the case for franchising. Turning to IFA’s recent Franchise Business Leader Survey, you might find these results useful in discussing some overall issues affecting today’s franchise business leaders.

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Outlook for U.S. Economy

IFA members are more optimistic about the U.S. economy in 2015 compared to their survey responses last year.  More than one-half of the franchisors and franchisees and two-thirds of the suppliers believe the economy will be “better” in 2015, compared to only 40 percent of franchisors, 15 percent of franchisees and 35 percent of suppliers who had a positive outlook last year.

However, the survey shows that 97 percent of respondents believe that the joint-employer ruling, were it to take effect, would have a negative impact on their business, with 82 percent saying the impact would be “significant.”

The Franchise Business Leader Survey also reveals concern about the enactment of discriminatory increases in the minimum wage. More than 85 percent of franchisor and franchisee members believe that recent efforts by some cities and states to increase the minimum wage will negatively impact their business. In addition, more than two-thirds of franchisors and 85 percent of franchisees reported that their businesses have already been “negatively impacted” by the Affordable Care Act. Below you’ll find how franchisees and franchisors prioritize issues affecting them:

Concerns

Visit IFA’s Franchise Labor & Workforce Hub, a new website for franchisees to provide key guidance on labor and workforce issues and join IFA’s Franchise Action Network to learn how to have a direct, positive impact on the future of the franchise industry.

 

FAN in the States

On Tuesday, October 14, IFA staff Erica Farage and Chris Krueger, and a local Philly Pretzel Factory franchisee, Herv Breault took the Franchise Action Network (FAN) to the State Capitol in Harrisburg, Pennsylvania. The event, which comes after recent industry events in Philadelphia, was a continuance of IFA’s engagement in the state.  As a veteran, Herv has achieved his pathway to small business ownership through franchising.

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The group had a productive day of Member and senior staff level meetings with the Pennsylvania Delegation. IFA met with the following offices: Senator David Argall, Senator Shirley Kitchen, Representative Cherelle Parker, Senator Tim Solobay, and Senator Mike Stack. Concluding the day, IFA met with the Policy Director of Tom Wolf, candidate for Governor. Mr. Wolf is currently leading in the polls and projected to be the next Governor of Pennsylvania.

The takeaways were clear – the FAN needs to be heard in every state capitol and lawmakers want to hear from you, the franchise small business owners. Educating lawmakers at the state level is an important part of the FAN and its days like this that allow the lawmakers to learn how important the franchising industry is to their state and communities.  Through the FAN, franchise small business owners can promote, educate and protect the franchise business model and help tell the franchising story to these decision makers. Locally owned franchises are America’s hidden small businesses, IFA asks your support to get involved, please visit www.FranchiseActionNetowrk.com to sign up.

Specifically in Pennsylvania, the IFA will be working with the state delegation offices and our local members to organize a “FAN, Franchising in your State” day in Harrisburg. These events help educate policy makers on what franchising is and the important role franchising plays to the state economy.

If you would like to get involved with legislative meetings in your state, please contact Erica Farage at efarage@franchise.org or Chris Krueger at ckrueger@franchise.org.

IFA Addresses Threats to the Franchise Model at MUFSO

On Oct. 7, the 55th annual Multi-Unit Foodservice Operators Conference, better known as MUFSO, concluded in Dallas. MUFSO is the most comprehensive executive conference in the restaurant industry and IFA sponsored a session titled, “Franchising Under Attack: Get Informed & Learn How to Take Action!”

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The session provided an overview from industry leaders and legal perspectives on all the franchise legislative and policy issues facing the industry. It also explained how to get involved through the recently launched IFA Franchise Action Network (FAN).

Panelists included Patrick Doyle, president & CEO, Domino’s Pizza Inc.; Aziz Hashim, president/CEO, NRD Holdings, CEO/chairman, Impact Investments; Michael Lotito, co-chair and shareholder, Littler’s Workplace Policy Institute; Steve  Romaniello,  CFE, managing director, Roark Capital; and Matt Haller, senior vice president, media relations & public affairs, IFA, who served as moderator.

The session got underway with Hashim, Doyle and Romaniello echoing points on the state of the industry under attack. Hashim noted he has “never seen this kind of wave,” regarding the industry threats with Romaniello adding, “Make no mistake, the industry is under attack and it is broader and deeper than most people think.” Doyle was hopeful “that rational people will make rational decisions, but a lot is at risk right now for the industry that could impact millions of business owners and jobs.”

Haller guided the conversation next to last week’s veto by Governor Jerry Brown of harmful franchise relationship legislation in California. The veto of SB 610 represented a true victory for franchise small business owners and employees throughout the state, the culmination of a two-year strategic campaign by IFA and California FANs.  “The reason people choose to be franchisees are brand promise and operations, franchising success rate is higher.  Legislation like this would weaken brand consistency which would lead to more failures,” Doyle commented.

Hashim added that SB 610 would have been, “government interfering in business contracts and have unintended consequences,” noting that, “special interest is at play trying to cause a rift between franchisees and franchisors.” Romaniello spoke to the energy surrounding the IFA opposition campaign:  “we have made a greater effort to engage franchisees, there are more common interests than ever before, and also a common enemy,” and continuing that “the Franchise Action Network is a tool to engage on a more granular and local level, as state and local issues are now a focus to be pro-active on, and California is a great example.” Lotito gave the opposition perspective on what SEIU is spending on this fight, how well its messaging is organized and the real challenge in this debate.

The next issue of discussion was the National Labor Relations Board recent ruling on joint employer. Lotito walked the group through the full impact of the proposed joint employer standard and what it means for the industry. Hashim noted that the ruling “profoundly changes the franchise model. Worst case, everything becomes corporate-only stores, which threatens the basic foundation of franchising. Franchisees are independent entities that hire, fire, promote and set wages.”

The panel closed with a call to action from all the panelists that there is no choice but working together to protect the industry and engaging lawmakers with the franchise business community.

For more information about the Franchise Action Network or to sign up, please visit www.FranchiseActionNetwork.com.

For any questions or inquiries, please contact Erica Farage at 202-662-0760 or efarage@franchise.org.