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.

Franchising Looks to the Future via NextGen Franchising Program

NextGenFranchisingLogo_Final

You’ll have to wait until the IFA Annual Convention to participate in the launch of the NextGen in Franchising program. But you might be surprised to learn the scope of this global competition as the IFA Educational Foundation leads the way in recognizing the huge pool of talent available in young entrepreneurs from around the globe.IFANextGenContestLogo_Final

Quick Facts

The CompetitorsIFACampaign_ContestOnly_opt3

  • 450 applications from 46 countries.
  • The 50 winners represent 22 countries.
  • 70 percent of applicants were men, 30 percent were women and 20 percent were students.
  • Winners came from Australia, Brazil, Canada, Croatia, Germany, India, Iraq, Jordan, Kenya, Malawi, Malaysia, Mexico, Morocco, Nepal, New Zealand, Nigeria, Peru, Romania, Somalia, South Africa, Uganda, United Kingdom and the United States.

Winning Concepts

Water salinization systems, eyesight clinics, roadside reflective strips, mobile made-to-order gelato, recycling plants, an indoor tennis facility, study class notes, emergency baby clean up, custom dog breeding, global education awareness and much more!

Business Challenges

The top three challenges were identified as financial strategy (45 percent), development of the idea (26 percent) and development of a business plan (19 percent).

Learn more about the NextGen program here.  Don’t forget to attend the NextGen in Franchising Network Reception, Summit and Roundtables Feb. 15-16 during the IFA Annual Convention in Las Vegas.

 

 

 

 

Choice Hotels Partners With Steve Harvey to Change Lives

IFA benefits in numerous ways from the leadership of Choice Hotels Pres. and CEO Steve Joyce, who serves as chairman of the board for 2014-2015.  It’s also common for our members  to  take the lead when it comes to partnering with organizations to support worthwhile causes.  Take a look at the headlines from the “Community Outreach” section of Franchising World magazine  below just from January!

Choice Hotels is teaming up with entertainer and philanthropist Steve Harvey to help raise funds to support the Steve & Marjorie Harvey Foundation. The foundation’s mission is to help young men and women, chiefly from inner cities and single-parent families, to set and reach their goals through such programs as the Steve Harvey Mentoring Camp for Young Men.  Joyce announced the partnership on the “Steve Harvey Show” this January.

Choice Hotels Harvey Joyce

Choice Hotels Pres.  & CEO Steve Joyce with Steve Harvey.

“Choice Hotels has worked closely with the Steve & Marjorie Harvey Foundation for six years now. And we have seen firsthand the hard work, sacrifices and tremendous amount of resources necessary to help these young men and women recognize and start to achieve their potential,” said Steve Joyce.

Since the mentoring program’s inaugural year in 2009, Choice Hotels has been the foundation’s largest in-kind sponsor.

“We are so pleased to be able to deepen our already strong relationship with Choice Hotels,” said Steve Harvey. “Our aim is to inspire and impact kids from across the entire country. But two years ago we lost our airline sponsor and that greatly limited who we could invite to camp from all fifty states. We all want the widest reach possible. Choice Hotels stepped right in to fill the void.”

And like so many other IFA members, it’s the personal engagement that makes such a difference.  In 2014, Joyce served as a camp mentor alongside other businessmen, community leaders, members of the military and professional athletes. This experience included fishing lessons for the mentees, as well as the opportunity for the young men to ask the mentors questions to help prepare them in life.

COMMUNITY OUTREACH

  • 9Round Records Donates $57,813 for Breast Cancer Treatment and Research
  • Newk’s Raises Awareness and More Than $100,000 For Ovarian Cancer Research, Cure
  • Planet Beach Saudi Arabia Hosts Breast Cancer Event
  • Massage Envy Spa Supports Arthritis Foundation with More Than $ 1 Million Donation
  • Sky Zone Raises More Than $80,000 for Breast Cancer Research
  • Sport Clips Helps Advance Blood/Platelet Needs
  • Steamatic Inc. Scholarship Aids Continuing Education

 

Legal Challenge Against Part of Seattle Minimum Wage Law Moves Forward

The legal challenge against the discriminatory provisions of Seattle’s new minimum wage law is taking an important step forward. The International Franchise Association and Seattle franchisees last June filed a lawsuit in U.S. District Court to challenge the provisions of the new law that discriminated against small franchise businesses. Then in August, the IFA requested a preliminary injunction to stop the discriminatory provisions of the minimum wage law from taking effect.

U.S. District Court Judge Richard A. Jones has now set oral arguments on that request for a preliminary injunction for 9 a.m. PST on Tuesday, March 10.  This will be the first time that arguments will be made on the legal challenge to the new law in person.  The hearing will be before Judge Jones at the U.S. District Courthouse in downtown Seattle.

Paul D. Clement, a partner at the law firm Bancroft PLLC and a former U.S. Solicitor General, is expected to represent the IFA and the Seattle franchisees at the March hearing.  IFA and five Seattle franchisees sued Seattle in June seeking to stop the city from treating franchisees as large, national companies rather than the small, locally-owned businesses that they are.

Seattle’s ordinance requires large businesses, defined as those with more than 500 employees, to raise the minimum wage they pay their employees to $15 an hour over three years starting April 1, 2015. Smaller businesses get seven years to phase in the wage increase. But at the request of the Service Employees International Union (SEIU), the law treats a single hotel, print center, restaurant or in-home health care provider as if it employs more than 500 people due to its affiliation with a national chain, even if it only employs five people, thereby creating an uneven playing field.

The city’s ordinance willfully categorizes small, independently-owned franchise owners as big, out-of-state businesses, a violation of the Commerce Clause of the U.S. Constitution. The lawsuit argues that the Seattle ordinance defies years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from its franchisors that provide brand and marketing materials, based on the payment of an initial franchise fee and ongoing royalty payments to use the brand’s trademark.

Judge Jones is likely to decide on the preliminary injunction before the law takes effect on April 1. Regardless of the ruling on the injunction, the lawsuit against the franchisee provisions of the new law will continue.  

The injunction – and the lawsuit – seek to stop only the provisions of the new law that discriminate against franchise businesses. If the injunction is granted, the new minimum wage law still takes effect. Small franchise businesses, however, would adopt the $15 minimum wage on the same 7-year timetable as other small businesses, instead of the 3-year schedule currently required in the ordinance.     

To learn more about the preliminary injunction, read IFA’s motion for the injunction here, and the IFA’s further briefs on the injunction here and here.

What is the Franchise Industry Saying After the State of the Union Address?

IFA obtained input from key leaders within the franchise community about what they feel Congress and President Obama should do to support the business community. Here are excerpts, but you can find the full copy here.

Clint Ehlers
Franchisee, FAST SIGNS International
On NLRB Joint Employer Recommendation 

“I cannot imagine what I would do if I were stripped of my independence because a different business owner, hundreds of miles away, is facing a lawsuit that has nothing to do with me. Hopefully Congress will force the NLRB to reject this flawed recommendation.”  

Herv Breault
Franchisee, Philly Pretzel Factor 
On Proposed Minimum Wage Increases

“Congress should pass legislation that would give incentives for companies that hire military veterans, allowing veterans to pursue their leadership, teamwork and organizational experience.”

Nancy Bigley, CFE
CEO, Bottle & Bottega
On Federal Proposals to Increase Minimum Wage

“I have deep concerns about the proposed wage hikes being examined at the federal level. These dramatic wage increases are going to have a negative impact on small businesses, which already operate under thin margins. ”

Brooke Wilson
Multi-Unit Franchisee, TWO MEN AND A TRUCK®  
On the 30-Hour-Work-Week Requirement in the Affordable Care Act

“The 30-hour definition is a major change that could have far reaching consequences we have not yet begun to see and decisions like this will lead to an increase in part-time work throughout the American economy.”

Saunda Kitchen, CFE
Franchisee, Mr. Rooter Plumbing 
On the need for comprehensive Tax Reform

“America’s tax-code is not working for the economy and small-business owners like me are getting lost in the complex web. Comprehensive tax reform, aimed at creating a fairer and simpler tax code for America’s franchise small-business owners, is the best way to stay competitive and create more jobs.”

 

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