Dear IFA Members,
With the end of the year upon us, I wanted to take this opportunity to update you on a number of major issues we are addressing for the industry, particularly on the labor front.
On Dec. 19, National Labor Relations Board (NLRB) General Counsel Richard Griffin issued several complaints against McDonald’s franchisees and McDonald’s USA, naming the independent businesses as joint employers. These complaints stand in direct contradiction to the 1968 Southland case in which the NLRB held that franchisors and franchisees are not joint employers. In overturning settled law and over 40 years of consistent legal precedent, the McDonald’s complaints represent a grave threat to the franchise business model by a fiat from the NLRB’s unelected General Counsel. IFA is leading the charge to fight these complaints and will exhaust all legislative and legal means to protect franchising. We will be launching a broad-based lobbying coalition to promote franchising and push back against government overreach in 2015, and we encourage those interested in joining to contact us directly.
Immediately following the issuance of the Dec. 19 complaints, IFA led a joint media teleconference with executives from the U.S. Chamber of Commerce, National Restaurant Association and National Retail Federation to explain the negative impact that these unprecedented complaints would have on thousands of franchise small businesses. IFA and its business group allies strongly condemned the NLRB, pointing out the threat posed to franchise small business owners and their employees. This call received significant media coverage in every major publication including The Wall Street Journal, Bloomberg, and The Hill. Yesterday, twin op-eds in The Wall Street Journal and New York Times staked out the landscape ahead. The WSJ slammed the NLRB, saying the NLRB “tees up a radical rewrite of franchise law,” while The Times took the opposite stance, arguing McDonald’s should negotiate over the terms and condition of employment at its franchised restaurants.
While McDonald’s and franchise businesses are squarely in the crosshairs of the NLRB at the moment, all employers will be facing drastic changes to the definition of who an employer is, and therefore who maintains liability for the employees of the franchisee, when the other shoe drops in early 2015. That shoe is the Browning-Ferris decision, which is likely to adopt the General Counsel’s position that any employer who utilizes a franchise model, independent contractor, subcontractor or supplier network, will be liable for the employees of those businesses with whom it does business.
To help franchise owners comply with changes in labor law, IFA recently launched a new web site, labor.franchise.org, to provide key guidance to franchisees on labor and employment law challenges.
In the New Year, IFA staff will be reaching out to all of our members to engage you more directly in our efforts to protect the franchise model from these existential threats. We are also seeking franchisees and franchisors to participate more directly in our advocacy efforts through the Franchise Action Network, especially in your locality. If you would like to get involved to protect your business and the franchise model, we urge you to join the Franchise Action Network.
Senior Vice President, Media Relations & Public Affairs