Franchises Pressure Congress To Save Them From Regulators

Franchise owners everywhere are making the trip to Washington, D.C., to oppose a recent decision handed down by the National Labor Relations Board (NLRB), which threatens the existence of the franchise model.

According to The Hill, the International Franchise Association (IFA) is sending in over 350 franchisees and franchisers to join with Speaker John Boehner and former Mississippi Republican Governor Haley Barbour in pressuring Congress to respond. Potential options for lawmakers include increased oversight or legislation.

Businesses are concerned that the NLRB’s ruling might mean the death of the franchise model, which has successfully operated partly because franchisees are considered to be owners of independent, small-businesses. But the NLRB in July felt it necessary to override business autonomy by declaring McDonald’s USA LLC as a “joint employer respondent” in order to support New York workers, who were protesting for higher wages.

The board issued a monumental decision saying that in workers’ rights cases, the franchise could potentially be summoned to the table for any alleged case of mistreatment.

“The franchise relationship is an American success story that allows entrepreneurs to climb the ladder of economic success, and the NLRB is attempting to change that model by creating great uncertainty for workers and business owners about who’s in charge,” Tennessee Sen. Lamar Alexander said.

From the NLRB’s perspective, the fact that franchises are involved in setting regulations for their franchisees means that they should have reciprocal obligations. In other words, they should be made to sit at the table for collective bargaining if the need ever arises at a franchisee’s business.

However, the NLRB decision regarding McDonald’s is by no means universally applicable. Any and all disputes regarding the franchise-franchisee relationship will be assessed uniquely by the board.

“Each company potentially coming under any form of review by NLRB has different policies and practices that would need to be evaluated in a case-by-the-case basis,” confirmed John Gordon, a California-based restaurant analyst at Pacific Management Consulting Group.

Already, Republicans are gearing up to respond by introducing legislation designed to neuter the NLRB, turning it “into more of an umpire than an advocate.”

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