The possibility of a change in the way the National Labor Relations Board (NLRB) determines whether an individual is employed by two independent companies, each a “joint employer,” has franchisors concerned.
Currently, joint employers are deemed as both having responsibility for hiring, firing, supervision and discipline.
“A redefinition could result in an erosion of the franchise business model by causing franchisors to exercise control over wages, hiring and other aspects of employment at franchisee-operated restaurants,” says Angelo Armador, National Restaurant Association (NRA) VP for Labor and Workforce Policy. Quoted in Restaurant.org’s recent News & Research blog post titled “Is the NLRB targeting franchises?,” Amador explains, “This would limit the flexibility of franchisees in hiring and making other decisions regarding employment that are essential to operating a successful franchise.”
Just as we at Sintel Systems share our vast point of sale (POS) experience and expertise with startup owners in order to help them make the best decisions from the very beginning, we are happy to share articles, advice and commentary about the dynamic regulatory environment’s impact on franchise business models.
Here are the highlights of the NRA post:
• Another of Amador’s concerns: “If the standard is changed, companies could be held liable for violations committed by entities completely outside of their control, such as staffing agencies.”
• Soon, the NRA writes, the NLRB is expected to issue internal guidance as to whether it will consider McDonalds, USA, LLC as a joint employer in a group of current unfair labor practice complaints against individual franchisees, “despite the fact that labor relations in the stores are solely the responsibility of the franchisees.”
• In addition, the NLRB has asked interested parties in another case involving a current unfair labor practice complaint which the board is hearing against Browning Ferris Industries. Along with other groups, the NRA has filed a brief urging the NLRB not to change its joint employer standard.
• The NRA has also endorsed House testimony by Andrew Puzder, CEO of CKE Restaurants, on the damage the change could inflict. “If franchisors are considered joint employers with their franchisees, the cost of increased staff and increased risk will most likely translate into franchisors charging higher royalty rates and fees, perhaps significantly higher,” Puzder testified. “Franchisor control over a franchisee’s labor force, and the risk and higher royalty fees associated with it, have the potential to chill the desire of franchisors to acquire a franchise or develop new units, at a time when the country desperately needs economic growth.”
Read the full NRA post at Restaurant.org here.
As the only full-service POS provider — from software development to franchise incubator to ongoing support — part of Sintel’s commitment to our customers and industry is to share ideas and information. Whether you’re a first-time franchise hopeful, a small business owner or an established chain, it’s always smart to stay on top of the news and analysis to achieve financial success.
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