Association Predicts Vast Harm to Franchising and Wants More NLRB Oversight
In a statement released Thursday, the International Franchise Association called on Congress to reject the National Labor Relations Board’s expansion of the joint employer rule. The rules change makes franchisees and franchisors responsible for the same employees and for labor infractions under the National Labor Relations Act (NLRA). The IFA warns that the rule will undercut the independence of franchisees, decrease franchisees’ equity in their businesses and cause franchisors to give less support to franchisees.
“Today’s final joint employer rule solidifies that this NLRB is fundamentally hostile to Main Street business owners,” said Michael Layman, IFA senior vice president for government relations and public affairs. “This overreaching and unworkable joint employment policy is designed to change the rules in the middle of the game for hundreds of thousands of franchise owners and turn them into middle managers in their own businesses.
“Franchising is a pathway to entrepreneurship for all Americans, especially women, people of color, veterans and first-time business owners. Nearly a third of franchise owners say they would not own their own business without franchising, and this attack on the franchise model would shut the door of opportunity to thousands of would-be entrepreneurs.”
IFA Will Fight On
Layman said the IFA will continue battling the newly enacted rule and urges members of “Congress to stand up for their Main Street constituents” and get rid of the rule by using the Congressional Review Act. The IFA also wants greater oversight of the National Labor Relations Board, which was created under the NLRA in 1935.
The NLRB’s change to the joint employer was proposed about 13 months ago, and the IFA statement said that “thousands of members submitted comments” opposing the change as damaging to the franchise business model. The association’s statement also said that bipartisan members of Congress oppose the expanded joint employer rule.
The new – or perhaps “resurrected” is a more accurate adjective – rule also was in place from 2015-2017, according to the IFA statement, which further said that during those years, it added $33 billion per year to franchises’ operational costs, led to 376,000 lost job opportunities and increased lawsuits by 93%. In addition, the statement cited Oxford Economics research predicting that franchisors’, franchisees’ and consumers’ costs will go up.
Founded in 1960, the IFA is the biggest and oldest organization representing franchising. There are more than 790,000 U.S. franchise establishments that support some 8 million direct jobs and generate more than $825 billion in annual economic output, the IFA said in its statement.