A group of franchise business operators launched a coalition Tuesday to lobby Congress in an ongoing battle to prevent franchisors from being considered “joint employers” with franchisees.
The Coalition to Save Local Businesses was created with support from the International Franchise Association, or IFA, which has been at the forefront of attempts to prevent a shift in the joint-employer definition by the National Labor Relations Board.
While a potential legislative solution is the ultimate goal, the first step, coalition leaders said, is to educate lawmakers on how a shift of the joint-employer definition would impact franchise business owners.
“The goal of the coalition is to protect local businesses, and the best way to do that is to help members of Congress understand my personal situation,” said Matthew Patinkin, a coalition co-chair and franchise operator of 72 Auntie Anne’s Pretzels, Red Mango Frozen Yogurt and Jamba Juice units. “The coalition is to rally the troops.”
At issue is a move by the NLRB to change the 30-year-old standard defining the relationship between franchisor and franchisee. Currently, a franchisor has to exhibit direct control over the hiring, firing or discipline of workers employed by franchisees to be considered a joint employer.
A ruling is still pending in a case involving waste-disposal company Browning-Ferris Industries, where a union has attempted to organize subcontracted workers at one of the firm’s recycling facilities.
In an amicus brief in that case, NLRB general counsel Richard Griffin argued in favor of a broader definition of joint employer that would potentially make franchisors liable for the labor practices of their franchisees, and ultimately force franchisors to the bargaining table.
A final ruling on the Browning-Ferris case would indicate whether the full labor relations board agrees with Griffin’s expanded definition. That decision was still pending as of Tuesday afternoon.
Meanwhile, the labor board in December moved forward with complaints against McDonald’s USA LLC as a joint employer with its franchisees in another case in which workers alleged that their rights were violated during minimum wage protests over the past two years.
Opponents of the new definition, including the IFA, the National Restaurant Association and other industry groups, contend that the broader joint-employer standard presents an “existential threat” to the franchise business model that would ultimately stifle investment in such businesses and have a ripple effect through the economy.
“The pending recommendation by the NLRB’s general counsel would upend the 780,000 locally owned franchise businesses across the U.S. and, in turn, jeopardize the 8.9 million jobs they directly support,” said Steve Caldeira, IFA president and CEO, in a statement.
Last week, both opponents and supporters of the expanded joint-employer definition testified before the Senate Health, Education, Labor and Pensions, or HELP, committee.
Supporters argue that franchisors should be involved in collective bargaining efforts and that workers would have a better chance at fighting for higher wages and improving workplace conditions if deeper-pocketed companies were involved.
Patinkin, however, argued that such a shift in franchisor/franchisee relations would be a fundamental change in the way he does business.
He said he and other coalition members will work with both sides of the aisle in Congress to build legislative support in opposition of the broader definition.
“To me, this is not a Republican or a Democratic issue,” Patinkin said. “This is an issue about hardworking people retaining their ability to own, operate and manage their own local business.”
It’s important for lawmakers to understand that franchisors do not dictate employment practices, Patinkin said.
Across eight states, Patinkin’s restaurants employ about 700 people, he said. “One of the reasons for our success is that we have total control over our stores.”
The relationship between franchisee and franchisor has long been a symbiotic one, he argued. The franchisor watches over the brand, and the franchisee is in direct control of its units and operations.
If the NLRB definition goes forward as expected, he said, franchisors will lose control of their brand and franchisees will no longer enjoy the autonomy that makes franchising attractive.
“In essence, it would take our ownership away from us,” he said.
Contract Lisa Jennings at [email protected].
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