Best Law Firms | Ranked By Best Lawyers | United States | Franchise law | Tier 1 | 2024

National Leading Franchise Law And Commercial Litigation Firm

Powerhouse Trial Lawyers And Strategic Problem-Solvers In Complex Business Disputes And Transactions

How could joint employers change under new legislation?

On Behalf of | Aug 14, 2023 | Franchise Law |

Franchise situations involve the main company or franchisor and the people who buy their own stores or the franchisees. The franchisor provides a lot of guidance and assistance to the franchisee, but in the end, the new store is the franchisee’s business to operate.

With this relationship, there is generally no joint employer situation because the franchisor has no control over the employees in the franchise store. However, new legislation seeks to change this.

A proposed change will alter franchises

The National Labor Relations Board is proposing to change the definition of joint employers, making them anyone who has a relationship of employment with the employee and governs at least one point of the employees’ job terms and conditions, such as wages, work schedule, discipline, health and safety guidelines or work rules. If this goes into effect, it would change the whole design of franchises, making franchisors more like managers of a corporate store with full liability.

Issues with the new rule

Objections from the industry say this new legislation will make franchises obsolete as they will no longer have independence. The franchisors will have to manage and oversee the franchises to protect their interests. It would make franchisors liable for union negotiations and any other practices of the franchisees.

The slight alteration of the definition of joint employers could completely change the game. No company will want the liability risks and the extra work of franchises if they will still have to manage and oversee them as they would a corporate store.