McDonald’s and Others Face New Rule That Could ‘Destroy the Franchise Model,’ Company Says
The National Labor Relations Board (NLRB) proposes a new rule that expands the "joint employer" definition, potentially making franchisors liable in labor disputes and bringing them to the bargaining table with unions. This rule could have significant implications for industries heavily reliant on franchising, such as fast food and hotels.
Summary
- The NLRB is preparing to issue a new rule that broadens the definition of "joint employer," affecting industries like fast food, hotels, logistics, construction, and tech.
- The rule would make holding franchisors accountable in labor disputes easier.
- It evaluates joint employer status based on control over essential working conditions, potentially including indirect governance.
- McDonald's and other franchise companies argue that the rule threatens the franchise model, making them liable for employment matters, which they claim they haven't been in over 70 years.
- Franchise trade groups are lobbying to overturn the rule through Congress and plan to challenge it in court.
- The potential impact includes increased control over franchisees, compliance costs, and legal expenses.
- A survey found that franchisees are concerned about increased control and reduced support from franchisors.
- The issue has been debated and changed during different administrations, with the pendulum swinging back and forth.
- A court challenge is likely once the rule's final version is released.
- The rule change could significantly affect workers, the industry, and investors in franchise businesses.
The National Labor Relations Board (NLRB) proposes a new rule that expands the "joint employer" definition, potentially making franchisors liable in labor disputes and bringing them to the bargaining table with unions. This rule could have significant implications for industries heavily reliant on franchising, such as fast food and hotels.
Summary
- The NLRB is preparing to issue a new rule that broadens the definition of "joint employer," affecting industries like fast food, hotels, logistics, construction, and tech.
- The rule would make holding franchisors accountable in labor disputes easier.
- It evaluates joint employer status based on control over essential working conditions, potentially including indirect governance.
- McDonald's and other franchise companies argue that the rule threatens the franchise model, making them liable for employment matters, which they claim they haven't been in over 70 years.
- Franchise trade groups are lobbying to overturn the rule through Congress and plan to challenge it in court.
- The potential impact includes increased control over franchisees, compliance costs, and legal expenses.
- A survey found that franchisees are concerned about increased control and reduced support from franchisors.
- The issue has been debated and changed during different administrations, with the pendulum swinging back and forth.
- A court challenge is likely once the rule's final version is released.
- The rule change could significantly affect workers, the industry, and investors in franchise businesses.