Are Franchisors 'Joint Employers'?

NLRB's redefinition recasts obligations, relationship between chain, franchisees

Peter Romeo, Director of Digital Content, Foodservice Group

McDonald's franchisor franchisees (CSP Daily News / Convenience Stores / QSR / Foodservice)

OAKBROOK TERRACE, Ill. -- Once in a great while, the monsters under the bed prove real. A frightener straight from Stephen King's id roared up this week in Washington, validating one of chain restaurants' worst fears and threatening to rip apart franchising as it currently operates.

The first victim would be McDonald's Corp., which learned this week from the National Labor Relations Board (NLRB) that it can now be named a co-employer and co-defendant in legal actions brought against franchisees by their employees. The franchisor would technically be regarded as a "joint employer," with an obligation to regulate the employment practices of franchisees in the same way a brand polices operational and trade dress standards.

Employees who feel they've been wronged while working in a franchised restaurant could seek redress against the deep-pocketed licensor as well as the store operator. 

If it sticks, the NLRB's redefinition of a franchisor's obligations would recast the relationship between a chain's home office and its franchisees. Franchise contracts would have to incorporate much more sweeping obligations and standards, and new ways of enforcing stipulated employment practices would have to be implemented.

Click here to read Peter Romeo's full Restaurant Reality Check blog at Restaurant Business.

By Peter Romeo, Director of Digital Content, Foodservice Group
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