“Floodgates” have opened, threatening franchises across the spectrum of the economy, warns IFA Pres. and CEO Steve Caldeira, CFE.

By ROBERT CRESANTI

    During an Oct. 30 news media call, International Franchise Association Pres. and CEO Steve Caldeira, CFE, announced plans to file a Freedom of Information Act request with the National Labor Relations Board. The association is requesting the reasoning behind NLRB General Counsel Richard Griffin’s recent recommendation that franchisors and franchisees can be considered “joint employers” in labor-practice complaints.  Nearly 20 journalists from business, trade and political media participated during the call. Caldeira was joined by Catherine Monson, CFE, the CEO of FASTSIGNS International and an IFA board member; Clint Ehlers, a FASTSIGNS franchisee from Pennsylvania; and Michael Lotito, the co-chair of the Workplace Policy Institute of Littler Mendelson. Lotito, an expert on the labor-related legal issues impacting franchising, outlined the disastrous implications that the general counsel’s recommendation would have, saying: “The general counsel seems intent on finding separate employers as one entity in many different business contexts, including franchising. His efforts are creating confusion and uncertainty. If his theory of joint employment becomes accepted law, many organizations will be forced to reassess their current way of doing business with one another. Such a result is neither necessary nor wise.” Caldeira warned that since the NLRB General Counsel’s opinion was issued, complaints listing franchisors and franchisees as joint employers have skyrocketed at the NLRB. After the recommendation, 61 new complaints have been issued against franchise brands in a wide variety of sectors, including travel and lodging, hospitality management, full-service restaurants and operational service and maintenance. “We fear that the floodgates have opened because of the general counsel’s opinion,” said Caldeira.  “And given the lack of transparency on the rationale behind the decision, it is creating a huge amount of uncertainty in the franchising community.  This needs to stop.”

IFA Plans Hotline and Informational Website Resources

Given the likelihood of more complaints, Caldeira revealed plans for a hotline and web resources to give IFA members the latest information on joint employer developments, as well as how to respond to them. “Believe it or not, his [Griffin’s] reasoning, which has the potential to disrupt a huge segment of our economy, has never been made public,” said Caldeira. “That is unacceptable to us.” In July 2014, Griffin authorized 43 complaints against McDonald’s USA in which the franchisor was considered a joint employer with its franchisees. “That opinion is deeply-flawed and terribly misguided,” said Caldeira. “It ignores decades of established law governing joint employment and franchising, including a recent California Supreme Court decision, Patterson v. Domino’s Pizza.” IFA sent a letter to Griffin on Oct. 30, 2014 asking that he immediately disclose his advice memorandum in the original McDonald’s cases. The IFA is not alone in its quest for transparency from the NLRB. More than 125 members of Congress from both parties have written to Griffin requesting he supply “written reasoning and any relevant data supporting” his July opinion because of the threat it poses to small businesses.  

Robert Cresanti is executive vice president of government relations and public policy for the International Franchise Association.  Find him at fransocial.franchise.org.    

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