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Contact:
Jenna Weisbord, 310-995-0839
jweisbord@franchise.org
@franchising411

IFA APPLAUDS LEGISLATION TO RESOLVE CONFLICT BETWEEN TRADEMARK & EMPLOYMENT LAW

Bipartisan Bill Would Protect Trademarks for Thousands of Franchises

(Washington, Aug. 1) – The International Franchise Association (IFA) today applauded the introduction of the Trademark Licensing Protection Act of 2019 (TLPA), introduced in the Senate by Sens. Angus King (I-Maine), James Lankford (R-Okla.), John Cornyn (R-Texas), Kyrsten Sinema (D-Ariz.), Joe Manchin (D-W.Va), Mike Braun (R-Ind.), and Kevin Cramer (R-N.D.).

Franchise businesses rely on their trademarks to signal to consumers that they can expect uniform standards of safety, consistency, and quality regardless of the small businesses’ location.  While trademark law requires franchises to establish brand controls to ensure uniformity, the improper application of federal and state employment law penalizes franchise brand companies for establishing those same controls; improperly holding them as “joint employers” with their franchise owners.

The TLPA seeks to resolve the uncertainty in federal law by reaffirming that brand standards designed to preserve or enhance the brand may not be used as evidence of employment controls in litigation. In a study conducted by the IFA, research found that franchise businesses have seen a 93 percent increase in lawsuits due to this type of legal uncertainty.

“As a franchisee, I own my own businesses and manage my own employees,” said multi-unit franchise owner and IFA chairman David Barr. “This bill will help foster stronger relationships between franchise brands and their franchise owners by allowing our contract terms to be in harmony with laws related to brand protection and labor and employment.”

“IFA appreciates the work of Sens. King, Lankford, Cornyn, Sinema, Manchin, Braun, and Cramer on this important bill.” 

Franchising is an arrangement when a name brand company grants a local owner the right to use its trademark, business systems, and processes to produce and market a good or service.  The business owner usually pays a one-time franchise fee and a percentage of sales revenue as royalty.  

“Franchise businesses are in a Catch-22 that has festered long enough due to lingering uncertainty about joint employer status under federal law,” said Matt Haller, IFA’s Senior Vice President of Government Relations & Public Affairs. “They are at once required to maintain brand standards, while at the same time have been held liable for their efforts to maintain them. This bill is an elegant solution to that complicated problem. IFA is proud to support such a thoughtful approach, and America’s 733,000 franchise small businesses are grateful for the bipartisan leadership of each Senator on this issue.”

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About the International Franchise Association
Celebrating 59 years of excellence, education and advocacy, the International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.

 

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