International Franchise Association Sues National Labor Relations Board Over New Joint Employer Rule

WASHINGTON – Today, the International Franchise Association (IFA) joined a coalition lawsuit challenging the joint employer rule issued by the National Labor Relations Board (NLRB). Filed in the U.S. District Court for the Eastern District of Texas, the lawsuit takes aim at the NLRB for exceeding the scope of its authority and violating the Administrative Procedure Act (APA) by failing to respond to comments regarding the rule’s harmful economic consequences.

“The NLRB’s joint employer rule would have dire consequences on the franchise model and our economy as a whole,” said Matt Haller, President and CEO of IFA. “We are exercising all available measures to prevent this rule from taking effect and are proud to join this broad coalition of business leaders in defense of the interests of franchisors and franchisees alike.”

The IFA is joined in the lawsuit by the U.S. Chamber of Commerce, American Hotel and Lodging Association, Associated Builders and Contractors, Associated General Contractors of America, Coalition for a Democratic Workplace, Longview Chamber of Commerce, National Retail Federation, National Association of Convenience Stores, Restaurant Law Center, Texas Association of Business, and Texas Restaurant Association.

The full complaint is available here: https://www.franchise.org/sites/default/files/2023-11/Dkt%201_Complaint.pdf

A Motion for Summary Judgment (MSJ) will be filed within a week of the lawsuit, setting up the suit for briefing and a decision on the MSJ prior to the joint employer rule taking effect on December 26, 2023.

During the last expansion of the joint employer rule in 2015, franchises lost $33.3 billion each year, 376,000 jobs were lost and lawsuits increased by 93%. According to research conducted by Oxford Economics, 70% of franchisees expect increased litigation and costs due to the NLRB rule, while 66% believe the new standard will raise barriers to entry into the franchising sector.

About The International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the 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 approximately 790,492 franchise establishments that support nearly 8.4 million direct jobs, $825.4 billion of economic output for the U.S. economy, and almost 3 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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