The IFA and Asian American Hotel Owners Association’s combined efforts to educate federal and state lawmakers about the impact of the joint-employer rule on franchising have yielded significant dividends to make the regulatory landscape more secure for franchise businesses.

BY JEFF HANSCOM

Two is almost always better than one and the same holds true when working to pass state legislation. On May 3, Gov. Nathan Deal of Georgia became the eighth U.S. governor to sign legislation making clear that a franchisor is not the employer of a franchisee or a franchisees’ employees. Georgia Senate Bill 277 or the “Protecting Georgia Small Businesses Act”, sponsored by Sen. John Albers (R-56), was the culmination of a joint effort between IFA and the Asian American Hotel Owners Association.

SECTION 1. This Act shall be known and may be cited as the “Protecting  Georgia Small Businesses Act.”

SECTION 2. Chapter 1 of Title 34 of the Official Code of Georgia Annotated, relating to general provisions relative to labor and industrial relations, is amended by adding a new Code section to read as follows: “34-1-9. 15 (a) As used in this Code section, the terms ‘franchisee’ and ‘franchisor’ shall have the same meanings as provided in 16 C.F.R. Section 436.1 as such existed on August 26, 2015. (b) Notwithstanding any order issued by the federal government or any agreement entered into with the federal government by a franchisor or a franchisee, neither a franchisee nor a franchisee’s employee shall be deemed to be an employee of the franchisor for any purpose. (c) This Code section shall not apply to Chapter 9 of this title.”

With many overlapping members — all of whom share concerns over the nebulous joint employer standard being pushed by the U.S. National Labor Relations Board in Washington, D.C. — teaming up to push back in Georgia was a natural fit. Working together, the IFA and AAHOA were able to successfully advance SB 277, which applies to state enforcement agencies. SB 277, excludes a franchisor as the employer of a franchisee or of an employee of a franchisee for purposes of certain laws relating to employment and was signed in the wake of a decision by the NLRB to change decades of federal labor law and legal precedent.

“Georgia has taken a critically important step to protect local franchise-business owners and their employees and ensure franchising continues to create millions of jobs across the country,” said IFA President & CEO Robert Cresanti, CFE. “While the new federal joint employer standard threatens the future viability of the franchise model, we applaud state legislatures like Georgia for enacting laws that make clear that franchisees are responsible for their employees.”

IFA and AAHOA have worked to educate lawmakers in Washington, D.C. and state capitals around the country about the profound, long-term impact of the joint employer rule on franchising. These efforts have yielded significant dividends to make the regulatory landscape more secure for franchise businesses.

Similar to successes in other states, local franchisees were instrumental in the effort, by speaking with and testifying before legislators in Atlanta. “The franchise system has given my family the opportunity to own and operate our own small business and providing our community with family-supporting jobs,” said Manish Jariwala, an owner of a Country Inn & Suites in Norcross, Georgia. “With this bill, Georgia is sending a clear message that small businesses of all types — and the jobs they create — are valued in this state.”

Looking ahead, the IFA along with our coalition partners, is aiming to increase the number of states where legislation like SB 277 is signed into law. With eight already under our belts, we have our sights set on 10 enacted by the close of the 2016 legislative session and continuing another aggressive agenda for 2017.

While there is partisan gridlock in Washington, which is only exacerbated during an election year, the picture at the state level is much different, with Republicans controlling seven of 10 chambers on average, coupled with 31 of 50 governors’ mansions. Now is the time to take advantage of this window before it closes and that is precisely what the IFA is planning to do.

Jeff Hanscom is director of State Government Relations and Public Policy for the International Franchise Association. Find him at fransocial.franchise.org.

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