IFA POSITION

IFA supports a clear and fair “joint employer” standard that is based on direct control and allows franchisees to operate independently and our economy to flourish.

IFA strongly opposes the NLRB’s joint employer rule that was slated to become effective in March 2024. The harmful rule would have established that two or more entities are joint employers whether or not the entities’ control is exercised, and whether or not any such exercise of control is direct or indirect.

Fortunately, and IFA-led legal challenge was successful in striking down the NLRB joint employer rule in federal court on March 8, so the 2024 NLRB rule is invalidated and does not apply to franchise businesses.

IFA’s Ask to Congress: The franchising community needs Congress to pass and the President to sign a Congressional Review Act (CRA) joint resolution of disapproval to permanently nullify the new NLRB rule. IFA is pleased the U.S. House passed House Joint Resolution 98 on January 11, 2024, and the U.S. Senate approved the measure on April 10, 2024.

 

BACKGROUND

The NLRB’s change to federal labor law will fundamentally alter the franchisor-franchisee relationship. There’s no suspense in how this policy will affect franchise businesses, because we’ve seen this misguided policy before. This rule will cost small businesses and consumers dearly because a similar 2015-2017 joint employer standard:

  • cost franchise businesses $33 billion per year,
  • resulted in 376,000 franchise job opportunities never created, and
  • nearly doubled litigation against franchises.

Naturally, franchisees are overwhelmingly opposed to the rule. According to a September 2023 Oxford Economics survey on the proposed rule:

  • 87% of franchisees said they would be concerned if their franchisor took more control over their operations as a consequence of the NLRB rule,
  • 82% said they would be concerned if their franchisor reduced operations and compliance support as a consequence of the NLRB rule,
  • Only 14% of franchisees said they would definitely still have opened a franchise business if this NLRB rule were in effect.

Watch IFA President and CEO Matt Haller provide congressional testimony on joint employer on December 13, 2023:

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