Local franchise owners take great pride in running their businesses, contributing to their communities, and providing employment and training to more than 8.1 million employees across the U.S.
In 2015, the National Labor Relations Board (NLRB) issued a decision in Browning-Ferris Industries of California, Inc. (BFI), which overruled more than thirty years of bipartisan employment law precedent. The NLRB replaced the predictable and clear “direct and immediate control” standard for determining joint employer status with a vague test based on “indirect” and even “unexercised” control over workers’ terms and conditions of employment. The decision exposed franchise businesses to workplace liability for another employer’s actions and workers.
As a result of the BFI decision, franchise businesses face higher operational costs, decreased business values, less compliance and training assistance from franchisors, less growth, and curtailed job creation.
For many franchisees, an expanded joint employer standard led to increased costs, less equity, and less support from their brands. In fact, according to IFA research, the expanded joint employer standard has cost franchise businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.
20 states have laws that clarify that franchisors are neither the employers of franchisees nor their employees.