IFA Calls on Congress to Reject National Labor Relations Board’s Joint Employer Rule

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WASHINGTON – The International Franchise Association (IFA) today released the following statement on the final regulation issued by the National Labor Relations Board (NLRB) expanding joint employment between franchisors and franchisees. Today’s rule defines how brands and owners could be jointly responsible for the same employees under the National Labor Relations Act (NLRA), fundamentally upending the franchise business model. The rule would reduce the independence of franchise business owners, diminish franchisees’ equity in their businesses, and force franchisors to offer less support.

“Today’s final joint employer rule solidifies that this NLRB is fundamentally hostile to Main Street business owners,” said Michael Layman, IFA senior vice president for government relations and public affairs. “This overreaching and unworkable joint employment policy is designed to change the rules in the middle of the game for hundreds of thousands of franchise owners and turn them into middle managers in their own businesses. What’s worse, we have seen this misguided policy before and it resulted in hundreds of thousands in lost job opportunities, billions in increased costs for franchised business, and a doubling of lawsuits.

“Franchising is a pathway to entrepreneurship for all Americans, especially women, people of color, veterans, and first-time business owners. Nearly a third of franchise owners say they would not own their own business without franchising, and this attack on the franchise model would shut the door of opportunity to thousands of would-be entrepreneurs.

“IFA will use every avenue available to protect franchising from the harm this rule will bring. We urge Congress to stand up for their Main Street constituents against this rogue, Washington agency and reject the NLRB’s joint employment rule, including through the Congressional Review Act.”

The NLRB’s rule was first proposed in September 2022, and IFA and thousands of members submitted comments in response to the proposal, saying it could “wreak havoc on the franchise business model” and would have “devastating consequences” for local franchised businesses.

There is bipartisan opposition in Congress to the rule as a result of the damage it would bring to franchised businesses and their employees.

Today’s rule returns to the expanded joint employer standard, which was in place from 2015-2017. This change cost franchise businesses $33 billion per year in operational costs, led to 376,000 lost job opportunities, and led to a 93% increase in lawsuits.

New research from Oxford Economics shows significant concern among franchisees about the rule, expecting it to increase costs for their business, their franchisors, and consumers, and decrease access to business ownership through franchising – as well as substantially change the franchisor-franchisee relationship.

IFA has vowed to stop the rule through any measure available, including through a legal challenge and urging lawmakers for greater oversight of the agency.

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