Washington agency’s proposal resurrects policy that previously cost franchise businesses $33.3 billion per year, 376,000 job opportunities, and 93% more lawsuits

WASHINGTON, DC, Dec. 7 – In comments submitted today to the National Labor Relations Board (NLRB), the International Franchise Association warned of the detrimental effects of the Board’s proposed joint employer standard, which would “wreak havoc on the franchise business model,” its millions of employees and the consuming public. Over 3,000 franchisees joined IFA in warning about the “devastating consequences” this rule could have for their businesses, aspiring entrepreneurs, and the entire franchise sector.

“With this proposal, a conflict-riddled NLRB has told thousands of American small business owners: you’re canceled,” said Michael Layman, senior vice president of government relations and public affairs for the International Franchise Association. “This is an extremist proposal that makes nearly every business relationship in America a joint employer. Small businesses have suffered under a bad joint employer standard before, but this proposal is worse.”

The comments, in response to the NLRB’s Notice of Proposed Rulemaking on the Standard for Determining Joint-Employer Status, highlight how the proposed rule resurrects and expands the 2015 Browning-Ferris standard, which IFA estimates cost franchise businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits. In addition, the new standard would wipe out hard-earned franchisee equity. 

“The proposed rule will needlessly upend the franchise business model and close the door to opportunity for hundreds of thousands of Americans, especially women, people of color, veterans, and first-time business owners. IFA urges the NLRB to immediately withdraw this rule, so an unelected Board in Washington doesn’t wipe out the American Dream for hundreds of thousands of franchise owners and those yet to come.”

Specifically, the IFA comments detail:

  • The consequences the rule would have for franchisors and franchisees
  • The ways the Board should modify the current proposal in favor of the 2020 standard
  • How the proposed rule is unlawful

Read the full comments here.

In the 118th Congress, IFA will prioritize bicameral, bipartisan legislation to codify a common-sense joint employer standard at the federal level, including through the Coalition to Save Local Businesses (CSLB).

The franchise business model provides hundreds of thousands of local business owners the opportunity to own their own business under a well-known brand name. According to recent Oxford Economics research, nearly one-third of business owners say they would not own a business without franchising, especially true for women, people of color, veterans, and first-time business owners. Franchised businesses provide better wages up to 3.4% higher than their non-franchised counterparts and provide more generous benefits. Around 26% of franchises are owned by people of color, compared with 17% of independent businesses generally. 

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About The International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s 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 775,000 franchise establishments that support nearly 8.2 million direct jobs, $787.7 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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