Franchising in the USA is due for another year of expansion in 2016. Franchise employment is again projected to outpace the general economy. What might curb this?
Consider the US Department of Labor and the National Labor Relations Board (NRLB). In 2015, the NRLB ruled and extended its definition for joint employers that could make franchisors responsible for problems in their franchisees’ businesses. The proposition is that a franchisee’s workers can also be the employees of the franchisor!
Meanwhile other government agencies, including the U.S. Department of Labor (DOL) and OSHA, have signaled their plan to follow the new joint employer (Browning-Ferris) standard, focusing on the restaurant, construction, staffing, agricultural, janitorial, and hotel industries, holding franchisors and contractors responsible for wage and hour compliance for workers whose services they benefit from regardless of whether a direct employment relationship exists.
This makes it imperative that companies that franchise their brands review where their brand controls may be excessive and loosen the reigns on their franchisees. Franchisors will need to re exam their manuals and systems in order to accentuate a licensee’s freedom to determine the means to accomplish outcomes in running the franchisee’s independent business.