Joint Employer Progress: The Job Is Not Done

 

During a press conference on July 27, members of Congress, including U.S. Reps. Bradley Byrne (R-Ala.), Virginia Foxx (R-N.C.), Lou Correa (D-Calif.), Henry Cuellar (D-Texas) and Tim Walberg (R-Mich.) introduced the Save Local Business Act, which is the single most important piece of legislation for franchising in decades. The reason it’s so critical is when the National Labor Relations Board altered the joint employer standard in August 2015, the ruling created a sense of uncertainty among franchise business owners, most of which are operating at the local level as small businesses.

 

How did this uncertainty affect franchises? Who better to answer that question than some of the franchise business owners who attended the press conference? Below, are the answers of some franchise business owners.

 

NRD Capital Managing Partner Aziz Hashim, a multi-unit franchisee who is Immediate Past Chair of the IFA Board of Directors, referred to the bill as a “huge deal. This is a singularly satisfying moment, although the job is not done.” Describing the revised standard as an “existential threat,” Hashim said that the confusion over the joint employer rule “is having a chilling effect on our business model, and this is a business model that’s creating jobs. All of us that get our livelihood from franchising have an obligation to step in and support the bill.” 

 

Hashim praised the efforts of the IFA Government Relations and Public Policy Department for working relentlessly over the past two-plus years to get a bipartisan bill introduced. “That’s very satisfying indeed, because it shows you that joint employer is not a Democratic or a Republican issue. This is an American issue, this is something for the people,” he said. Hashim asked all franchisors, franchisees and suppliers to contact their senators and elected officials to ask for support of the Save Local Business Act as a vitally important piece of legislation for the franchising community.

 

Ed Braddy, a Burger King franchisee in Baltimore, Md., remarked that the Save Local Business Act will bring clarity to the franchisor and franchisee community. “It will let the franchisor know that small franchisees such as myself aren’t a threat to them, and it will make them more comfortable in allowing me to operate without fearing that if I do something wrong, a lawsuit would apply to them,” he said. “That’s the major issue that this bill will clarify, to get the whole community back to normal.”

 

Steven and Christiana Logansmith, both former U.S. Navy officers, own ServiceMaster Chesapeake in Eaton, Md., employing 180 people. Christiana described NLRB’s joint employer doctrine as “insulting” to franchise businesses. “My initial reaction when the NLRB decision came out was, ‘This business, which we have built, may go to zero!’”

 

Abrakadoodle President Rosemarie Hartnett was excited to participate in such a momentous event for franchising. The issue is important to all the company’s franchisees across the country, she said. The additional expense due to joint employer is “almost unfathomable” for both sides, according to Hartnett. “It would increase costs from the franchisor’s standpoint and from the franchisee’s standpoint,” she said. “The franchisees bought their businesses as independent business owners and not to have franchisors interfere with their standing.” Passing the Save Local Business Act into law will have a major impact in keeping costs down, Hartnett added.

 

FASTSIGNS International franchisee Burke Huddleston talks to more than 60 franchisees in the company’s network almost daily. The revised joint-employer standard “has really clouded their relationship,” he said, “not only with the franchisor where they are looking for the maximum support, but it also hinders the ability to bet on themselves and be in control, which is why people go into franchising.” This is about the American Dream, he continued.

 

Braddy summed up what franchising means to the U.S. economy: “Franchising is the backbone of the small-business community in this country. It allows people like me and others to take the risk in opening a business and have someone coach you along the way, show you how to do what you need to do. They don’t tell you what to do. If we eliminate franchising across this country, we’re eliminating small businesses, and they are what makes this country thrive.”