IFA PRAISES NEW BILL TO ADDRESS JOINT EMPLOYER UNCERTAINTY FOR FRANCHISE OWNERS

FOR IMMEDIATE RELEASE

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Jenna Weisbord, 310-995-0839
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Bipartisan “Trademark Licensing Protection Act” Would Create Clarity for Franchise Businesses

(WASHINGTON, Sept. 4) – The International Franchise Association (IFA) today praised the bipartisan Trademark Licensing Protection Act, introduced by U.S. House Small Business Committee Chairman Steve Chabot (R-Ohio) and U.S. Representative Henry Cuellar (D-Texas).

The legislation would resolve legal contradictions for franchisors and franchisees by clarifying the competing laws that require a brand to preserve its federally-registered trademark through brand controls, but at the same time, penalize them from exercising such controls under new “joint employer” rules.

“Franchise businesses are in a Catch-22,” said Matt Haller, IFA’s Senior Vice President of Government Relations & Public Affairs. “They are at once required to maintain standards and possibly liable for efforts to maintain them. This bill can clarify these competing standards to allow for franchise businesses to grow, train workers, and strengthen local economies.”

The bill would amend the Lanham Act, which governs trademark law, to clarify that a brand’s efforts to preserve its trademark to ensure the brand is uniform and consistent to the public would not be classified as evidence of joint employment.

Franchising is based on the principle that every franchisee owns and operates its own business and is independently responsible for its own decisions, including the opportunity to retain business-related profits. The franchisor provides support for the brand through standards regarding quality and uniformity.

“Franchisees and franchisors continue to face significant legal and compliance costs, resulting in a chilling effect on economic growth and support for existing franchisees since the joint employer uncertainty began. We applaud Chairman Chabot and Rep. Cuellar for continuing their leadership in seeking a solution to this issue for the franchise sector,” said Haller.

The joint employer uncertainty began in 2015, following the National Labor Relations Board’s (NLRB) expanded joint employer rules and conflicting interpretations of joint employer under the Fair Labor Standards Act by the Labor Department and various federal and state court rulings. In November 2017, the House passed HR 3441, the Save Local Business Act, to address the joint employer issue by amending the National Labor Relations Act and the FSLA.