By Karen Bremer, Executive Director, Georgia Restaurant Association
A recent decision by the National Labor Relations Board’s (NLRB) general counsel, which was issued on July 29, 2014 stating that McDonald’s Corporation is a joint employer of its franchisees, has brought a level of concern for both franchisors and franchisees who are curious as to how this decision could affect their businesses. The NLRB’s decision was issued in response to several cases that were filed with the NLRB involving McDonald’s.
Additionally, up until this ruling, years of established law shaped the franchise model and created a set of practices that helped develop a relationship between the franchisor and its franchisees. This allowed for more people to own small businesses with the guidance of a franchisors business model. With the NLRB’s decision, independent operators or franchisees could potentially lose control of their business if the parent companies are granted the right to be responsible for the decisions of the franchisees employees. Ultimately, this decision could affect all franchisors, not just quick service restaurants (QSR’s).
Moreover, when comparing the number of company versus franchised locations for some of the top QSR companies, the number of franchised locations is significantly greater than company owned. This data shows the tremendous value that franchisees provide to the parent companies as well as the mutually beneficial relationship that that parent companies have with their franchisees, a relationship that could be altered by the NLRB ruling.
As this ruling progresses, the Georgia Restaurant Association (GRA) will continue to monitor the decision and fight to keep the ruling from going into effect. Additionally, to help restaurants understand what the NLRB ruling could mean for their business, the GRA has hosted a webinar on the subject, which is available to our members on our website at www.garestaurants.org. The GRA will also keep all members informed of any further developments to this ruling and will continue to post valuable resources for our members on our website. If you need to reach the GRA for further clarification on the NLRB’s ruling, contact us at (404) 467-9000 or firstname.lastname@example.org.