During its recent 2015 annual convention, the International Franchise Association (IFA) announced the formation of a new coalition to lead the fight against labor-driven attacks on the franchise model. Dubbed the Coalition to Save Local Businesses, the CSLB is a group of local business owners and industry leaders dedicated to protecting and strengthening all sectors of small business, in particular the franchise business model.
In particular, the IFA and now the CSLB are concerned about recent moves by the National Labor Relations Board (NLRB) to broaden the definition of “joint employer” to include franchisors and franchisees. This would cause independent franchise owners to be treated not as the small business owners they are but rather as large employers. Consequently they would be required to meet new minimum wage standards much sooner than their non-franchise counterparts, and to provide employee health insurance benefits under Obamacare.
Driven largely by unions like the Service Industry Employees Union, the push to classify franchises as joint employers could have catastrophic consequences for the franchise model as it exists today, stripping away any autonomy from franchise operators and driving many out of business. Franchisors could be held responsible for the actions of their individual franchisees, and labor costs could rise to levels not supportable by small local businesses.
Franchising Leads Economic Growth
This increasing federal intervention on the part of the NLRB would seem counterintuitive to a struggling economy still fighting its way back from recession. For over four years now franchising growth has outpaced that of the overall national economy, leading the recovery and creating jobs in record numbers.
“Franchising is an American success story. Independently-owned and operated local franchise businesses are growing faster, creating more jobs at a quicker pace and producing higher sales growth than other businesses,” said IFA President and CEO Steve Caldeira during the recent annual meeting. “Franchising is a vital engine of economic expansion in the United States and 2015 looks to be another strong year for franchise businesses.”
A Coalition to Save Local Businesses
Despite intense lobbying efforts and grassroots educational outreach on the part of the International Franchise Association, the future of franchising looks uncertain if the NLRB and the labor unions continue this attack on the franchise business model. Hence the formation of the Coalition to Save Local Businesses. With a mission to “inform Members of Congress of the potentially devastating impact that redefining this standard would have on their businesses and the overall U.S. economy,” the coalition is already working to develop and pass “legislation that would codify the decades-long and widely-accepted definition of what constitutes a joint employer.”
Franchisees and franchisors alike need to become educated about these attacks on the franchise model and the efforts of the franchise industry to defend against them. To get more information and join the growing list of members, go to www.savelocalbusinesses.com.