Two Years Ago, This Ruling Rocked Franchising To Its Core. Now Everything May Change Again.
In 2014, all hell broke loose in the franchising world. The National Labor Relations Board (NLRB) has a group called the Division of Advice, whose job is to suggest what actions the NLRB should take -- and it had recommended that McDonald’s be considered a co-employer of its franchisees’ workers, when it came to violations of federal labor laws. In other words: The McDonald’s corporation would be at least partially responsible for its franchisees’ employees. At the time, no one was sure whether the NLRB, which monitors labor disputes in the U.S., would adopt or ignore the opinion. So as notices and commentaries filled the pages of business publications, the franchise world kept a watchful eye on the situation, and continued grilling burgers and changing oil.
But then, in December of that year, the NLRB filed 86 charges against a McDonald’s franchisee for unfair-labor practices and named McDonald’s corporation as a joint employer with joint liability.
With that: panic.
From an outside perspective, the ruling wasn’t exactly front-page news. It’s wonky, complicated and seems to be just about McDonald’s. But the “joint-employer ruling,” as it has come to be known, became one of the biggest events in franchising in decades. There was a flurry of press releases, condemnations and lawsuits. Some declared that the move was an existential threat to the entire concept of franchising. Steve Caldeira, then the president of the 1,400-member International Franchise Association, said the ruling would destroy “the fundamental tenets of in existence.” It felt like franchise Armageddon.
