International Franchise Association Witnesses Speak Out Against Joint Employer Standard on Capitol Hill

The franchising industry’s unique model has long been established as a successful part of the American economy. But a new ruling on joint employment standards by the National Labor Relations Board (NLRB) could potentially reverse that progress.

Traditionally, franchisees have independently hired employees, set wages, managed staff members and run the day-to-day operations of their businesses. But under the new ruling, a franchisor and franchisee could both be held responsible for governing workers’ terms and conditions of employment.

On Thursday, the Senate Committee on Small Business and Entrepreneurship held a hearing to discuss the detrimental economic consequences associated with the NLRB’s new joint employer standard. The International Franchise Association (IFA), which has consistently raised concerns over the ruling, continued to lead the charge on educating the public on the burdens facing both franchisors and franchisees as a direct result of the new standard.

Ciara Stokeland, the founder and COO of MODE, explained why the NLRB’s standards don’t make sense from her perspective as a franchisor.

“Beyond the Washington legalities, you must understand how absurd this policy is. Put simply, a small business like mine may be held liable by Washington regulators for another business’ employees—employees that I didn’t hire, don’t supervise and I should not be liable for,” said Stokeland.

Another IFA witness, BrightStar Care franchisee Lynn Berberich, testified about the personal financial responsibilities she’s taken on because of the new standard.

“Prior to the NLRB ruling, BrightStar provided its franchisees with an integrated applicant tracking system, recruiting tools and support. Because of joint employer and all the unanswered questions, it’s now impossible for my franchisor to continue providing those services. Franchisees now fund and manage these on their own,” said Berberich. She went on to add, “There’s a saying that goes franchising allows you to be in business for yourself but not by yourself. The new joint employer standard puts franchisees back out by ourselves,” said Berberich.

While the Senate committee’s hearing on joint employer has come to a close, franchisors and franchisees—in combination with the IFA—will continue to raise awareness about the negative impacts the franchising industry is facing because of this standard. One of the biggest concerns is that it will ultimately lead to fewer jobs and slower economic growth.

“The joint employer policy means less growth and less jobs. Franchisors and franchisees are simply deciding to hold off on opening new locations. Fewer locations mean fewer jobs, and decreased or eliminated economic benefits to the community,” Stokeland said.

To watch the full Senate Committee hearing, click here.