On July 1, 2014, the stakes were raised for franchisors. A major decision by the U.S. National Labor Relations Board will likely change the playbook for franchisors.
NLRB General Counsel Richard Griffin ruled a franchisor, who may have little to no say in how a particular franchise treats its workers, can be held liable for suspected labor-law violations.
For franchisors, it’s a scary thought. Any threat to the three-decade old decision by the NLRB, which had afforded a measure of protection for franchisors by limiting exposure of a franchisor to “personal decisions made by franchisee” is a major game changer.
An issue with such far-reaching implications to the many business owners who operate a franchise is far from settled. Many fear it has opened a Pandora’s Box of legal wrangling that could have a major impact on operating a franchise.
Undoubtedly some will see the decision as politically motivated, but that does little to help assuage the fear of sanction by the NLRB. One fear shared by many in the franchising world is the specter of shared liability between franchisor and franchisee.
Owning a franchise is a popular means to entrepreneurship, so it’s highly unlikely this politically inspired decision will discourage aspiring entrepreneurs from owning a piece of the American Dream. Even so, tapping the expertise of a franchising expert can boost the bottom line, regardless of what decisions are handed down by the powers that be.
