Business groups are up in arms over a National Labor Relations Board (NLRB) decision that they fear could demolish the legal wall between corporations and their franchises.
The NLRB’s finding that McDonald’s has joint employer status, along with its franchisees, over the chain’s thousands of workers could expose the company to claims from workers who say their labor rights have been violated.
If it stands, the determination could lead to an uptick in lawsuits against franchisors and force corporate management to the table in collective bargaining situations.
Industry groups are pledging to fight the determination, saying it threatens to blow up a business model that withstood the Great Recession as other sectors faltered.
“This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors,” said International Franchise Association President Steve Caldeira.
Unions and their allies say the decision merely responds to an evolution in the franchise industry that has enabled companies to wield substantial control over stores while insulating themselves from labor and workplace disputes.
Corporate management of McDonald’s franchises, they argue, goes well beyond setting protocol for food preparation and other activities needed to protect its brand. Unions say the company’s control effectively extends to working conditions and employment decisions.
The group Fast Food Forward has been at the forefront of a national push for higher wages for workers at McDonald’s and other fast-food restaurants.