Why Franchisors Fear The Joint Employer Lawsuits

When the National Labor Relations Board decided to consider McDonald’s a joint employer of all workers within the franchise, fears spread like wildfire. This ruling meant that any McDonald’s employee was considered jointly employed with the McDonald’s franchisor, even though individual franchisees hired the employees. So if a problem came up like injustice in the hiring or firing department, complaints could go all the way up to the top.

This completely disrupts the franchise business model, and not in an innovative way. The declaration by the NLRB back in July resulted in 43 board-authorized cases involving the McDonald’s franchisor, according to this article in Entrepreneur Magazine. In the end this could cost McDonald’s (and any other franchise operating in this model) a fortune to settle the issues. And McDonald’s isn’t the only big-named franchise dealing with this issue.

This fate can be avoided by making sure there is no clause within your contract that deems the franchisor and franchisees joint employers. As a franchisor, this protects you from mistakes that franchisees may or may not make. It’s best to play it safe and make sure you aren’t liable for all employees’ actions.

Because this situation is concerning to many of you, we’ve scheduled a webinar for this Wednesday, October 15, 12 – 1 PM on how to avoid McDonald’s fate if you are a franchisee. Our webinars are interactive discussions, so please register here if you are interested in speaking with us and other franchisees/franchisors about this pressing issue. 

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