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ARTICLE · 14 MARCH 2016

Franchising Model On Trial

Fox Rothschild LLP
Fox Rothschild LLP
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Without them, well, the model is likely to fail. We will continue to monitor the case and update as appropriate.

United StatesCorporate/Commercial Law

Trial opened last week before a NLRB Administrative Law Judge in New York regarding the extent of the NLRB’s joint employer doctrine. The trial seeks to have McDonald’s named the joint employer of the employees of its franchisees. Why? The simple answer is that a joint employer finding would substantially simplify union organizing.

The case promises to be a long slog. Even a cursory look at the opening statement made by Jamie Rucker, lead counsel for the NLRB, shows that it is not McDonald’s but all of franchising that is on trial. The statement took aim at many things common in franchising today: the use of programs to help franchisees identify strong candidates for employment; brand standards, such as the amount of time McDonald’s specifies in which orders are to be taken and filled; suggestions made by operations consultants hired by the franchisor; suggested local-market pay scales; and even standard form libraries. These types of things are the bread-and-butter

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