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Question: Have there been any updates from the National Labor Relations Board on franchising issues?
Answer: Yes. As you know, the NLRB and its treatment of the franchise relationship has been in the news lately, particularly in relation to the franchisor-franchisee relationship being a joint employer relationship, meaning that the franchisor could be liable for the franchisee’s actions towards its employees. Recently, the NLRB considered whether Freshii Development, LLC (“Freshii”), franchisor of a fast-casual restaurant chain, was a joint employer with its franchisee under the National Labor Relations Act (the “Act”). The NLRB concluded that Freshii was not a joint employer with its franchisee under both the NLRB’s current standard and the standard recently proposed by its General Counsel in the McDonald’s cases.
In arriving at its decision that no joint employer relationship existed, the NLRB found the following facts important to its conclusion:
The Advice Memorandum provides instruction to franchisors about avoiding a joint employer relationship with its franchisees. However, uncertainty remains due to the fact that unlike most franchise systems, Freshii did not actively enforce the non-food-related requirements of its franchise agreement. The NLRB also advised that Freshii’s requirements regarding uniforms, initial training, store hours, food preparation, recipes, menu, and décor, without more, were not a basis for finding a joint employer relationship. This is good news for franchising!
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Read MoreAt Fahey Schultz Burzych Rhodes PLC, we’ve been helping municipalities, franchised businesses, employers, and more with their legal needs since 2008. We’d love to learn how we can help you, too.