Why the NLRB is assaulting the franchise industry

27/02/2015
There are two primary ways in the U.S. to capitalize rapid business expansion beyond internal financial resources: Outside investors (including going public) and franchising.
This article is about franchising being in jeopardy.

Here are the basic steps of the franchise model:

1. An entrepreneur-turned-franchisor turns the best practices proven at the mothership operation into licensed intellectual property (IP).
2. Independent franchisees purchase this IP and agree to follow rules prescribed in the franchise agreement about how the "product" is presented to the marketplace, like signage, branding and ingredients.

Everything else, including employee hiring, management and firing, is the sole discretion of the franchisee, who succeeds or fails based on ability and local circumstances.
As the headwaters of modern franchising, the U.S. is the global leader in this business expansion model, with more than 3,000 franchise options in more than 75 industries. And almost a million franchise establishments — all small businesses — employ almost 10 million people and generate roughly 5 percent of the U.S. economy. Indeed, franchising has been a big part of the American Dream for thousands of entrepreneurs on both sides of the franchise agreement for more than 150 years.
Alas, recent actions by the National Labor Relations Board (NLRB) could put this part of the American Dream in jeopardy. In labor violation complaints against McDonalds, the NLRB says it intends to treat the franchisor corporation as joint employer with its thousands of franchisees. It gets worse: According to Kent Hoover, Washington Bureau Chief for The Business Journals, " The NLRB as a whole may adopt this standard for all businesses."

Fonte:http://www.bizjournals.com/bizjournals/how-to/growth-strategies/2015/02/why-the-nlrb-is-assaulting-the-franchise-industry.html

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