With nearly a century of new growth, business franchising is still growing in America. The number of franchise institutions grew from 697, 943 in 2013 to 806, 270 a generation later, and will increase to an estimated 821, 589 institutions this month, according to Statista information.
Licensed businesses are often stereotyped when quick- food establishments. The type of businesses that are franchised run the gamut from, yes, food ( McDonald’s, Popeyes ) to hardware (ACE ) to hospitality ( Red Lion ) to haircuts ( Great Clips ) to animal care ( Woof Gang Bakery and Grooming ), and so much more. These are growth times for company packaging.
When you consider that two distinct current national governments have advocated for changes that may reduce franchising to a size, this is equally amazing. As a rebuke to trial attorneys and organized workers, the National Labor Relations Board and President Joe Biden‘s administrations have attempted to pass the combined firm rule.
If it is implemented, critics charge that the combined company law would start franchisers, the companies that create the brands, to greater responsibility and mass unionization drives. Additionally, it would likely lower franchisees ‘ profitability and autonomy, which are the smaller, rent-only organizations. Other industries may be burdened by it, but franchising challenges are near existential.
How, despite regulatory efforts that are central to their business model, have franchises managed significant growth? One industry representative claimed that it is not unfortunate that the majority of Congresses have opposed these initiatives.
The International Franchise Association’s senior vice president of government relations, Michael Layman, told the Washington Examiner,” We are grateful to the bipartisan majority in Congress who has supported franchising.” Congress “voted to nix this harmful policy three times.”
The Republican-controlled House of Representatives recently voted to repeal the Congressional Review Act by 207 to 177 votes. By a vote of 50 to 48, the Democratic-controlled Senate ratified the resolution. On May 1, the bill arrived at the Oval Office.
According to Layman,” President Biden’s support for small businesses is demonstrated by his decision to support the NLRB.”
President Joe Biden argued in a statement that the joint employer rule would “prevent companies from evading their bargaining obligations or liability when they control a worker’s working condition– even if they reserve such control or exercise it indirectly through a subcontractor or other intermediary.”
The right to organize is rendered useless whenever the workers cannot bargain collectively with each of those employers, according to the president.
Congress then tried and failed to override Biden’s veto. Whether or not supplying, say, uniforms and signage and milkshake machines really counts as” control]ling ] a worker’s working condition” then became a matter for courts to sort out.
Thus far, the rule is n’t faring well in the judiciary. The U. S. Chamber of Commerce sued the NLRB. In a March 8 decision, J. Campbell Barker, a judge for the Eastern District of Texas for the United States, vehemently refuted and revoked the rule.
According to Barker, NLRB “largely backhanded and failed to reasonably address the disruptive impact of the new rule on various industries.” Franchised businesses, for instance, had about$ 825 billion of economic output in 2022, and more than 8 million workers.
The judge was n’t willing to upset that economic apple cart based on what he found to be the government’s flimsy rationale. He claimed that the rule “exceeds the bounds of common law” and “runs headlong” into Supreme Court precedent.
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The NLRB can appeal Barker’s ruling, but it may not fare better in other courts or in the U. S. Supreme Court down the road.
Most franchisees will likely breathe a sigh of relief and return to work as soon as the joint employer rule does finally end. There’s a great deal of food to be made, rooms to be rented, hair to be cut, and goods to be sold.
