Last month brought big news for franchised small businesses across the country when the U.S. House of Representatives gathered with industry experts for a hearing held before the Subcommittee on Health, Employment, Labor and Pensions of the House Committee on Education and the Workforce.
A major focus was the definition of a “joint employer,” specifically between a franchisor and its franchisees’ employees. The National Labor Relations Board (NLRB) recently requested clarification on the definition — which raised concern with the International Franchise Association (IFA). The IFA strongly believes if the NLRB agrees that franchisors are joint employers of franchisees’ employees, the result would be more oversight by franchisors and less autonomy for franchisees.
The CEO of CKE Restaurants, Andrew Puzder, who is also an IFA board member, explained during his remarks that while the relationship between franchisors and franchisees was mutually beneficial, the two operate separately. Demonstrating his point, Puzder explained that CKE and its franchisees have more than 70,000 employees across the U.S. and a change in joint-employer status would require “massive oversight on CKE’s behalf” — ultimately leading to a significant increase in costs associated with CKE having to monitor the hiring process and essentially wiping out franchisees’ independence and discouraging hiring.
In related news, the U.S. House of Representatives recently passed America’s Small Business Tax Relief Act of 2014 (H.R. 4457), giving franchisees and other small business owners the ability to deduct up to $500,000 in purchases. The deduction limit had recently reverted to $25,000 after a temporary expensing provision expired. It’s great news for franchises as the House passes legislation that allows franchisees to reinvest in their businesses to fuel expansion and growth, according to IFA president and CEO Steve Caldeira.
We’ll continue to follow these and other issues related to franchising regulations, so stay tuned!