Franchise 101 Spotlight: The International Franchise Association

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Special Edition

President of International Franchise Association (IFA) Visits Lewitt Hackman

For more than 55 years, the International Franchise Association has been committed to improving methods and business practices for all participants in franchising – whether working with the Federal Trade Commission, lobbying on legislation; or collaborating with franchisors and franchisees to improve relationships. The Lewitt Hackman firm has been a strong supporter of IFA, participating in the Association’s annual conventions and often speaking at the annual IFA legal symposium.

In recent years, IFA has faced an important threat to franchisors and franchisees – the changing standard on “joint employers” and increasing risks of “joint employer liability.” To increase awareness about this issue, receive ideas about IFA member preferences, and meet and greet the many franchise clients of the Lewitt Hackman firm, IFA President and Chief Executive Officer Robert Cresanti traveled from Washington D.C. to visit Lewitt Hackman. President Cresanti spoke with several of our franchisor and franchisee clients and firm attorneys about the joint employer liability problem, other work of the IFA, and developments in franchising.

Mr. Cresanti provided a history of joint employer litigation. In an unprecedented move in 2014, the National Labor Relations Board’s general counsel issued unfair labor practice complaints against McDonald’s and several of its franchisees, seeking to hold the franchisor partially liable for alleged labor practices because the franchisor established general operating procedures. This is alarming to IFA because most franchisors establish general operating procedures.

In 2015 the NLRB decided a case involving waste disposal company Browning-Ferris. The Board changed decades of practice, deciding that direct and immediate control of an employee is no longer the standard for determining joint employer liability. Based on the Browning-Ferris precedent franchisors could be liable as joint employers by just having the right to indirectly control terms of employment, even if a franchisor never exercised that control. The decision blurred the lines, further threatening the franchise business model.

Mr. Cresanti described the numerous closed doors he and IFA encountered in trying to explain a franchisor’s tenuous position in light of the NLRB’s decisions. Despite obstacles, he vowed IFA will continue fighting to keep franchise business models thriving in the U.S.

Several Lewitt Hackman clients who attended indicated they wish to get more involved in IFA. Lewitt Hackman has signed up to host regular IFA networking events, and firm lawyers will continue to speak at IFA events. Lewitt Hackman thanks IFA CEO Robert Cresanti for visiting our firm and encourages franchisors and franchisees to thin about involvement in IFA. More information is at www.franchise.org.

This communication published by Lewitt Hackman is intended as general information and may not be relied upon as legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of a particular situation. Copyright Lewitt Hackman 2016. All Rights Reserved.

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