Business & Lobbying

Franchise owners flock to DC in defense of McDonald’s

Fast food restaurateurs, hotel operators and other franchise owners from around the country are descending upon Washington on Tuesday to register their opposition to a National Labor Relations Board (NLRB) finding they say threatens to undermine their business model.

The latest salvo in an escalating battle between labor and business, the fly-in is part of the International Franchise Association’s (IFA) strategy to overturn a preliminary NLRB decision that corporations like McDonald’s share joint employer status with their franchisees.

{mosads}If upheld, the finding would force corporate managers to the table in collective bargaining discussions and expose them to claims of labor rights violations from workers at chain stores and businesses.

The fight began only recently, but the business group is moving to quickly shore up crucial support within Congress.

“We’re going to make our voices heard,” IFA President Steve Caldeira said, describing the developments at the NLRB as “a threatening situation” for an otherwise healthy industry that added jobs during the economic crisis.

“It would have a chilling effect on job creation,” he said.

The fight centers on a July finding by the NLRB’s Office of General Counsel that McDonald’s USA LLC could be named as a “joint employer respondent” in scores of cases alleging workers’ rights were violated in response to protests for higher pay.

Franchisors have traditionally been insulated from such cases, but the NLRB finding supports a view held by unions that corporations like McDonald’s enjoy control over virtually every facet of its stores while bearing little responsibility for worker treatment. 

“The reality is that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge,” said Micah Wissinger, an attorney representing McDonald’s workers in New York City.

New York, Chicago, Detroit and other cities have been home to a series of protests in recent years involving workers demanding wages of at least $15 an hour.

The Fast Food Forward movement has succeeded in grabbing national headlines, most recently this month, when dozens of workers were arrested for their parts in coordinated protests around the country.

The campaign asserts that anything less than $15 an hour is not a livable wage. And the push was buoyed by the NLRB’s joint employer designation, which could shift significant leverage to workers engaged in such labor disputes, if it stands.

However, the finding will be subject to review by an administrative law judge, once complaints naming McDonald’s are formally made. The losing side in those cases could then appeal to the full NLRB and, after that, federal courts.

Even if ultimately upheld, the McDonald’s joint-employer status would not automatically apply to other franchise chains, which would be judged individually going forward.

“Each company potentially coming under any form of review by NLRB has different policies and practices that would need to be evaluated in a case-by-the-case basis,” said John Gordon, a California-based restaurant analyst at Pacific Management Consulting Group.

But business groups fear that the dispute could create a damaging precedent for the industry, which has enjoyed steady growth in recent years, even as other segments of the economy faltered.

Businesses are seeking to portray the protest campaign as a clear effort orchestrated by the Service Employees International Union to organize the nation’s fast food workers and replenish the powerful labor group’s dwindling ranks.

And while workers take their case to the streets, the IFA is turning its attention to Capitol Hill.

More than 350 franchisees and franchisors are expected to participate in this week’s event in Washington, which will include remarks from Speaker John Boehner (R-Ohio) and former Mississippi Gov. Haley Barbour (R).

The business owners plan to flood lawmakers’ offices, pressing them to oppose the NLRB’s finding. While they have no direct role in the fight yet, the IFA believes Congress will play a critical role in its outcome, whether through oversight of the NLRB or direct legislation.

To date, industry groups critical of the NLRB’s position have found a sympathetic ear from Republicans. In the House, the Education and the Workforce Committee convened a hearing last week to rail against the decision.

Senate Republicans have also jumped to the businesses’ defense.

“The franchise relationship is an American success story that allows entrepreneurs to climb the ladder of economic success, and the NLRB is attempting to change that model by creating great uncertainty for workers and business owners about who’s in charge,” Sen. Lamar Alexander (Tenn.) said.

Alexander, the top Republican on the Health, Education, Labor and Pensions Committee, and Senate Minority Leader Mitch McConnell (R-Ky.) plan this week to unveil a bill they say would “turn the NLRB into more of an umpire than an advocate.” 

Though details have not been released, the legislation is not expected to directly address the joint-employer issue.

Looking to expand its support, the franchise association will argue that the NLRB finding would reduce the incentive to own a franchise by designating the umbrella corporation as a formal employer.

Caldeira said franchisees operate independently, as small-business owners who “have their own skin in the game,” via personal investment.

“It would essentially take away their autonomy to run their own business,” he said of the decision.

The IFA has at its disposal a formidable, if relatively small, lobbying force.

The group spent $745,000 to lobby the federal government last year but has shown signs of ramping up its activity. It added a third outside lobbying firm, American Continental Group, to its roster this month. 

Lobbyists on the account include Stephen Pinkos, a former Republican leadership aide; Manus Cooney, a former Senate Judiciary panel counsel who also advised Sen. John McCain’s (R-Ariz.) 2008 presidential run; and C. Stuart Chapman, a past chief of staff to Rep. Carolyn McCarthy (D-N.Y.), who oversaw her work on the House Education and the Workforce Committee.

Forms indicate the American Continental Group will be taking the trade group around to offices on Capitol Hill to provide an “introduction of members to IFA.”

The group has also worked to grow its influence in Washington via the campaign circuit. The IFA’s expenditures through the association’s political action committee increased each election cycle between 2000 and 2012, when spending eclipsed the $1 million mark, according to data kept by the Center for Responsive Politics.

Through the end of July, the IFA had doled out just under $965,000, the figures show.

Caldeira said the group has increasingly looked to back members on both sides of the aisle who are supportive of its priorities. This time around, the joint-employer issue is near the top of the list.

“We’re going to ask lawmakers to become more aware of this threatening situation,” he said, later adding, “This is an election year.”

Megan R. Wilson contributed to this story. 

Tags Boehner Carolyn McCarthy John Boehner John McCain Lamar Alexander Mitch McConnell
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