IFA: joint employer status could hurt franchise growth in 2015

Franchise businesses are worried the National Labor Relations Board decision over joint-employer status will “deflate” growth projections in 2015. 

"Last month, the National Labor Relations Board (NLRB) moved to upend decades of law and practice by issuing a complaint against McDonald's saying that it should be considered a ‘joint employer’ with its franchisees,” Steve Caldeira, president and CEO of the International Franchise Association (IFA), said in a release.

“The entire business model of franchising is endangered by this ill-conceived complaint.” 

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IFA’s released its Franchise Business Economic Outlook: 2015 on Wednesday, projecting more jobs and franchise locations this year, but said the NLRB’s decision could significantly impact that growth. 

The report said franchise businesses are expected to add 247,000 new jobs, a 2.9 percent increase over last year to 8.8. million jobs, and the number of franchises will increase by 12,111, or 1.6 percent, to 781,794 establishments. 

And while economic output from franchise businesses is estimated to increase by 5.4 percent over last year to $889 billion, business owners said they are concerned that minimum wage increases could negatively impact their bottom line. 

“The business model for franchising is under assault,” Matthew Patinkin, a franchise owner of Auntie Anne’s Pretzel shops, said in a IFA release. 

“First, the complaint by the general counsel at the National Labor Relations Board leaves franchise business owners like me uncertain and very concerned about the future.  The complaint targets McDonald’s, but all other franchises are also at risk. I’m also concerned that Obamacare has changed the definition of full time to 30 hours per week.”

Patinkin said the change to a 30 hours per week for full time workers forced him to reduce hours for some of his employees.