NLRB McDonalds Decision Could Impact Franchisors Nationwide

The National Labor Relations Board (NLRB) Office of General Counsel authorized complaints filed by employees of McDonalds franchisees could also be held against McDonalds USA, LLC, the franchisor. This has tremendous significance for all franchisors and could have far reaching consequences in the future for franchisors nationwide. NLRB held that McDonalds corporate is a “joint employer” with its franchisees. If this decision stands up, franchisors, and McDonalds in particular, may be held liable for all the infractions of its franchisees, possibly extending to joint liability for other types of actions by its franchisees.

McDonalds and the International Franchise Association (IFA) plan to appeal any rulings from the NLRB that enforce this posture. Clearly, if pursued, this ruling will open the door for many types of decisions against a franchisor for the actions of its franchisees.

Franchisees are independent contractors and business owners who run their businesses with certain controls exercised by the franchisor. However, those controls rarely cover such matters as when to fire an employee or how to handle labor issues or placing labor restrictions.To have a governmental body hold that a franchisor is liable for those types of actions, along with a franchisee, is a clear lack of understanding of the franchisor/franchisee relationship, which is a unique relationship.

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