Engaging in a franchise partnership means stepping into a relationship of exchanges and mutual benefits.
As a franchisor, you hand out little pieces of your business to willing partners, allowing them to use your established brand and operations to find success of their own. And as a franchisee, you put an invested effort into expanding the overarching business, offering a chance for growth without complication.
With these two-sided benefits, however, can come the question of where to draw the line between shared responsibility and individual liability. In terms of employee affairs, the recent McDonald's ruling by the National Labor Relations Board has put the answer up in the air.
The result of alleged labor law violations at individual McDonald's restaurants, the ruling determined that McDonald's Corporation could potentially be treated as a joint employer in such cases. This means that if a labor violation is filed against an independent branch, corporate can be held accountable no matter their level of involvement in the situation.
For now, the decision is specific only to McDonald's, but if it stands despite the company's plans to challenge, the implications could change the hiring game for franchise operations everywhere. Here's what the McDonald's ruling could mean for your hiring process, whether you are a franchisor or franchisee:
If the ruling persists, HR consistency throughout franchises--from corporate to the joint down the street--will become key. As a franchisor, you'll no longer be able to claim third party observer in franchisee-employee disputes. And with your lucrative corporate head in the mix, there will be stronger motivation for complaints to be filed.
Even if your franchise operation doesn't approach the size of the McDonald's network, you'll have become suddenly liable for more people than you bargained for. In order to protect your franchise, you'll need a way to keep a cautious eye on every franchisee location's hiring practices. This might also mean being choosier about who you do business with.
“If you have an owner-operator network representing your brand and you’re not sure what their hiring practices are — how they’re picking talent, managing performance or what they’re doing with regards to the overall process for talent selection — you ought to be really worried,” Hireology's CEO and Chief Hireologist Adam Robinson told the Chicago Daily Law Bulletin.
As a franchisee, you consider yourself--not corporate--to be the owner of your store. Underneath the encompassing brand of your franchise, you are the boss of the daily decisions and procedures. The McDonald's ruling could mean the loss of some of this freedom.
In order to protect itself, your franchisor will likely keep an eye on your hiring, firing, and other employee practices. They might even create a uniform code to ensure consistent practices across locations, which could lead to mounting pressure and friction in your partnership.
If the McDonald's ruling goes through, it will undoubtedly change the franchise model that has been standard for so long. And even if it doesn't, the conversation it has sparked will likely amount to a shift in the way you do business. Either way, it's best to anticipate the changes the ruling will bring, and figure out the reaction that will be best for your business--franchisor or franchisee. For more franchise hiring advice, check out our guide to hiring for your franchise locations.