American franchises have been a great avenue for countless hardworking American men and women to build their own version of the “American Dream.” Franchises have contributed an incalculable benefit in the American economy for decades. They boost our local economies; they donate millions of dollars to community and national charities; and so many of our communities are built up because of them. As of 2016, franchises employed 7.6 million Americans and have injected $674 billion into the U.S. economy.
Now, American franchises are facing an attack on their entrepreneurial spirit.
Last week, the Supreme Court ruled in Janus v AFSCME that public-sector unions cannot force government employees to pay union dues. Employees should be the ones to decide where and how to spend their hard-earned paychecks. This ruling was a tremendous victory for men and women who want to decide for themselves if they want to join a union. Plain and simple, SCOTUS made it impossible for public employees to be coerced into financially propping up a union.
After the Janus ruling, the unions are turning their focus back to fighting a staple of the American economy: franchises. The Service Employee International Union (SEIU) is looking to utilize a 2015 Obama-era National Labor Relations Board (NLRB) ruling that expanded “joint-employer” classification to include franchises. Beforehand, the NLRB operated under long-standing precedent that franchisors (the corporate brand name) were separate entities from franchisees (the local small businesses under the brand name).
What does this mean? It means franchise employees had the choice whether or not to unionize. Not so after the 2015 ruling. It means groups like the SEIU can possibly organize labor under the large corporate name and hold franchise subsidiaries liable for employment practices. For example, McDonald’s workers could be unionized under the corporate name, and any legal action taken against McDonald’s would include any and all franchises under the McDonald’s brand name. Bad news for American entrepreneurship and small business.
Negative impacts on franchisees and small business are countless. Unions want this rule to stand because it will expand their union membership base – regardless of members desire – and deepen their union pockets. According to the Manhattan Institute, if the SEIU organized just half of the McDonald’s workforce it would make $155 million a year.
Luckily the small business community remains optimistic so far: last November the House passed the Save Local Business Act (H.R. 3441) which clarified that franchises are not covered under joint-employers. Currently, this legislation is being blocked in the Senate by Senators Elizabeth Warren (D-MA) and Patty Murray (D-WA). To save franchises and prevent a significant blow to the American economy, Congress should attach the Save Local Business Act to must-pass legislation like the appropriations bill and protect franchise workers and owners from this misguided NLRB ruling.