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AAFD Member Alert: NLRB General Counsel Finds McDonald’s USA may be Joint Employer of Restaurant Employees – Important Implications for US Franchise Owners

On Tuesday, July 29, 2014, the General Counsel to the US National Labor Relations Board (NLRB) issued an opinion that McDonald’s Corporation could be deemed to be the joint employer of thousands of line employees at McDonald’s restaurants due to the amount of control that McDonald’s exercises over its franchise operators. Here is a link to the NLRB release:http://www.nlrb.gov/news-outreach/news-story/nlrb-office-general-counsel-authorizes-complaints-against-mcdonalds AAFD Chairman, Robert Purvin issued the following statement to MSNBC: “The AAFD has been arguing for years that franchisor control of franchisee conduct places great stress on the validity of an independent contractor relationship, such that franchise owners (and their employees) may well be deemed to be employees (or indentured servants) of their franchisors.  So it sounds like this is a shoe I have expected would finally drop.  The franchising community needs to take stock of the separation of authority that needs to be present to create a contractor vs. an employer relationship.” An MSNBC article by Tim Noah has quoted Purvin. The article examines the issue and applauds increased government scrutiny of independent contractor relationships in franchising.  http://www.msnbc.com/msnbc/mcdonalds-fissured-workplace. The AAFD seeks to protect franchisee rights to operate as independent businesses, and to protect franchisee business ownership equity. The evolution of franchisor control of franchise systems has continually eroded franchisee rights and equity. The NLRB decision suggests that some franchisors, like McDonald’s, may have crossed a line that destroys the claim that owner-operators are independent business owners. Although not the first decision of its kind, the NLRB opinion is a ground shaking event that is reverberating within the franchising community.  In the past, the US Small Business Administration declined to treat certain franchises as small businesses due to excessive franchisor control, and the US Department of Labor has also found the presence of employer relationships in some models that claim to be franchises. Some recent court decisions, particularly in the janitorial business sector, have reclassified franchisees as employees. The International Franchise Association has issued at least two statements regarding the NLRB action. The IFA issued a Smart Brief on the subject on July 30: “The National Labor Relations Board voted that McDonald's will be a joint respondent in 43 complaints filed against independent operators. “If...

How Franchisee Associations Can Help Level The Playing Field Between Franchisees And Franchisors

How Franchisee Associations Can Help Level The Playing Field Between Franchisees And Franchisors

Jul 28, 2014

In their marketing materials, franchisors like to tout themselves as a partner, a coach, or even a benevolent big brother to franchisees, providing training, advice, and support whenever the franchisee needs it. The whole idea of a franchise system has been carefully cultivated to conjure images of the franchisor and franchisee working hand-in-hand toward mutual success. This idyllic concept is often shattered by the reality of how the franchisor-franchisee relationship really works. When franchisees dig into the 50+ pages of the typical franchise agreement, they may realize that the franchisor requires strict adherence to the company’s operating procedure while offering no promise of support. In fact, many franchise agreements specify that that franchisees derive no goodwill or owner’s equity from running a franchise. The franchise agreements are so restrictive that franchisees often have less flexibility than their own employees! That’s why Robert Purvin, Chairman of the AAFD, regularly compares franchise ownership to modern day serfdom. Franchisees who sign on the dotted line are agreeing to play on an uneven field where the franchisor maintains complete control over the enterprise. If the franchisee struggles or opposes a franchisor’s action, they have little recourse even if the franchisor’s actions (or, more often, lack of support) are hurting the franchisee’s profits. How can the franchisee possibly level the playing field? We believe that a strong and cohesive franchise association is one of the most powerful ways that franchisees can gain the attention of the franchisor and build a more collaborative relationship. The power of the franchise association comes from the unity of the franchisees. Franchisors can easily ignore one unhappy franchisee, but when a significant number of franchisees (especially long-serving and high-earning franchisees) all speak with a single voice, most franchisors recognize the necessity to sit down at the table and listen. Franchise associations also provide additional wide ranging benefits, including: Shared Costs – Franchisees can share the costs of supportive services, such as ongoing legal advice and representation, when each member pitches in a small amount of money to achieve a significant funding pool. Communication – Franchise associations allow franchisees to discuss their unique experiences with one another to help identify the most pressing issues and...

California Fair Franchising Legislation SB 610 Advances. Key Committee Approves Sending the Bill to Full Vote in the CA Assembly

DATELINE: June 24, 2014, Sacramento CA. AAFD sponsored fair franchising legislation, California Senate Bill SB610, has been approved by the CA Assembly Committee on Business, Professions and Consumer Protection and is now advancing to a vote before the full California Assembly. The Bill passed the California Senate last year. SB610, introduced by Senator Hannah-Beth Jackson (D-Dist 19), will protect the duty of good faith and fair dealing in franchise relationships and reinforce the right of franchisees to join and participate in franchisee associations. The bill also provides important protections of franchisee rights with regard to franchise sales, transfers and terminations. Robert Purvin, chair of the American Association of Franchisees and Dealers expressed his pleasure on learning that the legislation is now advancing, "One more step forward to protect franchisee rights in California. The reports of the death of SB-610 have been greatly exaggerated." Purvin was most pleased that the Bill was approved by a bipartisan vote of 10 in favor and just two opposed (one Democrat and one Republican voted no). The SB 610 is supported by a coalition of franchise associations and other organizations that back consumer protection legislation. Joining the AAFD is the Coalition of Franchise Associations (CFA), the Asian American Hotel Owners Association (AAHOA), and the SEIU, among others, with significant leadership from John Gordon, of Pacific Management Consulting Group. Hundreds of individual franchisees wrote letters of support for the legislation. The Bill is being vigorously opposed by the International Franchise Association and other associations that represent big business such as the California Chamber of Commerce. Those interested in learning more about the bill and listening to an audio recording of yesterday’s hearing can visit Blue Maumau. The AAFD has issued a statement in support of the bill, which states in part: Modern franchise relationships are most always governed by one-sided ‘take it or leave it’ adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisees rights in the franchise relationship. For franchisees, the franchise relationship is almost always a ‘bet the farm’ transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and...

California Fair Franchising Legislation SB-610 “In Play” AAFD’s Robert Purvin to Testify Before California Assembly Business and Professions Committee on June 24, 2014

Sacramento – June 23, 2014 -- California Senate Bill SB-610, a piece of fair franchising legislation sponsored by the American Association of Franchisees and Dealers (AAFD), goes before the California Assembly Committee on Business, Professions and Consumer Protection on Tuesday morning, June 24, 2014. AAFD Chairman Robert Purvin has been asked to testify in support of the bill at the upcoming hearings. This is a critical time for California franchisees to demonstrate support for this important legislation by sending letters to Committee members and attending the Committee hearing. SB-610, introduced by Senator Hannah-Beth Jackson (D-Dist 19), seeks to protect the duty of good faith and fair dealing in franchise relationships and reinforce the right of franchisees to join and participate in franchisee associations. The bill also provides protections of franchisee rights with regard to franchise sales, transfers and terminations. The Bill is supported by a coalition of franchise associations and other organizations that back consumer protection legislation. Joining the AAFD is the Coalition of Franchise Associations (CFA), the Asian American Hotel Owners Association (AAHOA), and the SEIU, among others, with significant leadership from John Gordon, of Pacific Management Consulting Group. The Bill is opposed by the International Franchise Association and other associations that represent big business, including the California Chamber of Commerce. The AAFD has issued a statement in support of the bill (linked here), which states in part: Modern franchise relationships are most always governed by one-sided ‘take it or leave it’ adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisee’s rights in the franchise relationship. For franchisees, the franchise relationship is almost always a ‘bet the farm’ transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and a franchisor’s promise of substantial support. SB-610, as amended in 2014, takes a small but important step in recognizing and protecting franchisee rights. Most importantly, the statute would prohibit a franchisor from attempting to waive the duty of good faith implied in all agreements. The Bill also provides important protection of franchisee rights and interests in the event of the sale and/or termination of the franchise. Long term,...

Gerry Edtl

Gerry Edtl Consulting Gerry Edtl Consulting Contact: Gerry Edtl Work Address: 5360 Edmondson Pike #104 Nashville, TN 37211 work Work Phone: 615-948-3065work Work Email: gerry@gerryedtl.comINTERNET Visit Website | Show Map | Connections Business Directory | Leaflet | Wikimedia 5360 Edmondson Pike #104 Nashville TN 37211Get Directions Mr. Gerry Edtl is an expert in business profitability and direct sales and marketing. Gerry's experience has qualified him to coach business owners and their key staff in the elements of profit, and the stages of direct sales and marketing. In his 41 years of business experience he has analyzed and developed clear, actionable solutions to address the widespread confusion around profitability and direct sales and marketing. He has a unique way of making these two subjects simple to understand. His ability to work with a team has enabled him to successfully turn around every business he has worked in during his career. Mr. Edtl is now retired from the international franchising business after serving 34 years. For nineteen years he worked as a franchise turnaround specialist. His unique ability to bring out the true and best in each team member has made him a highly sought after business development leader. He also worked fifteen years as a business consultant, international speaker, educator, and seminar presenter. During those fifteen years he developed multiple sales and marketing processes, and customer service programs that earned him the respect of business owners and their key managers. Today, he is the Founder and President of Gerry Edtl Consulting, a corporation that serves business owners with proven Sales Leadership and Business Leadership Development. His company helps team leaders discover and realize their professional and personal potential as they build the team, improve the work, implement a plan, and enlarge capacity. Gerry is in business to help leaders; business owners, key managers and employees gain market share. Gerry's hobby is volunteer umpiring for Little League Baseball and Softball. He was selected to umpire at the 2013 Little League World Series, Junior Softball (14 year old girls) in Kirkland, WA. During his 18 years as a Little League volunteer he has learned that baseball is like life. Sometimes the call goes your way and sometimes it...

ServiceMaster® Franchisees Form AAFD Chapter

ServiceMaster Franchisee Owners’ Association To Provide Unified Voice SAN DIEGO, APRIL 2014 – In an effort to provide franchisees with a proactive voice, ServiceMaster® franchisees have formed a franchisee owners association as a chapter of the American Association of Franchisees and Dealers (AAFD). The association, known as the ServiceMaster Franchisee Owners’ Association (SMFOA), will work to develop stronger relationships with customers, foster a collaborative and productive relationship with ServiceMaster management, and protect each franchisee’s business equity. Longtime ServiceMaster franchisee, Jerry Winkley is the Chairman of the association’s steering committee until elections to adopt bylaws and elect an inaugural board of directors are completed in the next few weeks. SMFOA is a rapidly growing association that has gained over 100 members in just a few weeks. Its membership includes franchisees in all service lines of the ServiceMaster brand and in every region of the United States. “A key to a successful launch of a new association is the strength, passion, and credibility of its leadership,” said Robert Purvin, Chairman of the AAFD. “The men and women behind SMFOA have these qualities in abundance. The AAFD is proud to support such a motivated and high quality group of franchisees.” “I believe we have a rich ServiceMaster heritage and financial future to protect,” said SMFOA’s Jerry Winkley. ”Through SMFOA, we can speak with one voice and help the Home Office make better, long-term positive decisions that will benefit us all.” The AAFD, one of the oldest direct member franchisee trade associations in the United States, will help guide the SMFOA as it continues to grow, develop, and seek to implement its objectives. The AAFD has formed exclusive chapters for over 60 franchise systems and seeks to foster Total Quality Franchising. The SMFOA has currently received a very diverse and broad base of support from ServiceMaster franchisees of all sizes and geographic regions, including many of the top 200 franchises in the ServiceMaster network. The organization’s membership already represents well over a third of their division’s total customer level revenue (CLR), and the SMFOA expects to soon represent over half of all their division’s CLR in all of their combined divisions. The SMFOA’s objectives include: • Increasing communication among ServiceMaster franchisees to improve profitability and brand value • Compiling and sharing best practices within its membership • Providing a collective and coherent voice on behalf of its...

M. Blen Gee, Jr.

M. Blen. Gee, Jr. regularly represents franchisees and prospective franchisees. Mr. Gee does not represent franchisors. Mr. Gee’s areas of concentration include business litigation, mediation and arbitration; purchase or sale of businesses; and business, corporate and trade association law. Mr. Gee and his firm also have a very active automobile dealer practice. Mr. Gee is an honors graduate of the University of North Carolina School of Law and holds an AV Rating from Martindale-Hubbell, its highest peer review rating. Mr. Gee is a member of the AAFD Franchisee LegaLineSM. [divider...

W. Michael Garner

Clients who have worked with Michael praise his “extreme commitment to achieving the best possible outcome, and unwavering belief in our position.” They have called him “the ultimate legal professional” who presents a “brilliant case.” Chambers USA said he is a “litigator of significant prowess,” who is “great on his feet.” One client summed it up this way: “You are one awesome lawyer.”

Lewitt Hackman

Lewitt, Hackman, Shapiro, Marshall & Harlan is a full-service Los Angeles law firm for businesses and individuals.
franchise attorneys
*Certified Specialist Franchise & Distribution Law, State Bar of California Board of Legal Specialization
Los Angeles based Lewitt Hackman provides full service representation to franchisees, area franchisees, distributors, dealers and others involved in franchise relationships.

Peter Hanson

Peter Hanson is the founder and CEO of Futuredge LLC, offering franchisee association management services and a past multi-unit Huntington Learning Center franchisee.  Peter has served as Chief Operating Officer and Chief Financial Officer of the AAFD and is past president of the Association of Remedial Educators (the Huntington Franchisee Association). To contact Peter click...

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