Two decisions that change the rules for the restaurant biz

Two big recent developments reshaping business rules for franchise operators and brands:

(1)  California State Assembly Thursday (8/14/14) passed a bill strengthening the rights of business people who operate franchises against the companies such as Subway and McDonalds who issue the franchise licenses.  It will now be harder for these big brands to revoke a franchisee’s license, and easier for the franchisee to sell their business or join a franchise association without interference from the brand.

(2)  In another recent development, the National Labor Relations Board general counsel held that a franchise brand company (Subway etc) can be considered a “joint employer” with the franchisee when it comes to labor law violations, eliminating the traditional legal insulation of the brand company from activities of its franchisees.

From the brands perspective these are losses, but from the franchisees and workers point of view they are wins.  Thoughts?



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