Update – Franchisor Liability as Joint-Employer

As recent as April of this year, the Department of Labor (DOL) issued an opinion on what constitutes Joint Employer infractions. There a four relevant factors to consider when presented with a Joint-Employer issue according to this Notice of Proposed Rule-Making: The extent to which the franchisor has the ability to hire and/or terminate the employee, The amount of control the franchisor exercises over the employee’s schedule and conditions under which the employee works, If the franchisor determines how much the franchisee is paid and how often, and Where and by whom the employee files are kept. The DOL believes this to be probative to the actual issues courts are presented: what is the actual involvement of the Franchisor in the Franchisee’s employment practices and thus what is their liability in the employment of their individual agents? This proposed rule creates clearer guidance on topics including if Franchisor-provided training materials not being enough to create a joint-employer situation. Should this rule be adopted, it would not carry the weight of law, but would provide guidance to the interpretation of the FLSA and joint-employer issues. If you are considering franchising, be proactive about understanding your joint-employer liability and contact today to get your answers. You can contact us at (800) 670-8051 or email us your inquiry to . In case you missed it: Franchisor Liability As a Joint-Employer Franchisors have a valid interest in protecting the brand they have worked hard to create. they accomplish this by requiring uniformity from their franchisees and exercising control over certain aspects of their franchisees’ operations. This includes control over the location and look of their franchisees’ places of business, the products and services offered by their franchisees and how intellectual property is utilized and protected by their franchisees. Franchisors also exercise control


Concerns Over Franchisors’ Use of Surveillance Video

Franchisors have utilized technology for many years to build and maintain their brands. Franchisors have used point-of-sale technology to track their customers’ buying trends, banking technology to streamline their franchisees’ payment of royalties, and social media to maximize their marketing efforts.  Most, if not all, of these uses have proven to be successful and have benefitted everyone in the franchise system, including the franchisor, franchisees and their customers.  However, a recent trend of using video surveillance is causing some to ask whether franchisors are going too far. Specifically, franchisors in recent years have started requesting that surveillance cameras be installed in their franchisees’ places of business so they can monitor the actions of employees and customers.  While there are certain potential benefits that can be derived from this use of surveillance, there are also many concerns that should be considered and addressed before any surveillance plan is implemented. Basis for Surveillance Requests Franchisors are making these requests for surveillance pursuant to provisions commonly found in franchise agreements that require the franchisees to conduct their business in accordance with the then-current standards set forth by the franchisor.  These standards are usually found in the operations manual that can modified as often as the franchisor deems necessary.  These provisions allow for franchisors to continually improve their brand and the operations of their franchisees while maintaining the necessary continuity between locations. These provisions are, or should be, concerning to franchisees because they are requiring compliance with standards that are unknown to the franchisee at the time the franchise agreement is executed.  Franchisees commonly oppose new requirements to the extent they constitute material changes and/or are costly to implement.  However, these provisions are generally enforceable to the extent the franchisor can demonstrate a reasonable basis for the new standard and the change furthers a