Franchise Protection Advances

Date: April 04, 2017

If a measure introduced by Rep. Jim Carns is approved, Alabama will join 10 other states in passing legislation to protect the state’s franchise businesses.

House Bill 390 clarifies the employment relationship between an individual franchise and the corporate franchisor by stating that the franchisor is not the employer of an individual franchise or any of its employees. The measure would also stop state enforcement agencies and local government units from expanding the new federal joint-employer standard.

HB 390 comes as a response to a National Labor Relations Board ruling made in August 2015. In that decision, the NLRB overturned the existing joint employer standard and expanded the definition. Under the new standard, employees of an individual franchise are considered under the control of the larger franchising corporation, meaning that owners of individual operations would need permission from the franchisor to hire, fire, and discipline their own employees. This expanded definition also makes it easier for workers at franchises like fast food chains to unionize.

In March, HB 390 passed with a unanimous vote from the House Committee on Commerce and Small Business. Nearby states Georgia, Louisiana, and Tennessee have also passed franchise-protecting bills in recent years.

Related Content: Small Business News | Alabama | Economy

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