Standardized Franchise Hiring for the Now

Protecting your brand as a desirable employer is important to you as a Franchisor with dozens, hundreds, or even thousands of locations with your logo on the door. With the PRO Act passing the House on March 9, 2021 franchisors along with many other businesses, are worried about how the legislation might affect their businesses and the relationship with their (current and future) employees.

If it passes the Senate, the PRO Act, or the Protecting the Right to Organize Act of 2021, will be the most significant update to labor laws since WWII.

AAF research found that the broadened joint-employer standard would impact 44 percent of private sector employers or 54.6 million workers. (American Action Forum)

Supporters of the PRO Act praise the legislation for shifting power away from big business to the workers. The Act would give employees the ability to organize and negotiate with collective bargaining to improve wages, benefits, and working conditions. 

Those against the Act criticize it for undermining worker’s rights and putting some employers at undue risk of labor disputes.

Effect on Franchise Recruiting

If signed into law, the Act would primarily impact Franchisors in two ways: increase joint liability and reclassify certain types of employees.

One way franchisors have achieved standardized hiring practices across their locations without opening themselves up to joint liability is to leverage a single recruiting platform. Encouraging franchisees to use the same hiring software across locations creates a uniform brand and candidate experience, as well as the ability to share applicants. It also allows for corporate office oversight without the risk associated with joint liability. However, under the PRO Act, certain training and advising could classify franchisors as joint employers.

Secondly, the Act will change the classification criteria for independent contractors — turning many freelancers, subcontractors, and gig workers into employees.

Joint Liability

The PRO Act would seal the National Labor Relations Act (NLRB) joint employer status rule into law. Under the new standard, franchisors would be held jointly responsible for the franchisee’s employees.

The International Franchise Association reports that in 2015, following the NLRB decision, joint employer lawsuits increased 93% and cost individual franchise businesses an average of $42,000.”

Detractors say these requirements could halt franchisor support or significantly increase control — effectively ending the franchise model.

Employee Classification

The definitional changes to employee classification under the PRO Act would be set by the “ABC test”, which declares that “an individual performing any service shall be considered an employee and not an independent contractor, unless…” they meet a certain set of criteria that releases them from the definition.

Franchisors, along with freelancers and gig economy workers, are organizing against the reclassification. According to the Internal Franchise Association (IFA), “it would likely define franchisees as employees of their brand, instead of the owners that they really are.”

Planning Ahead

Franchisors would be wise to consider how their strategy will shift in the unlikely event the legislation passes. They should contact their legislators to learn more about how they would be impacted. Plus, confirm their legal teams are staying abreast of the changes, so they can pivot as needed.

Whatever lies ahead, one thing we know for sure is they need to continuously have incredible employees operating the business day to day. Since legislative outcomes are hard to predict, having strategic partners on your side, like HiringThing, is crucial. Chat with one of our business development representatives today to see how we can help standardize your franchise hiring. 

About HiringThing

HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable HR technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the HiringThing HR platform empowers anyone, anywhere to build their dream team.