May 3, 2016

The National Labor Relations Board ruling labeling McDonald’s as a joint employer triggered a wave of concern in the franchising world. It took a step in the wrong direction for franchisors. While McDonald’s continues to fight the ruling, the precedence still stands. The McDonald’s corporation can be held liable as a co-employer.

In light of this disruption in the franchising world, I recommend that all franchisors review their operations and update their Franchise Disclosure Document and Operations Manuals. 

If you aren’t up to date on this particular ruling, check out my Huffington Post article. There I outline in more detail four specific steps for parent companies to take today.

At PLAYLive, we have been taking steps to ensure we are protected as well.

Without knowing the specifics, it’s likely that McDonald’s was overreaching their management or influence on hiring, firing, and training. Our goal at PLAYLive is to create a clear and defined separation from our corporate office and any of these practices in the franchise. While our operations manual and FDD were good to start with, we don’t want to allow any wriggle room for a joint employer finding from the NRL.

That means we want to emphasize that the burden of hiring, firing, and training is on the franchisee and the franchisee alone. When it comes to employees, we train the franchisee on what constitutes a good employee. This includes procedures to train staff as well as outlines on disciplinary actions in different settings. While we educate the operator on these, the application of these practices falls on the franchisee.

All of this is updated in our operations manual and Franchise Disclosure Document (FDD).

Additionally, we have adopted an online training system for franchisees. This practice is becoming increasingly popular among franchisors. For starters, it helps to reduce costs for the franchisee since they don’t need to pay for a corporate trainer to come to their facility to execute the training. Secondly, it helps to create additional separation from our PLAYLive corporate office and the hiring practices at the franchisee level.

If you haven’t reviewed your operations manual or FDD since the NRL ruling, it’s time to take a look under the hood of your franchise. Contact me today, and we can ensure you have a strong, legal foundation in this ever-changing franchising industry.