Franchise Model Update

There may soon be good news for businesses that rely on the franchise model, which, along with gig work, has been under assault from the left for quite some time.

The good news comes in the form of proposed regulations concerning "joint employment" that have just passed the required period for public comment:

These distinctions between business relationships and arrangements matter under our labor laws. What's known as "joint employment" occurs when two or more entities are both liable for a single worker's terms and conditions of employment. There's been a fight in Washington over changing the nature of franchising, staffing agenices, and even independent contracting relationships from partnerships to traditional employer -- employee arrangements, to the detriment of all and the communities they serve. The good news is that the Trump Department of Labor planted a flag in the ground to protect these independent arrangements in its thoughtful proposed joint employer rule.

The public comment period just concluded, but from the over 200 submissions, many franchise owners clearly communicated that they are their own boss, not the franchisor. Federal policy should weigh in favor of protecting this distinction rather than increasing legal liabilities for franchisors over the day-to-day employment decisions of independent business owners -- causing the whole model to crumble. [bold added]

The rest of the article does well to flesh out the advantages of contract work and the franchise business model, and by contrast, the potential damage of removing legal protection for them.

While this is good news, one must keep in mind a fact that is also apparent from the piece: As a regulatory change, this measure will be subject to the policies of future administrations. (A similar move in the first Trump term was just about wiped out by Biden.)

Until and unless advocates of liberty gain enough cultural momentum to cause a decisive political shift in favor of free markets, this battle will continue indefinitely, threatening countless small businesses in the long-term and discouraging entrepreneurs.

A battle may have been won, but the war rages on.

-- CAV