Wednesday, August 6, 2014

The War on Small Business

Each week unveils more controversy in the business world. Some events are state related; some are federal. Some are just the nature of the current economy and uncertain future. But, this week the president and CEO of the National Restaurant Association used the term, "war on small business," in regards to a ruling by the National Labor Relations Board. A bold statement no doubt, but from someone with her experience and knowledge is eyebrow raising and worth sharing.

What is it that has the NRA so upset? This week, the NLRB overturned a thirty-year rule that gave franchisees the freedom to run their day-to-day employment practices as they desired, essentially independent of their franchisor. The franchisee has always been able to determine hiring, shift schedules, terminations, etc. as they deem necessary. The key here being that the franchisor, in the past, has not been held responsible for any missteps that the franchisee may incur. They operate their business independent of the franchisor. In fact, as recently as last month, a Texas franchisor was ruled not liable as an employer under the Fair Labor Standards Act because he did not control employment hiring, pay rates and schedules.

Well, now the NLRB has eliminated that protection to the franchisor despite the fact that the franchisor really does not have any control over the franchisee's employment practices. The NRA believes this a very, very dangerous ruling with far-reaching implications, perhaps to other industries as well. What this ruling does is tie franchisees directly to the franchisor, thus taking a fraction of what is now many restaurants and tying them into one large unit altogether. They also believe that this ruling was made in part to aid an effort to unionize restaurant workers. By doing so, the NRA believes that the NLRB has cleared the way to go after one franchise as a whole, instead of going after one restaurant here, one restaurant there, so on and so forth. They believe it's an undermining shortcut to aid the unionization effort of restaurants, and they will not let this ruling go without a fight.

The ruling has caused much fear throughout the NRA as they have said this ruling will drastically affect jobs. It will deter other franchisees from wanting to invest money, which will lead to fewer taxes paid, fewer business opened and fewer jobs created.

Combined with new health insurance mandates, the demand for an increase in minimum wage, the increase in food prices, the continued regulations of health laws and mandates, the threat of restaurant unionization, and now this ruling... well that would certainly deter anyone from wanting to open a restaurant right now. One might say you would have to be crazy to dive into this current mess of utter dysfunction.

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