Attacks on the Franchise Model

In January, re:group coordinated the first Southeast Michigan Franchise Business Network (FBN) of 2015. The topic at hand was an impassioned one for all proud to represent the franchise industry: the recent attacks on the franchise model.

We were privileged to be guided by the moderator, Brian Witus of Jaffe Raitt Heuer & Weiss, with a roundtable discussion led by a team of franchise professionals: Derek McLeod, Jaffe Raitt Heuer & Weiss; Moe Shrikian, VP General Counsel, Hungry Howie’s; David Steinberg, Raitt Heuer & Weiss; and Taylor Bond, CEO of Children’s Orchard.

Over the years, I’ve attended many FBN events. But this, by far, contained the most passionate and thoughtful audience discussion. All in attendance were vocal with concern about how the current political landscape threatens the franchise model as we know it. The National Labor Relations Board (NLRB) and the Department of Labor (DOL) are moving for franchisors to be named joint employers of franchisees’ employees. This would reallocate all employee responsibilities to the franchisor—from establishing wages and raises, to determining hours, to healthcare eligibility. This threatens the integrity of the franchise model. It is thwarting a culture of entrepreneurism into one of corporate oversight, which discourages the industry’s sustainability and expansion.

Photo of Brian Witus, Jaffe Raitt Heuer & Weiss; Ron Sollish, Maddin, Hauser, Roth & Heller, P.C.; and Moe Shrikian, Hungry Howie's

Brian Witus, Partner at Jaffe Raitt Heuer & Weiss; Ron Sollish, Shareholder at Maddin, Hauser, Roth & Heller, P.C.; and Moe Shrikian, VP General Counsel at Hungry Howie’s

According to the International Franchise Association (IFA):

The most threatening of all workforce-related issues is the proposed changes to “joint employer” standard that has historically recognized the differences between franchisee and franchisor. Notwithstanding thirty years of existing law, unelected Washington bureaucrats at the NLRB are considering changes that would hold franchisor brand companies liable for charges against local franchisees, threatening to dismantle the franchise relationship that has allowed hundreds of thousands of new locally-owned small businesses to open and millions of jobs to be created.

Franchising has played a vital role in our nation’s growth and economy. It’s one of the biggest engines that drives small business and job creation. As organizations that represent the industry, our FBN discussion emphasized the importance of getting to know our legislature, and working collectively to fight for our rights. We all recognize it will take time and every effort to protect and adapt. But every win will go towards the common goal of keeping the integrity of the franchise business model in tact.

To defend the industry, the IFA has launched a new strategic initiative called the Franchise Action Network (FAN). This network creates consistency by bringing franchisees and franchisors together to be a collective voice on behalf of the industry. re:group has teamed up with the IFA, and we’re asking our clients to help by signing up to do so as well. By building the FAN across the nation, our industry will be prepared to handle future federal, state and city issues that threaten the franchising industry.

Over the next several months, the FAN will be educating franchisees, franchisors and suppliers in each state on public policy issues in their area, which will position the IFA for successful legislative activity in the 2015 sessions beyond.

By joining the FAN, you will play a critical role in ensuring the franchise model remains an important part of the U.S. economy. re:group supports the IFA and FAN and asks that our clients take a moment to learn more about the issues that could affect everyone in our industry. To learn more or to join the FAN, visit

Are you a franchisor, franchisee or supplier to the franchise industry in Southeast Michigan? Register for our next FBN discussion, April 14, 2015 at the Detroit Marriott Livonia. We’ll be talking about alternative funding sources for franchisees.

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