UNELECTED BUREAUCRATS ARE THREATENING AMERICA’S FRANCHISE SYSTEM

The General Counsel of the National Labor Relations Board – an unelected bureaucrat – has made a recommendation that would make franchisors responsible for the employment actions of all local business owners.

This means franchisees will be faced with higher costs and franchise owners will assume more risk in selling a franchise. This will choke off the opportunity to create tens of thousands of new small business owners.

FRANCHISE FACTS

The franchise business model has been one of the most successful business models in the nation since its rise a half century ago. It has been responsible for:

  • Creating 770,000 small businesses in America
  • Supporting 18 million direct and indirect American jobs
  • Adding more than $2 trillion to the American economy

The franchise model is an affordable way to realize the American Dream of small business ownership.

1 out of every 5 franchises is minority-owned.

Minority-owned businesses are responsible for $1 trillion in economic output and 6 million jobs in this country. And importantly, minority franchisees make up 20 percent, 1 out of every 5, of the franchise system, employing many minorities and often located in minority communities.

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AMBUSH ELECTIONS AND THE NLRB

Unions have sought to curtail the National Labor Relations Board (NLRB) representation election process to ease the process of union organizing. They have done this despite the fact that they win approximately 68 percent of certification elections under the previous election rules.

The most notable effort to fundamentally transform the unionization process was the Employee Free Choice Act (EFCA), now resurrected as the Workplace Democracy Act. These bills contain a provision known as “card check,” which would substitute publicly signed cards for secret-ballot votes.

Labor had hoped that the Obama administration and its Congressional allies in the 2009-11 Congress would pass EFCA, but they did not. Instead, efforts by labor shifted to more marginal changes to the representation case procedure. Specifically, labor hoped to shorten the period between petition filing and voting, to ensure a union advantage in contacting and campaigning to employees.

In December 2014, the NLRB—currently controlled by a 3-2 pro-labor majority—passed a series of changes to the representation election procedure. These changes increased the power of union organizers to obtain contact information of employees and shortened the period between the filing of a representation petition and the conduct of an election.

These changes stack the deck in favor of the union side in representation elections. While under the previous rules, elections were held in a median 38 days, the new rules provide for a vote in as little as 11 to 12 days. This provides unions a significant advantage: in a comparison of elections held immediately following the entry into force of the new rules in April-June 2015 and the same period in 2014, unions’ winning percentage increased by nine points from 62% to 71% under the new rules.

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