In December 2014, the National Labor Relations Board made waves when it named McDonald’s USA LLC as a “joint employer” of franchise restaurant employees in a number of complaints for alleged labor violations by the franchise owners. As the NLRB describes on its webpage providing information on the cases, the agency’s “investigation found that McDonald’s, USA, LLC, through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act.”
The first of several hearings on the joint liability issue took place in New York City on March 30, 2015, but a decision regarding joint liability is likely many months away. In the meantime, the case has caused franchisors to take a second look at their policies in an effort to avoid the same type of potential liability. While companies and employment lawyers are focusing on how to frame the franchisor/franchisee relationship in light of this possible paradigm shift in franchisor liability, they should also be considering the impact any such change may have on their trademark rights.