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States Alter Joint Employer Status, Act Changes Menu Label Regulations

At the state level, law changes are taking place that could affect business-as-usual for franchise professionals. California has another bill under review, after Senate Bill 610 was vetoed by Governor Jerry Brown last fall, that would alter the circumstances that allow franchisors to terminate contracts with franchisees.


Assembly Bill 525 proposes refined terms that would protect franchisees from what policymakers believe to be weak state laws that shield franchisors unfairly and leave franchisees vulnerable to potentially losing their businesses without reasonable cause. The bill is said to be clarified, in light of concerns that surrounded SB 610, so that franchisees can have a stronger, more balanced contract that can be more easily implemented in court.


Further eastward, Tennessee has proposed changes to legislation concerning joint employer status of franchisors, a proposal that dates back to February and that was approved April 10. HB 0757 and SB 0475 were introduced to clarify the standing of franchisees and the employees of franchisees as non-employees of franchisors according to Tennessee law. This would thus alter how potential future litigation in the state would handle the joint-employer issue that has been primarily focused on franchise businesses and proposed by the National Labor Relations Board.


Attempts to clarify how state legislation views the NLRB proposed joint-employer status of franchisors are moving nationwide as multiple state policymakers negotiate their standing alongside the involvement of the IFA. The state of Texas has also recently proposed HB 1686, with an effective date of September 1, 2015, which would exclude franchisors as employers of franchisees or a franchisee’s employees. Other states considering similar law changes may follow suit.


Another controversial move affecting franchises, the menu labeling requirements issued by the Food and Drug Administration, will face a bill established to change who is required to post detailed labeling according to the requirements. HR 1249 Common Sense Nutrition Disclosure Act, taking effect December 1, 2015, requires only those retail food establishments that earn over 50% of total revenue through the sale of food to adhere to the 2014 implemented regulations. Some restaurant industry professionals argue this move is unfair and that retail food establishments of all kinds should compete equally, sharing the same burden of ingredient and calorie disclosure across the board, regardless of where the bulk of annual revenue is derived.

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