Senate committee passes bill to protect franchises
A bill to protect Missouri’s small franchise owners from being unfairly pulled into national lawsuits was passed by a Senate committee on Feb. 7.
The bill addresses a problem that began in 2015. That year, the National Labor Relations Board created legal peril for these small local companies by replacing a clear, bright-line joint employer definition with a vague, multi-factored standard. Recent research showed this change has cost businesses across the U.S. between $17–33.3 billion annually and killed up to 376,000 potential jobs.
Twenty other states have adopted legislation that protects the independence of small franchisees and stops them from being linked to national lawsuits.
Senate Bill 38 seeks to bring similar legislation to Missouri with the Small Business Franchise Protection Act. At a Senate committee hearing on Jan. 31, Sen. Onder said the key to franchising has historically always been that a franchisor and franchisee are distinct legal entities.
“In Missouri, the economic impact of franchising is enormous, with 17,000 businesses employing 178,000 employees with a payroll of over $6 billion,” said Onder during a hearing on the bill. “Until 2015, the decades-old standard was that the NRLB only found two separate businesses to be joint employers if the punitive joint employer exercised direct and immediate control over the employees at issue.”
The Missouri Chamber will continue to advocate for this reform as it moves through the legislature.