McDonald's and Others Face New Rule That Could "Destroy the Franchise Model," Company Says

MSN reports:

More than 800,000 people work at a McDonald’s restaurant in the U.S. But the question of who works for McDonald’s is a thornier one. Today, about 95% of the restaurants bearing the Golden Arches are franchises. And McDonald’s Corp. is quick to say that the workers flipping burgers, running registers, and mopping floors at those restaurants are employed by the franchisees, not the company headquartered in Chicago’s West Loop. 

To McDonald’s (ticker: MCD), this distinction is vital—and under imminent threat.

The National Labor Relations Board is preparing to issue a highly anticipated, and in some circles, highly controversial new rule expanding the definition of “joint employer,” or when a company is considered to hold a joint responsibility for another businesses’ employees. The proposed NLRB rule would make it easier to hold franchisors liable in labor disputes and bring them to the bargaining table with unions. The same goes for businesses that use contractors or subcontractors and temporary staffing services. That has important implications for franchise-heavy industries like fast food and hotels, as well as sectors like logistics, construction, and even big tech.  

The revised rule was unveiled more than a year ago, and in July the NLRB estimated that it would be released in final form by August. An agency spokesperson didn’t comment on the revised timing, but labor experts expect it to be published soon. 

A safe prediction: McDonald's will be employing fewer people in the coming years in America.