Wisconsin Supreme Court Decision Raises Fair Dealership Law Questions Beyond Municipal Liability

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The primary issue in Benson v. City of Madison, 2017 WI 65, is clearly the question of whether the Wisconsin Fair Dealership Law (“WFDL”) reaches contractual relationships involving municipalities. As discussed here, this is an issue of first impression, and the Court’s holding has broad implications.

There are, however, additional aspects of the decision worth consideration. Three in particular bear mention.

First, the Wisconsin Supreme Court had not heard a WFDL case in a while. In the interim, the composition of the Court changed substantially, and that turnover yielded a majority oriented toward a more free-market paradigm. Some commentators have wondered how the WFDL would be applied by the current Court. Benson suggests that in many respects not much has changed. The Benson majority, joined by all five Justices perceived as more conservative, follows settled law granting the WFDL a broad construction. (Indeed, by holding that municipalities are covered by the WFDL, the majority significantly expands the law’s scope.) And it firmly forecloses arguments that a party can contract around the WFDL, nullifying a contractual provision that the City of Madison cited as exculpatory. See 2017 WI 65, ¶48.

Second, the Court shed a little light on the doctrinal Gordian knot at the heart of most WFDL litigation. The vast majority of WFDL cases turn on the question of whether the parties’ relationship constitutes a “community of interest.” This has always been a vague standard. Three decades ago, the Court identified two “guideposts” for this inquiry: “continuing financial interest” and “interdependence.” Ziegler Co. v. Rexnord, Inc., 139 Wis. 2d 593, 604-05, 407 N.W.2d 873 (1987). The Ziegler Court also identified ten, non-exclusive facets of a relationship that might shed light on one or both guideposts. See id. at 606. Lower courts have been somewhat vexed by applying the various facets—and others that might seem relevant in individual cases—to the guideposts. Benson provides some wiggle room, noting that the Ziegler facets need not all be measured in every case, because “it is more accurate to say that some or all ‘may’ be considered; the factors are meant to be a helpful aid in addressing the overriding community of interest question, not an unwieldy burden.” Benson, 2017 WI 65, n.15.

Third, the Court’s newest Justice, Dan Kelly, wrote a separate concurring opinion to, in his words, address “one persnickety point.” Id., ¶64 (Kelly, J., concurring). But his point is not a minor one: he disagrees with the majority about what goods and services should be considered the subject of the contract that binds the parties in a dealership. Justice Kelly believes that only those goods and services that belong to the grantor (here, the City of Madison) can be considered part of the dealership, while the majority opinion cites both those and additional goods and services provided wholly by the dealer (here, the golf pros). See id., ¶¶65-66.  The fact that Justice Kelly raised this issue and that none of the other five Justices in the majority joined his concurrence can be read to suggest that a majority of the Court—at least four Justices—disagree with his reading of the statute and believe that a dealer can bring its own goods and services into a dealership relationship. That issue was not decisive here, but it could loom large in a future dispute about application of the WFDL (and in calculating damages due to the golf pros on remand).

Does Size Matter Under Price Discrimination Laws? Seventh Circuit Says “Not Always”

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Late last week, the Seventh Circuit Court of Appeals rejected Woodman’s Food Markets’ claim that Clorox Company violated federal price discrimination laws when it ceased selling “large packs” of certain products to Woodman’s, while continuing to sell such large packs to discount warehouses such as Costco and Sam’s Club.   A three-judge panel of the Seventh Circuit reversed a ruling of the U.S. District Court for the Western District of Wisconsin that had denied the motion of Clorox Company and Clorox Sales Company (“Clorox”) to dismiss the lawsuit for failure to state a claim.

In its complaint, Woodman’s had sought injunctive relief only.   It initially alleged that Clorox had violated prohibitions against price discrimination under the Robinson-Patman Act, 15 U.S.C. §§ 13(a), (d) and (e), when Clorox ceased to sell “large packs” such as 40-ounce salad dressing bottles, 460-count plastic food storage bags and 42-pound cat litter containers to Woodman’s.  Large packs often have a lower unit price than smaller packages, and enable consumers to shop less often for frequently used products.

The Seventh Circuit’s reversal was based on a close review of the elements of claims based on those subsections of the Robinson-Patman Act.  The court noted that “[s]ubsection 13(a) prohibits price discrimination where the effect of that discrimination “may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person” who itself or whose customers benefit from the discrimination.”  During the court of the litigation, Woodman’s abandoned its claim under subsection 13(a).

Subsections 13(d) and (e) address price discrimination that is concealed as promotional “services or facilities” and prohibit providing such services or facilities unless the payments or actual services are available on proportionally equal terms to all. Subsection 13(d) covers payments for “services or facilities” from the seller; subsection 13(e) addresses the direct provision of services or facilities by the seller. Notably, the prohibitions in these subsections apply regardless of whether or not such “services or facilities” interfere with competition.  The District Court had ruled that only subsection 13(e) applied to Woodman’s claim, and on appeal Woodman’s relied exclusively on that subsection.   Woodman’s contended that both (a) the unit discount that goes along with a larger package size, and (b) the convenience of large packs, established a “service or facility” under subsection 13(e).

As to the unit discount argument, the Seventh Circuit held all unit discount claims must be brought under subsection 13(a), not subsection 13(e).  The court noted that subsections 13(d) and (e) exclude claims that could be brought under subsection 13(a); if that were not the case, “the requirement of a substantial lessening of competition in subsection 13(a) could be avoided in every case that also fits the criteria of subsections 13(d) and (e).”  Of course, Woodman’s had abandoned its subsection 13(a) claim.

In dismissing the argument as to convenience of large packs, the Seventh Circuit held that only “promotional” services of facilities are covered by subsection 13(e).  Woodman’s had cited two Federal Trade Commission decisions from 1940 and 1956 in support of its argument. The FTC, however, itself filed an amicus brief in the Woodman’s case, stating that in the FTC’s view, subsections 13(d) and (e) apply only to promotional services or facilities.  The court also deemed a statement found in a 1971 Seventh Circuit ruling that services or facilities for purposes of subsection 13(e) “are not confined solely to promotional matters” to be  an “unnecessary aside” and based on an FTC interpretation that the FTC has since disclaimed.  Held the court:  “Size alone is not enough to constitute a promotion service or facility under subsection 13(e); any discount that goes alone with size must be analyzed under subsection 13(a); and the convenience of a larger size is not a promotional service or facility.”  The court noted that the size of packaging could be considered a “promotional service or facility” in some circumstances, such as “fun-sized” individually wrapped candy at Halloween or football-shaped packages marketed in conjunction with the Super Bowl. 

Putting “Secrets” in the FDD: A Franchisor Nondisclosure Trap

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The Federal Trade Commission mandates disclosure of “any material action involving the franchise relationship during the last fiscal year” under Item 3 of the Franchise Disclosure Document (“FDD”), which must be provided to all prospective franchisees. But as a recent opinion of the U.S. Court of Appeals for the Seventh Circuit illustrates, this seemingly innocuous requirement is tinder for litigation when complying with it violates the nondisclosure provisions of a settlement agreement -- and the aggrieved party seeks $20 million in liquidated damages.

Plaintiff had owned an Indiana brokerage company that operated as a franchisee of Keller Williams for approximately 10 years, and also served as a regional director for the franchisor. The parties’ relationship soured, however; her job was terminated in 2010, and the franchise relationship ended the following year.

Litigation ensued. In 2012, the parties resolved the lawsuit and entered a settlement agreement. The agreement prohibited the parties from disclosing its terms to third parties (with limited exceptions for disclosures to tax professionals, insurance carriers and government agencies). A violation of the agreement’s nondisclosure provisions would trigger a “liquidated damages” clause of $10,000 per violation.

About three months after the settlement, Keller Williams issued a new FDD to approximately 2,000 existing or potential franchisees and other interested firms or persons. In Item 3 of the new FDD, Keller Williams described the lawsuit in detail and  disclosed the amounts paid to the plaintiff.

The plaintiff then sued for breach of contract -- seeking $20 million ($10,000 x 2,000 claimed “violations”) in liquidated damages.

Keller Williams successfully defended the action by challenging the liquidated damages clause as constituting an unenforceable penalty clause. It is worth noting, though, that the trial court and Seventh Circuit (which affirmed the lower court) did not hold the plaintiff could not have obtained actual damages for the breach (or, for that matter, liquidated damages, if the agreement’s liquidated clause had not been so onerous); the evidence provided by the plaintiff of actual damages “was virtually none.”

The takeaway for franchisors: In any settlement agreement with a franchisee, always include an exception for required FDD disclosures when drafting nondisclosure clauses.

[Caudill, et al. v. Keller Williams Realty, U.S. Court of Appeals for the Seventh Circuit, No. 15-3313]

New Law Limits Franchisors’ Joint Employer Liability Exposure In Wisconsin

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In an environment where franchisors are increasingly concerned about being deemed “joint employers” with their franchisees, the Wisconsin Legislature has provided some welcome relief. It has enacted legislation that provides franchisors with assurances that they will not be treated as an “employer” of the employees of a franchisee for purposes of Wisconsin laws pertaining to unemployment insurance, worker’s compensation, employment discrimination, minimum wage and wage payments, merely because the franchisor retains rights of quality control under the parties’ franchise agreement.

2015 Wisconsin Act 203 adopts the definition of “franchisor” found in the Code of Federal Regulations. Such franchisors may still be treated as an employer of its franchisee’s employers in the following situations: (a) the franchisor has agreed in writing to assume that role; or (b) the franchisor has been found by the applicable department or division of state government to have exercised a degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purposes of protecting the franchisor’s brand.

Recent rulings and policy initiatives of the National Labor Relations Board and U.S. Department of Labor have suggested that indirect rights to control another entity’s employees may be sufficient to support a finding that a joint employer relationship (i.e., that more than one entity is an employer of an individual employee) exists. But under the federal Lanham Act, franchisors must impose quality control standards in order to maintain the integrity and enforceability of their trademarks. These quality control standards may be considered to constitute such indirect control.

The dilemma faced by a franchisor in this environment: if the franchisor enforces quality control to protect the trademark and brand, it risks having joint employer liability imposed and being held liable for acts of its franchisees’ employees (for whom, in the vast majority of cases,  the franchisor has no legal or contractual right to control); if it does not, it weakens the strength of its marks. The Wisconsin bill provides assurance to franchisors offering franchises in the state of Wisconsin that enforcement of quality control standards will not result in an imposition of joint employer liability under Wisconsin law. 

“Frankenstein” Veto Language Interpreted by Federal District Court

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A recent post on this blog noted that wine distributors were not covered by an expansion of the definition of “dealer” under 1999 amendments to the Wisconsin Fair Dealership Law (“WFDL”) due to “a creative partial veto from then-Gov. Thompson.”

That creative partial veto was front and center in a decision and order issued last week by the U.S. District Court for the Eastern District of Wisconsin, denying defendants’ motion to dismiss for failure to state a claim. The plaintiff, Winebow, Inc., had brought a declaratory judgment action seeking to affirm that it could terminate all wine distribution relationships with defendants Capitol-Husting Co., Inc., and L’eft Bank Wine Company Limited without violating the WFDL.

The crux of the defendants’ motion to dismiss was that the 1999 amendments to the WFDL should be interpreted to define wine distributors as “per se dealers” under the WFDL, subject only to limitations on small producers and sales lines constituting less than 5% of a distributor’s business. They contended that the statute covers distributors of “intoxicating liquor” as defined in section 125.02(8) of the Wisconsin Statutes, regardless of whether such distributors can meet the “community of interest” test ordinarily required for dealer status.  Defendants noted that the WFDL definition that provides per se dealer status to distributors of intoxicating liquor defines “wholesalers” with reference to section 125.02(21) of the Wisconsin Statutes, which definition does not exclude wine wholesalers.

The WFDL, however, defines “intoxicating liquor” as having “the meaning given in s. 125.02(8) minus wine.”  The words “minus wine” were inserted via Gov. Thompson’s use of what was dubbed a “Frankenstein veto,” with many other words in succeeding clauses of the legislation deleted by his veto pen, leaving only “minus” and “wine” in place. The District Court denied the motion to dismiss, finding that “[t]he statutory definition of “intoxicating liquor” is clear, and wine is expressly excluded.”

Other arguments in this case, however, may also prove to be instructive. The plaintiff’s complaint seemingly alleges that the “minus wine” language means that all wine distribution agreements are exempt from coverage under the WFDL – even if the parties’ relationship satisfies the community of interest test of section 135.02(3)(a).  The complaint states the defendants’ wholesale distribution of Winebow portfolio wines does not qualify for protection under the WFDL “as wine is expressly exempt from the WFDL.”  Plaintiff’s contention was not directly at issue in the defendants’ motion to dismiss, but presumably would be raised in a motion for summary judgment or for judgment on the pleadings.

Wine and Spirits Distributors Said To Be Seeking Legislative Protections

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The Wheeler Report reported on Thursday that five trade associations have raised concerns to state legislators about rumored proposed amendments to Wisconsin’s Fair Dealership Law that would make it easier for wine and spirits distributors to transfer brand distribution agreements to third parties.

One letter to legislators dated May 14, 2015 was jointly authored by the Wisconsin Restaurant Association, the Wisconsin Petroleum Marketers & Convenience Store Association and the Wisconsin Grocers Association,  all representing retail sellers.  Another letter, also dated May 14, 2015, came from the Distilled Spirits Council of the United States and the Wine Institute, who advocate for manufacturers.

The associations allege that at least one wine and spirits wholesaler has sought amendments to the WFDL similar to changes that were enacted by the Wisconsin Legislature in 1999, but were significantly limited by a partial veto by then-Gov. Tommy Thompson.  That partial veto eliminated a section that would have provided that a change in management, ownership or control of a wholesaler would not be “good cause” under the WFDL for a grantor to terminate, cancel, fail to renew or substantially change the competitive circumstances of a wholesaler, as long as the successor wholesaler met the grantor’s reasonable and material qualification standards in effect at the time of the change.

Other provisions of the 1999 legislation expressly defined “dealer” to include liquor wholesalers, without reference to the “community of interest” requirement for dealer status under the WFDL. The expanded definition of dealer provided exceptions from WFDL coverage where the manufacturer had never produced more than 200,000 gallons of liquor in a single year, or where the distributor’s net revenues from sales of all brands produced by that grantor was less than 5% of all liquor sold by the distributor. These provisions survived the partial veto.  The original legislation, however, would have similarly expanded the definition of dealer to cover wine distributors.  A creative partial veto from then-Gov. Thompson removed wine distributors from that protected class.

When Does The Statute of Limitations Begin to Run on WFDL Claims?

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Although the Wisconsin Fair Dealership Law (“WFDL”) provides significant protections for franchisees and dealers against termination and non-renewal, the statute of limitations for filing WFDL claims is one year. That short limitations period can be a minefield for parties seeking relief under the WFDL.

For 30 years, the Wisconsin Supreme Court’s ruling in Les Moise, Inc., v. Rossignol Ski Co. has provided the principal precedent in evaluating when WFDL claims accrue for purposes of the one-year statute of limitations.  In Les Moise, the court held that a Chapter 135 claim accrued on the date that the dealer receives notice of an allegedly improper termination, instead of the actual date of termination.

A recent unreported decision of the Wisconsin Court of Appeals, Chili Implement Company v. CNH America, LLC, illustrates unresolved issues that remain in applying the Les Moise holding.  The CNH court held that “we disagree with CNH that Les Moise establishes that all causes of action under the Wisconsin Fair Dealership Law accrue when a dealer receives a termination notice.”

The facts of CNH:

  • CNH sent a notice to Chili Implement on March 1, 2010, stating that Chili Implement is in default of the parties’ agreement because it has failed to achieve a satisfactory market share and to stock sufficient inventory.  The notice also stated that to avoid termination, Chili needed to accomplish two things within one year of the notice date:  “to meet or exceed 90% of the Wisconsin state market share” and to stock sufficient inventory to achieve that market share.
  • After a year passed, CNH determined that Chili Implement has failed to meet the stated requirements and terminated Chili effective May 31, 2011
  • Chili sued CNH on January 19, 2012, alleging violations of the WFDL, among other violations.

CNH alleged that under Les Moise, CNH’s claims under the WFDL were barred by the one-year statute of limitations.  The notice was sent March 1, 2010; the lawsuit was filed almost two years later, on January 19, 2012.  Chili Implement asserted that its WFDL claim accrued as of the date of actual termination, on May 31, 2011.  The trial court had granted summary judgment in favor of Chili Implement on the statute of limitations question, finding that a material factual dispute existed as to whether the 2010 notice was actually a notice of termination.

The CNH court did not answer how a lawsuit such as Chili Implement’s should be treated.  The CNH court cited limiting language from Les Moise that what matters is whether, upon receipt of a notice, the dealer was “immediately capable of determining” all of its claims.  The court noted that Chili Implement had two potential claims:  one based on inadequate notice (which was capable of immediate enforcement upon receipt of the 2010 notice) and termination without good cause (which depended on subsequent acts or omissions of CNH).  But because CNH had not briefed how such claims should be handled, the CNH court declined to do so, and found that CNH has failed to show that it had a winning statute of limitations argument based on Les Moise.

So the issue remains:  when does the WFDL statute of limitations begin to accrue?

[Chili Implement Company v. CNH New Holland, LLC, 2014AP1496]

Crowdfunding Comes To The Franchise World

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We’ve been curious to see whether crowdfunding would find the world of franchising.  Traditionally, the solicitation of investors through general advertising has been severely restricted under federal and state securities law; these limitations also apply to crowdfunding, or seeking capital contributions through online solicitation of the masses. The JOBS Act of 2012 sought to remove some of these restrictions, under the theory that both investors and businesses seeking capital could benefit from this new internet marketplace, as long as certain protections are in place.

Now Fund A Franchise, has begun to accept applications from prospective franchisees and invite investors to provide funding in a manner similar to that deployed by Kickstarter. It appears that Fund a Franchise is the first crowdfunding platform organized to cater to the franchising market.

Fund a Franchise requires that a prospective franchisee complete an application and be accepted into the program. The prospective franchisor must agree that it will consider a franchisee capitalized at least in part through the crowdfunding program.  The prospective franchisees pay a monthly fee to be listed on the site and have access to a “deal room”; investors may participate at no charge.  Investments may be made in the form of equity or debt.

Crowdfunding has the potential to match individuals who wish to open a franchised business, but lack the necessary capital investment to do so, with investors who might be willing to take a chance on a franchising opportunity.  But several questions and issues occur to us, including:

  • Will franchisors agree to participate?  Generally, franchisors generally want to limit the number of owners of a franchisee.  If the franchisee has too many owners, it may not be clear who has the right to make decisions on behalf of the franchisee.   Many franchisors may be reluctant to approve a franchisee that raised capital through contributions from numerous individuals.  A franchisor would be more likely to accept a franchisee that consists of one manager/entrepreneur providing primarily services to the start-up business and a single sophisticated investor whose principal contribution is capital.  The Fund a Franchise website suggests that several franchisors are willing to participate, but none are large systems.
  • Will a manager/entrepreneur and investor(s) who are brought together online be compatible?  Such arrangements generally succeed when there is a great deal of trust established among the parties; written contracts can only go so far.
  • At this time, only accredited investors (generally, individuals with over $1 million in assets or with income in excess of $200,000 in each of the last two years) can participate in crowdfunding on Fund a Franchise and similar platforms.   This places a significant constraint on the number of persons who are eligible to invest through the site.  The prohibition against participation by non-accredited investors will end when the SEC finalizes regulations permitting such investments, but these regulations are not likely to be in place before early 2016.
  • Using Fund a Franchise will not avoid legal fees; the site requires users to retain a securities lawyer (although the site will apparently provide referrals to such counsel upon request).

(Note:  This post is provided for information purposes only; we make no recommendation as to the advisability of utilizing Fund a Franchise or any other investment platform or investing in any business.  You should consult legal counsel and your financial advisor before entering any such arrangement)

Fore!  Governmental Entities May Need To Consider Applicability Of WFDL

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If ultimately upheld on appeal, the trial court’s initial holdings in a lawsuit filed by four golf professionals against the City of Madison, alleging a breach of the Wisconsin Fair Dealership Law by the City, have the potential to establish that the WFDL applies to governmental entities as well as private businesses.  To date, no reported case law has addressed the potential application of the WFDL to governmental entities.

Beginning in 1976, the City of Madison had contracted with golf professionals to administer municipal golf courses on the City’s behalf.  Under these agreements, the golf professionals were responsible for operating and maintaining the courses, paying for all employees, golf carts, golf ranges, golf-related goods, services, food and beverages and golf-related merchandise available for purchase at the courses.  In December, 2012, existing agreements between the City and the golf professionals terminated and were not renewed by the City.  Last year, the golf professionals sued the City, alleging that the City’s non-renewal of their agreements violated the WFDL.

In asserting that the WFDL does not apply to the City or its relationship with the golf professionals in its motion to dismiss, the City advanced two principal arguments:

  • A municipality is not a “person” with the definitions contained in Chapter 135.  “Person” is defined under sec. 135.02(6), Wis. Stats., as “natural person, partnership, joint venture, corporation or other entity.”  The City contended that the City is a “municipal corporation” and that “municipal corporation” is not included within the statutory definition of “person.”
  • The City did not grant the golf professionals the right to sell goods or services, the right to distribute goods or services, or the right to use a trade name, trademark, service mark, logotype, advertising or other commercial symbol of the City, as required under the definition of “dealership” under sec. 135.02(3)(a), Wis. Stats.

As to the first argument, the trial court held that “[m]unicipal corporations, such as the City of Madison, form a subset of “corporations.”  If that were not the case, the City would nonetheless fall within the definition of “person” under the WFDL as an “other entity”.”  The trial court disagreed with the City’s contention that case law would require that statutory provisions that are written in general terms, without expressing a clear intention that the statute apply to a governmental entity, should not be imposed on a governmental entity.  The trial court also cited sec. 135.025(1), Wis. Stats., which requires that the WFDL “shall be liberally construed and applied to promote its underlying remedial purposes and policies.” Similarly, the trial court found that the plaintiffs had alleged facts that, if proven to be true or further developed, could be sufficient to show that the City had granted the plaintiffs the right to sell the City’s goods or services or to use the City’s trademark or other symbols.  Thus, the trial court held, dismissal of the golf professionals’ lawsuit was not proper either on these grounds nor based on other arguments advanced by the City in its motion to dismiss.

Both the plaintiffs and defendant have motions for summary judgment pending with the trial court.  If the court does not grant summary judgment to either party, and the parties do not settle their dispute, the lawsuit is scheduled to proceed to a jury trial during the first week of August, 2015.

(Benson et al v. City of Madison, Dane County Circuit Court Case No. 14 CV 180)

The Good, the Bad, the Uncertain:  Developments In Franchisor Liability

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          The legal debate over imposing vicarious liability of franchisors – or making franchisors liable for the acts of their franchisees and franchisees’ employees – has flared up this year, thanks in large part to a recent court decision and policy directives emanating from the Office of the General Counsel of the National Labor Relations Board.

          The franchise model assumes that franchisees merely license franchise trademarks, copyrights and other intellectual property from franchisors, and that the franchisee is not the agent of the franchisor.  While franchisors may insist that the franchisee follow quality control, marketing and product consistency standards that affect the franchisor’s trademarks, franchisors typically contractually disclaim any right to control day-to-day hiring, firing and supervision of employees.  But that does not prevent parties who assert claims against franchisees from also alleging that the franchisor should be liable as well, based on principles of agency.  The claimant alleges that the franchisee and its employees are agents of the franchisor, and thus the franchisor is liable as well.

          First, the good news for franchisors:  In late August, the California Supreme Court held that Domino’s Pizza LLC was not liable for the acts of a franchisee whose manager had allegedly harassed an employee.  The court’s decision was based largely on the terms of the franchise agreement between Domino’s and its franchisee.  The court did note, however, that a franchisor “will be liable if it has retained or assumed the right of general control over the relevant day-to-day operations at its franchised locations … and cannot escape liability in such case merely because it failed or declined to establish a policy with respect to that particular conduct.”

         Next, the bad news: in July, the Office of the General Counsel to the National Labor Relations Board announced that it would authorize complaints alleging that McDonald’s USA LLC is a “joint employer” of the employees of its franchisees.   The Office of the General Counsel found merit in charges that McDonald’s and its franchisees had violated the rights of employees “as a result of activities surrounding employee protests.”

          The NLRB release announcing the decision did not set forth the grounds as to why McDonald’s was deemed to be a joint employer, but the NLRB Office of the General Counsel has signaled, in another pending case, that it seeks to change the standard for determining when “joint employer” status is applicable.   Under the existing standard, which has been in place for 30 years, a finding of joint employer status is appropriate when two or more parties “share or codetermine those matters governing the essential terms and conditions of employment.” The International Franchise Association and other trade groups have filed a brief in the pending case, opposing the attempt by the NLRB Office of the General Counsel to re-define joint employer status so as to include situations where one party indirectly controls the other.

        While a revision to the definition of joint employer would affect many industries, it would have a massive impact on the franchise industry, whose business model is predicated in large part on the distinction between franchisor and franchisee.

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