This article provides a good primer on employment issues in the United States, and franchisee/franchisor liability.
The franchisor does expose themselves to employment risks even if it tries to protect themselves in the franchise agreement:
As employment law has evolved, the risk of potential liability to the franchisor under this type of arrangement has increased. In particular, a number of state anti-discrimination laws (such as those of New York, New Jersey, and California) impose liability upon third parties for aiding and abetting discrimination. Even where a franchisor takes a completely hands-off approach with respect to the franchisee’s employees, it may still face potential liability where it knowingly tolerates or condones discriminating practices. In practice, this type of aider and abettor liability now places franchisors in a Catch 22 position. If a franchisor knows of discrimination by the franchisee but fails to act, liability as an aider/abettor may result. Conversely, if the franchisor does take action, that action itself may lead to the imposition of liability as an agent and/or joint employer. This is further compounded by the fact that the size of jury awards and the willingness of juries to give large awards has also increased over the last few years.
Here is how franchisor, Jackson Hewitt, gives employment advice:
For example, Jackson Hewitt, the nation’s second largest individual tax preparation company, periodically surveys its franchisees to determine what issues are of most concern to them. It then retains independent employment counsel to provide seminars on those topics at its annual franchisee convention. The company also follows up with the franchisees by way of a post-seminar survey to ensure the training is effective and responsive to their concerns. Training on such things as how to properly interview and hire employees, what to watch for in dealing with discipline/discharge issues, and how to conduct investigations of employee complaints are particularly helpful to franchisees.
Employee training and posting requirements also should be addressed by both parties. Federal law, as well as most states, requires that employers post information summarizing the applicable employment laws on such issues as harassment/discrimination, wage and hour regulations, whistleblowing, and workplace safety. A recent visit to a franchise to interview witnesses with respect to a race discrimination charge revealed that there was not a single required posting on the employee bulletin board. When questioned, the franchise owner simply said “they (the franchisor) never told me anything about that.” Nor had the lawyer who represented him on the purchase of the franchise. As a result, the franchisee’s simple failure to make the required posting was used against it as evidence of its alleged discriminatory intent. This could have been easily avoided. Providing general guidance as to where the franchise may find the information for the state in which it is operating is a good way for the franchisor to do its part in promoting compliance.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
This is a huge concern for the zors. They are almost always adjoined to slip and fall and negligent actions. However, the burden of this should be on the zee as long as the zor can show they have a system of education about how to secure and safeguard the workplace – a compliance program.