The Franchise Memorandum

A federal court in Missouri recently denied a motion by McDonald’s to dismiss an employment discrimination claim brought against it by a franchisee’s former employee. Johnson v. McDonald’s Corp., 2021 WL 2255000 (E.D. Mo. June 3, 2021). Barbara Johnson briefly worked at a McDonald’s franchise before quitting after allegedly being sexually harassed and assaulted. In her subsequent employment discrimination complaint, she alleged that she was an employee of the franchisor McDonald’s, describing her franchisor-issued application form, franchisor inspections of franchisee operations, and training provided by McDonald’s to the franchisee that included the topics of sexual harassment prevention and reporting. McDonald’s moved to dismiss the complaint on the basis that she failed to plead facts sufficient to establish that McDonald’s was her joint employer or that the franchisee acted as its agent.

The court rejected McDonald’s arguments in an extremely brief decision. After discussing and distinguishing three cases in which McDonald’s was not found to be a joint employer, the court held that Ms. Johnson’s allegations were sufficient to survive a motion to dismiss. Without ruling on the appropriate standard to apply to the joint employer issue, the court labelled it “a close case,” holding Ms. Johnson’s allegations sufficient to show some level of interrelated operations, common management, centralized control of labor relationships, and centralized management. While the brevity of the decision prevents great insight into the court’s reasoning, the court’s conclusion appears driven by an overall impression of the controls typically exercised by a franchisor over a franchisee, in addition to the particular controls exercised by McDonald’s — including the specific decision to require sexual harassment prevention and reporting training.