The Franchise Memorandum

Despite various procedural efforts by McDonald's, it remains unclear what specific conduct the NLRB contends makes a franchisor—even McDonald's—a "joint employer" with its franchisees. As is well known in franchising circles, on Dec. 19, 2014, the NLRB Office of the General Counsel (GC) issued 13 complaints involving McDonald's USA, LLC and 21 of its franchisees, consolidating 78 alleged violations of labor laws including "discriminatory discipline, reduction in hours, discharges and other coercive conduct directed at employees in response to union and protected concerted activities." The complaints fail to allege any factual basis for the joint employer claim beyond the existence of a franchise agreement, alleging only that "McDonald's possessed and/or exercised control over the labor relations policies of [the franchisees]." In opposition to a McDonald's motion, however, discussed below, the GC asserted:

The evidence will show that McDonald's USA imposes identical requirements and means of control across all of its franchises, including uniform imposition of operating and employment practices through such things as franchise agreements, operating manuals, required hardware and software, training, franchise review processes, and direct supervision. The evidence will also show that McDonald's USA engaged in a nationwide, coordinated response to what it perceived to be a nationwide campaign by the Service Employees International Union and that much of the response was implemented by the franchises. Given this uniformity of operations, common control, and coordinated conduct, the General Counsel expects much of the evidence regarding McDonald's USA's relationship with any one franchise will also be evidence regarding McDonald's USA's relationship to its other franchises.

McDonald's unsuccessfully responded in New York case with a motion seeking to require the GC to allege the facts underpinning the joint employer allegation. McDonald's and each of the franchisees also assert that severance is appropriate because the alleged unfair labor practices arose in cities throughout the U.S., that each claim is based upon unique facts, and because it would be unduly costly and unfair to require them to travel to New York, Chicago, and Los Angeles to be part of similar hearings that involve factual allegations irrelevant to their cases. McDonald's and the franchisees argue that the existence of a joint employer status will depend on unique facts involving each franchisee, if the relationship exists at all. The hearings are scheduled to begin March 30, 2015.