The Federal Government Continues Its War on Small Business

Incompetent folks, who have never run a business or made a payroll, are making decisions with far reaching consequences for businesses throughout the country.

By Allen Tharp

By Allen Tharp

The federal government continues its war on small business.  Incompetent folks, who have never run a business or made a payroll, are making decisions with far reaching consequences for businesses throughout the country.

A ruling issued last week by the unelected National Labor Relations Board (NLRB) will very likely destroy the franchise business model that has been so successful.  Currently over 9 million Americans work for 870,000 franchised businesses.

The reason the franchise model has been so successful is that entrepreneurs are able to invest in proven business models that have been fully developed for franchisees by franchisors.  Franchisors typically provide franchisees with a blueprint on how to operate a successful business, including comprehensive training on how to run the concept.  They provide operations manuals, training manuals, architectural and design guidance, and ongoing mentoring for franchisees.

small business stocking shelves This mentor-protégé relationship significantly increases the chance of success. Rather than a 90% failure rate seen in new businesses, franchisees see a 90% success rate.  Franchising works well for franchisees because it allows them to invest their hard earned money in businesses with a proven track record, and it works well for franchisors because it allows them to grow their concepts using franchisees money.  The result is lots of jobs that would not otherwise exist, and lots of services provided to customers, that would not otherwise be provided.

So why would the federal government interfere with something that is working so well?  The answer is that like everything this administration does, they are doing it for political reasons.  The government’s goal is to unionize franchise employees, and that is why they just turned years of precedent on its head with this ruling.

The NLRB Board ruled that now anyone who exercises direct or indirect control over employment conditions, or has the potential to exercise such control, jointly employs workers.

Since the franchisor sets price and quality standards, the NLRB says the franchisor will, in the future, be required to bargain with a union representing the franchise employees.

Entrepreneurs tend to be very strong willed and independent minded folks but because of this ruling, franchisees will have to give up total control of day-to-day business decisions to franchisors. They will now become just middle managers in a big corporate entity.

Previously the NLRB has always defined an employer as the firm that hires, fires, pays wages, disciplines, promotes, and makes work assignments. That common sense approach that comports with most Americans’ understanding of the employer/employee relationship has now been thrown out.

Liberals never give up on their bad ideas. If they can’t accomplish their goal one way, they try another way.  In this case, they had failed to organize franchise employees because they could not persuade workers that the benefits of union representation outweigh the cost of union dues.  With this ruling, the plan now is to organize from the top down, using public relations campaigns to pressure corporate management to accept unionization.  They will no longer need to convince the workers that unionizing will be to their benefit. They can now ignore the wishes of the employee and the business owner.

As a result of this rule, franchisors will stop franchising and millions of opportunities for aspiring entrepreneurs will disappear. However, unionizing is much more important to this administration than the American dream. I doubt that these folks even understand the true consequences of their decision.  Unfortunately ignorance never stops a liberal from forcing their opinions on unwilling others.

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