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Senators Lankford, King Introduce Bill to Protect Small Businesses Ability to Franchise

OKLAHOMA CITY, OK – Senators James Lankford (R-OK) and Angus King (I-ME) introduced the bipartisan Trademark Licensing Protection Act. The bill seeks to protect the franchise model by addressing the issue of what constitutes a joint employment relationship. It corrects a decision by the National Labor Relations Board (NLRB) in which the Board reversed a 30-year standard that a business needs “direct and immediate” control over their subcontracted businesses or franchisees. This ruling ultimately means that actions taken by a trademark owner to maintain brand standards may cause courts to consider the trademark owner a joint employer of a franchisee’s employees. This could make the trademark owner liable for wrongdoing committed by the franchisee.

While the NLRB and the Department of Labor have taken steps through the rule making process to address the discrepancy, franchise employers are still at risk. Lankford is working to codify the regulatory changes in law so a future federal agency decision cannot return to this environment again.

“Franchises are the heart of small businesses in America,” said Lankford. “Franchises allow people to move from employee to owner and fulfill their dream of owning their own business. They are local employers and providers of goods and services under the umbrella of a larger name and brand. But the larger name does not negate the fact that they are separate small businesses. Businesses in Oklahoma and across the country deserve the peace of mind that they can franchise and maintain quality without federal interference. I look forward to the full consideration of our simple proposal so we can clarify this rule discrepancy for small businesses across the country.”