Commissioned by the IFA | 07 Sep 2023

Potential consequences of the NLRB joint employer rule

Economic Consulting Team

Oxford Economics

The International Franchise Association (IFA) commissioned Oxford Economics to assess the potential impacts of the National Labor Relations Board (NLRB)’s proposed revisions to the joint employer rule on franchising. Survey questions distributed by the IFA as part of their annual member survey allowed us to gain insight into potential consequences of the rule for franchisors and franchisees and their possible responses. Our report sets out those potential consequences with a focus on implications for franchisees.

Oxford Economics finds that one of the consequences of the ruling would be to introduce substantial uncertainty around the franchise business model with impacts on the franchisor/franchisee relationship. Parties will likely need a transition period to determine best responses and adjust. Specifically, these responses will depend on whether franchisors choose to increase oversight of franchisee businesses or distance themselves from them, to avoid being found liable as a joint employer. Survey results revealed that franchisees have high degrees of concern regarding either of these potential franchisor actions.

Oxford Economics also finds that the new ruling could lead to increased litigation and related costs. This is supported by earlier research into the implications of a similar decision to broaden the definition of joint employment. A 2019 IFA report found a rise in petitions related to joint employment in the period after the Browning-Ferris decision of 2015.

This ruling would likely lead to rising costs for franchisees. Some of these costs include legal costs, insurance costs related to heightened liability risks, and ongoing operations costs. In the case that the ruling leads to increased oversight and control by franchisors, this may interfere with franchisee independence and their ability to run their own business. Furthermore, rising costs can also impact franchise value and raise barriers to entry for new businesses, potentially disproportionately affecting underrepresented minority groups.

To download the report, please complete the form below.

The experts behind the research

Our Economic Consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques.

Laurence Wilse-Samson

Lead Economist, Economic Impact

Read the report

Complete the form below to download the report.

You might be interested in

The Economics of Reduced-Risk Products: Global policy landscape and principles for policy treatment

In this study, Oxford Economics assesses the policy landscape for ‘Reduced-Risk Products’ in the tobacco market, and explores the potential health and economics consequences of taking a precautionary policy stance against them.

Find Out More
How to tackle sustainability challenges

Sustainability is a multifaceted challenge, shrouded in complexity. It can make navigating the complex landscape of sustainability daunting, with organisations often struggling to understand their unique challenges and find effective solutions or meet their reporting and disclosure requirements. Why, are companies struggling, even though 97% of businesses consider sustainability a top priority?

Find Out More
The McDonald’s System’s Multi-Billion Dollar Impact

The McDonald’s System plays an integral role in state economies through its support of jobs and businesses, driving economic opportunity for its independent owner/operators, McDonald’s crew members, and suppliers.

Find Out More
The Economic Impact of U.S. Cable Providers

This report, commissioned by NCTA, shows that cable providers and cable programming providers had a significant impact on the U.S. economy in 2022 in terms of their contribution to GDP, the number of jobs they support, and the tax revenue they stimulate.

Find Out More