The new joint-employer standard will result in harmful corporate consolidation of local small businesses.
By Congressman Tom MacArthur (R, NJ-03)
Americans love to shop local. Many of us actively seek out the smaller mom-and-pop establishments in order to support our local communities. Last year, more than 95 million people took part in Small Business Saturday, and I was one of them.
What I love about shopping locally is the knowledge that local small business owners are generally more in tune with the needs of the community. They often live locally – might have even grown up locally – and they know their customers. Where I live in South Jersey, small businesses are the backbone of our economy. They do most of the hiring in our area and they support one another, and consumers and workers are better off for it.
Expanding the reach could be at risk
Behind many familiar brands across various industries – child care, home care services like plumbing or landscaping, moving services, restaurants and hotels, and many other industries – are hundreds of thousands of local, small business owners who operate their small business as a franchisee of a larger brand. Franchising has created 770,000 new businesses that account for nearly 18 million direct and indirect jobs and contribute $2.1 trillion, or more than 10 percent of our economy each year. Through franchising, national companies are able to expand the reach of their products and services, and local entrepreneurs are able to start their own small businesses.
Unfortunately, many small business owners are at risk of being absorbed by a handful of large corporations if the National Labor Relations Board and special interest trial lawyers have their way. They are trying to create a new joint-employer rule, which would hold businesses liable for the management and actions of workers they do business with, but don’t actually employ or control. The new standard could extend liability from individual franchisees to brand companies, from subcontractors to larger employers, and even from a vendor or supplier to the company purchasing their products or services.
Is local worth it?
Larger companies, faced with such increased liabilities, could decide it’s just not worth it to work with local franchisees or contractors and start providing their products and services directly, rather than through local partners. This will endanger businesses like the Hilton Garden Inn and Holiday Inn Express in Mt. Laurel, New Jersey. With seven of 10 new jobs coming from America’s 28 million small businesses, anything that hurts these small businesses hurts America’s workers and their local communities.
Massive corporate consolidation of franchisees removes the “shop local” component that many of us value. If the joint-employer rule becomes law, consumers and workers will be left out of the conversation, and small business owners will be left with little decision-making power. Many of them will essentially become middle managers in large companies.
Killing ambition through regulation
In short, the U.S. government will have killed the initiative that has caused millions of ambitious, creative and hard-working Americans to venture out, take risks and build the small businesses that are so vital to a vibrant economy. This is a truly misguided idea.
Small business owners deserve better, and I will stand with them and their employees to prevent this harmful regulation from becoming the law of the land. ■
How franchising helps shore up business
By Brandon Vervelde
Customers, workers and community members need to know that you are the business owner and operator.
Most people in the country have no idea how the franchise system works. Unfortunately, those people are the same ones making decisions that deeply impact your business. Elected officials and government bureaucrats are pushing ideas like the expanded joint-employer standard that effectively treats your small business as part of your franchisor’s corporation.
The officials don’t form their opinions in a vacuum. They base their decisions on, in part, their own real-life experiences and knowledge.
It’s in our entire industry’s best interest that the American people come to a better understanding of how franchising works. You know that you own and operate your own small business, but too often your own employees, customers and community members don’t know it.
Here are a few ideas on how to educate each of them.
For your employees, ask yourself, “How many know that I own the business, I sign their paychecks, I bought or built the hotel myself, and I just have an agreement with the brand?”
Tell workers you are the owner and give them your cell phone number
Your workers need to know that you’re not only the boss but that you’re also the owner and operator. If you attended AAHOA’s national convention last spring in Nashville, hopefully you caught the keynote address from Kevin O’Leary, the wealthy entrepreneur and star of the TV show “Shark Tank.” One piece of advice he gave was to be accessible to every single one of your employees. He said each of his employees of every business he invests in has his cell phone number. They never call, he added, unless something is of utmost importance. But they know they can, and that’s what matters. Making this small effort will confirm to your employees that you’re the person in charge, even if you don’t get a chance to speak to them every day.
Tell guests who you are in a welcome letter
Your property might have a lot of repeat customers or you might never see the same guest twice, but either way you should make an effort to make sure they know you’re the person who owns the hotel. If every hotel in the country made an effort to educate their customers, understanding of franchising would increase tremendously.
Here’s one way you let your customers know more about you. You probably already have a small plaque on the wall or near your front desk saying that the property is owned and operated by you or your company. But those plaques are easy for a customer to overlook. I suggest being a bit more straightforward. What if you included a welcome letter in the amenities booklet in each guest’s room? In the short welcome message, be sure to explain that you are based in the area and sign it with your name.
When it comes to your community at large, raising your profile as the local owner and operator of your hotel will not only lead to better understanding of franchising but will also lead to increased business.
Sponsor youth sports teams
One way to reach out to and support the local community is to be a sponsor of local youth sports teams. There are plenty of options between soccer, basketball, football and more. You will earn a lot of favor with the organizers, parents and grandparents of the kids on the team.
An added bonus comes if your sponsored team helps organize a tournament in the area. As the sponsor of the team, you would be on the top of their list for recommended accommodations for visiting teams. Out-of-towners will seek out your hotel first as the recommended spot.
With just a little bit of effort, we can each make a difference for the hotel industry in educating America about how franchising works. We won’t be able to make change overnight, but together we’ll steer the conversation toward better understanding. And that makes for good business.