Arkansas Senators John Boozman and Tom Cotton wrote this piece published here in Arkansas Business September 28, 2015

As many Arkansans know, the franchise model has been one of the greatest examples of economic success in history. The benefits of franchises are widespread and shared by investors, business owners, employees and nearly every American.

There are more than 770,000 franchises nationwide employing about 8.5 million people—almost three times the population of Arkansas. Our state has nearly 10,000 franchises that provide jobs to approximately 100,000 Arkansans. Franchises span almost every industry, including fast food, barbershops, automobile dealerships and even healthcare firms. 

This business model works because it offers entrepreneurs the chance to use an established, well-known brand while keeping control of operational decisions. Franchise owners – not corporate headquarters – know their local area best, and they hire employees and set wages, hours and working conditions. Franchisees are responsible for the success or failure of the business. They file their own taxes and are accountable for following all local, state and federal laws. 

For decades this model has relied on a joint-employer standard that is fair and reflects reality. This standard, set by the National Labor Relations Board (NLRB), deems businesses as joint-employers only when they share direct and immediate control over essential terms and conditions of employment. For instance, if a McDonald’s employee at a Little Rock branch had an issue with pay or working conditions, that employee could address the issue with his or her manager – not the corporate headquarters in Illinois more than 600 miles away that has no control over any employment decision at the Arkansas location. 

But a recent decision by the NLRB puts this entire model at risk. In its 3-2 Browning-Ferris ruling, the NLRB decided that the joint-employer definition includes liability for businesses that don’t exercise any control over the terms and conditions of employment.  

In the example above, if a Little Rock employee had an issue with their working conditions, that employee could now bring a lawsuit against the McDonald’s headquarters – even if the headquarters had nothing to do with the challenge facing the employee. Fayetteville-based Shake's Frozen Custard would potentially be liable if the owner of one of its franchise stores in Florida was found guilty of violating labor laws. 

This will lead to one of two outcomes, both disastrous for Arkansas businesses. 

First, corporate headquarters may start taking control over personnel decisions made at local franchises. This means the McDonald’s headquarters in Illinois will tell Arkansas managers who they can hire or fire.  

Alternately corporate headquarters may decide to end their entire franchising model entirely. No business wants to be liable for decisions that are out of its control. 

Unfortunately, this decision is just another example of harmful changes to longstanding labor policies instituted by the Obama administration. Over the last six years, the NLRB has restricted the ability of employers to give workers adequate time and information about union elections, while the Department of Labor has attempted to limit the ability of financial advisors to assist families with investment and retirement decisions. And now, the NLRB threatens to undermine one of the most important small business models in the country. 

That’s why we’re working to stop this ruling and protect Arkansas franchisors. 

The Senate Committee on Appropriations included a provision to restrict NLRB regulatory overreach by prohibiting any funding for enforcement of this rule. 

Additionally, we are proud sponsors of the Protecting Local Business Opportunity Act, legislation that would overturn this ruling. We will work closely with our colleagues on both sides of the aisle to pass this legislation and will continue to seek ways to prevent the Obama administration from destroying Arkansas businesses. 

Rest assured, we’re committed to stopping the worst excesses of the Obama administration. Returning to the original standard of joint-employment, which has maintained decades of precedence, is essential for business owners, employees, and any Arkansan who enjoys the convenience of local franchises.

Accessibility is an important part of my commitment to Arkansans. Telephone-town halls allow me to connect with thousands of people across the state while working in Washington and casting votes on their behalf. This is a great opportunity to be part of the political process with the convenience of being at home.

This statewide event allows Arkansans the ability to ask me questions over the phone or listen to the conversation about the issues impacting them. If you're interested in participating in the phone conversation, call toll free 888-400-1986 at 7 p.m. on Monday to connect to the discussion and ask questions.

Since my election to the Senate five years ago, I have spent time during each August visiting with Arkansas’s farmers, ranchers and industry leaders during my annual agriculture tour.

This year’s tour was extremely beneficial as there are a lot of important issues facing the agriculture community that Arkansas producers were eager to discuss. 

Among them:

• Waters of the United States (WOTUS) Rule: Arkansas farmers, ranchers and private landowners are rightfully concerned about this tremendous overreach that threatens their ability to use their property. This rule will raise costs without providing clean water benefits, take control away from states and increase uncertainty all while causing project delays as Arkansans try to figure out where this EPA power-grab applies.
  
  
• School Nutrition: Discussions about school lunch programs and nutrition were particularly timely as the Agriculture Committee is set to consider legislation reauthorizing child nutrition programs when the Senate reconvenes in September. Prior to the adjournment of the Senate for the August in-state work period, I introduced the Hunger Free Summer for Kids Act, legislation to make federal child nutrition programs more efficient and flexible to reach children in need during the summer months when school meals are not available. I will be working to get his bill included with the larger reauthorization.
  
  
• Country of Origin Labeling: I’ve long opposed the COOL mandate because it alienates our trading partners, increases compliance costs, and offers few benefits. The World Trade Organization once again ruled against the U.S. in this dispute. We’ve seen the decisions against this mandate four times now, and if we don’t get it fixed, this could impact the economy in a very negative way.

Thanks again to everyone who took the time to show me their operations and share their concerns about agriculture-related issues during this year’s tour. It is my hope that by the time next year’s tour rolls around, we will have quashed the misguided WOTUS rule, reauthorized the child nutrition law and settled the labeling dispute.