Resolution on the Misapplication of Employee Classification Laws
This resolution recognizes that business format franchising is a major contributor to the United States economy. The resolution also recognizes that franchising is a contractual business relationship, not akin to an employment relationship.
WHEREAS, franchising contributes $1.2 trillion to the United States economy through 820,000 franchise businesses; and
WHEREAS, franchise businesses employ over 9 million workers; and
WHEREAS, franchising has been a major source of economic expansion in the United States, particularly in the retail trade and services sectors, providing entrepreneurs with a proven route to business ownership; and
WHEREAS, business and franchise agreements are contracts that govern the duties and obligations of the parties to these agreements; and
WHEREAS, Section 10 of the U.S. Constitution and most state constitutions specifically prohibit impairment of contracts that are freely and openly entered into by the parties; and
WHEREAS, the area of contract law is a well established and settled area of law with sound guiding principles outlined in the uniform commercial code; and
WHEREAS, legislation or regulations which would improperly classify franchisees as “employees” is a misinterpretation of labor and contract policy and deprives franchise investors of valuable economic opportunities; and
THEREFORE, BE IT RESOLVED, [insert state here] opposes enactment of laws that interfere with business and franchise agreements freely and openly entered into by parties.
BE IT FURTHER RESOLVED, that [insert state here] opposes enactment of laws and regulations that have the effect of classifying franchisees as “employees” of the franchisor.
Approved by the Legislative Board January 15, 2012.
Keyword Tags: Commerce Insurance and Economic Development Task Force, Employment