The following is the opinion and analysis of the writer:
Graham County is much like the rest of rural America. Our county’s strength doesn’t lie in recruiting major corporations and large businesses to open shop. Instead, it’s dependent on our small businesses.
Having formerly served as Chair of the Graham County Democratic Party, I’ve seen how small businesses form the backbone of rural Arizona. The entrepreneurs who open businesses don’t just create jobs; they sponsor Little League teams, support local charities, and invest in their communities.
I recognize the importance of an environment that is conducive to new businesses opening. That’s why I know that our leaders in Congress must prioritize regulations that give aspiring entrepreneurs and small business owners a fair shot at achieving the American Dream.
One place they can start is by reforming the joint employer standard to ensure that franchising — one of our nation’s most successful routes to small business ownership — remains a viable option.
For many aspiring entrepreneurs, franchising offers something invaluable: the chance to own and operate an independent business while benefiting from the training, marketing support, and proven systems of an established brand. The success of the model as a pathway to ownership is clear: a franchise location represents nearly 1 in 10 of all U.S. business establishments.
Here in Arizona, franchising is delivering results. It’s responsible for more than $20 billion in economic output and is one of the best job creators we have. Over the last year, more than 216,000 good-paying, quality jobs have been created by franchisees. These are jobs being held by our friends and neighbors, which have served to improve their quality of life.
Protecting the future of franchising and ensuring that our economy and workforce continue to grow underscores the need to bring clarity to the joint employer standard.
The joint employer standard underpins the franchise model. It determines when two separate businesses can be held jointly responsible for the same employees. In the last 10 years, four changes to the standard have resulted in an environment that’s not conducive to the growth of the industry or the economy.
Small business owners, both current and aspiring, choose franchising because of the independence that it offers. But as long as there is uncertainty, this independence is at risk.
For current franchisees, an unclear standard means that national brands may seek to exert more control over operations to mitigate risk. As a result, despite years of being an independent owner and operator, a franchisee could suddenly become little more than a middle manager.
Mitigating risk also hurts aspiring owners. Instead of working with first-time owners, brands may gravitate toward established operators, shutting off access to what has become an essential model for would-be owners.
At the same time, it creates an equally confusing landscape for employees. As brands exert more control, employees are suddenly left wondering whether their employer is the franchisee on the ground who hired them or a national corporation led by someone they’ve never met. This confusion makes it harder for workers to organize or hold the right employer accountable.
By establishing a permanent, franchise-specific joint employer standard, Congress would solve all these issues.
It would protect the independence of franchisees, maintain franchising as a door for aspiring small business owners, and strengthen workers’ rights by ensuring that the franchisee on the ground is the one held accountable as their employer. It’s a common-sense fix.
Franchising makes Arizona stronger. We need our leaders in the U.S. Senate to codify a standard that protects this model that works for communities across Arizona.
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