Congress agreed on something bipartisan – and Biden vetoed it

By Rep. Kevin Hern in The Hill

Too often, politicians in Washington talk about things they know nothing about. Take President Joe Biden and the economy. He said all the right things during the recent National Small Business Week, correctly stating that small businesses “embody the spirit of America and our boundless possibilities.” But talk is cheap. When those same businesses needed Biden the most, he let them down, especially with his veto of widely supported bipartisan legislation.

It should come as no surprise that only 34 percent of Americans view “Bidenomics” favorably. 

Biden spent 50 years in public office — but my story is different. Long before elected office, I sold my hog farm back in 1996 to buy my first McDonald’s restaurant. From that point forward, I signed both sides of my paycheck. Over the next decade, I grew my business to 24 franchise locations that employed thousands of people in the Tulsa area. 

This process is known as the franchise model. An aspiring entrepreneur like me (a franchisee), who may not have the background or capital to start a business from scratch can instead buy into an established brand like McDonald’s (a franchisor). For a fee, franchisees benefit from the trademark, the licenses and everything that comes with it.  

Franchising is small business. In fact, more than 80 percent of franchise owners operate just one location. 

But the success of a franchisee is not guaranteed. Far from it. A franchisor and a franchisee may share a name and logo, but they are independent entities. The system is designed so each individual unit makes their own day-to-day decisions about personnel, schedules, growth and how to run their business.  

If Biden has his way, the independence of the relationship — the ingredient that makes the franchise model so special — will disappear overnight. That’s because his political appointees at the National Labor Relations Board (NLRB) proposed an expanded version of “joint employer.” As its name suggests, joint employer turns franchisees into subordinates of their franchisors. The employees of each location now report to corporate bosses in faraway cities rather than their local faces. The local entrepreneur who took a chance — some with their life savings — to invest into a franchise is reduced to a mid-level manager, reporting upwards to corporate. 

The motivation for Biden and other joint employer proponents is simple: It eases the path to unionization and expands the liability risks to juicy targets. Biden brags about being the “most pro union president in history.” Joint employer is a complete surrender to those union bosses he needs in November. When the rule first came down last October, the AFL-CIO heralded it as an, “important win.” 

Thankfully, both chambers of Congress passed a repeal of joint employer in a strongly bipartisan fashion. Biden could have taken the win and signed the bill. Instead, he issued a shameful veto, not once mentioning the impact for small business in the process. It was a slap in the face to the franchise community and the more than 800,000 small businesses operating as a franchise.  

Joint employer has proven to hamper economic growth, an area where Biden sorely needs a win. When the same rule was in effect under the Obama administration, it resulted in 376,000 lost jobs. 

Without franchising, my story would look very different. I am not alone — the franchise model is responsible for more than 8 million jobs in America today. 

Like anything else, the franchise model isn’t perfect. Recent policy recommendations put forward by the International Franchise Association, the official trade organization for franchises, offer commonsense improvements to the pre-sale negotiations between a franchisor and prospective franchisee — all to help the franchisee understand exactly what they’re investing in.   

A strong relationship between the two is critical to future success. It’s incumbent on all parties to protect it, and we must get it right. 

Franchising is what makes America special; it gives people from all walks of life — even someone who grew up in poverty, like me — a chance to make it, an opportunity to experience the American Dream. 

Franchising cannot exist with joint employer. Joe Biden may not understand that point, but the nation’s hundreds of thousands of franchise locations sure do. Having spent the last few years combatting soaring inflation and economic uncertainty, they’re watching closely, and they won’t forget.