Disenfranchising the American Dream?

The National Labor Relations Board’s general counsel decided earlier this year that the decades-old rules of franchising law no longer apply — that franchisors are “joint employers” and can thus be held liable for the employment decisions of individual franchisees.

The decision came in response to complaints alleging that McDonald’s and its franchisees had violated the rights of employees involved in protests against the company, but the decision has the potential to disrupt the entire franchising business model.

Just talk to Bill Bass, a franchisee with Two Men and a Truck.

“This joint employee-employer thing, if that goes through, that’s a hand grenade in the middle of the franchising business model,” Bass told Entrepreneur shortly after he learned of the NLRB ruling. “It would completely change everything about the franchising model, to the point where we probably wouldn’t be in franchising.”

It isn’t just the business model that’s under attack, but the hundreds of thousands of contracts that make the model hum. But contract law doesn’t seem to be of much interest to the NLRB’s chief lawyer.

“This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors,” said Steve Caldeira, chief executive of the International Franchise Association.