Restaurant Chains Fret They'll Be on Hook for Franchisees' Transgressions
As the legal landscape shifts, attorneys are advising franchisors to limit their potential legal exposure by exerting less control over franchisees.
October 25, 2021 at 03:43 PM
6 minute read
Labor and Employment
By tossing out a Trump administration rule that made it easier for restaurant chains and other franchisors to dodge responsibility for their franchisees' actions, but not immediately replacing that rule with a new one, the U.S. Department of Labor has left many franchisors nervous.
In-house counsel and the attorneys who advise them are wondering which franchisor practices could get them into trouble later, once the Labor Department has decided the extent to which franchisors are liable for their franchisees' employment conduct.
"I'm in a state that I'm still concerned about this," Perry Roshan-Zamir, general counsel of Nextbite, Ordermark and Sunset Restaurant Management Group, said of the legal landscape. However, because there's a fair chance franchisors will end up facing a level of liability similar to what they faced by the end of the Obama administration, he said, franchisors don't think they will be completely blindsided by policy changes.
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