Just when it seemed like things couldn't get any worse for small businesses, the federal government decided to make things even worse.
Small and medium-sized enterprises have continued to face tough business conditions over the past few years. With record inflation, high interest rates, and labor shortages, widespread pessimism among small and medium-sized enterprises. The last thing they want is more government intervention, and that's exactly what is happening.
The latest regulations from the National Labor Relations Board are another blow to small business owners who operate franchise companies. The new rules, scheduled to go into effect March 11, will prohibit franchise owners of favorite local restaurants, gyms and hotels from simply running their own businesses. Instead, they are demoted from owners to employees, leaving minority franchise owners to bear the brunt of the damage.
Under current law, most franchise owners are essentially independent small business owners. They use the same branding as businesses, but make their own decisions about who they hire, how they market their businesses, what materials they stock, how they interact with their communities, and more. To do. These franchise owners have a true entrepreneurial spirit and are willing to accept all the challenges and risks that come with owning their own business.
But now, this rule would remove all incentives for entrepreneurship and force risk-takers to function as a small part of a much larger company. The National Labor Relations Board claims the rule protects sole proprietors, but the liability extends to large corporations, making it difficult for bureaucrats in Washington to decide who can and cannot be their bosses. The reality is that you have to decide.
While this approach would harm most franchise owners, minority communities would be disproportionately harmed.largely one third 18.8% of franchised businesses have minority ownership, compared to 18.8% of non-franchised businesses. With the new rules, two-thirds of franchisees say it is difficult for new entrepreneurs to start a franchise, with women and minorities facing the greatest challenges.
The worst thing about this impending regulatory change is that the government already knows it's a bad idea. It's a concept recycled from the Obama administration, but scrapped under President Trump. When the system was first introduced in 2015, franchise owners said their family-run businesses no longer felt like their own, had little incentive to be creative and entrepreneurial, and They complained that micromanagement has become the norm. Data supported this anecdotal evidence. Industry research at the time revealed that 92% of franchisees say they have received less support from brands since the rules came into force. Additionally, it is estimated that more than 376,000 franchise jobs were lost each year while this system was in place, costing franchisors more than $33.3 billion in losses.
As Americans continue to suffer under “Bidenomics,” this latest rule upends our free, capitalist economy and leads to massive overreach that will impact far too many hardworking Americans and their families. Not too much. This is another example of disastrous economic policies that have resulted in nearly 20% cost increases since 2021, resulting in nearly half of Americans believing they are worse off today than they were before the pandemic. ing.
Fortunately, members of both the House and Senate parliamentary review act A resolution to overturn this destructive regulation. A broad coalition of organizations, including the National Black, Hispanic, and Asian/Pacific Islander Chambers of Commerce, have all signed on in support. If passed, this bill would restore the previous joint employer standard that allows small businesses to grow and prosper.
When small businesses thrive, America thrives. Policymakers should listen when entrepreneurs say new policies pose an existential threat to their ability to succeed, especially when they speak from past experience. In place of such regulations, policymakers should encourage entrepreneurship and all the benefits it brings to workers and communities.
Linda McMahon is president of the America First Policy Institute and its American Workers Center. She is a former head of the Small Business Administration and the Daily Caller. She is also the chair of the News Foundation's advisory board.
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