This is the question that most directly threatens the franchise model, because it goes to its core premise: the franchisee is an independent entrepreneur. If so, the franchisee is the sole employer of its staff. If not really - because the network's head imposes its procedures, its till and scheduling software, its service standards -, then the franchisor could be held to be a joint employer, and be answerable under employment law in restaurants it does not own.
In the United States: a ten-year battle, with no judgment
It all began with complaints filed from 2012 onwards by franchisees' employees, in the context of the “Fight for $15” campaign: they claimed they had been disciplined or dismissed for their union activity.
On 29 July 2014, Richard Griffin, General Counsel of the National Labor Relations Board (the federal labour authority), authorised the issuing of complaints naming McDonald's USA, LLC as a joint employer alongside its franchisees. On 19 December that year, thirteen consolidated complaints were issued. A trial opened before an administrative law judge, Lauren Esposito. It would never be completed.
After a change of majority, the authority chose in 2018 to settle rather than have the question decided. Judge Esposito refused to approve the settlements in July 2018; the Board overruled her on 12 December 2019 and ordered her to approve them. On 22 April 2022, the federal Court of Appeals for the District of Columbia rejected the union's challenge and upheld the settlement: back pay paid to the complainants, a fund of 250,000 dollars, corrective notices - and no finding that McDonald's was a joint employer.
The rule, meanwhile, has gone there and back
While the case was bogged down, the legal test itself changed four times.
| Date | Decision or rule | Test adopted |
|---|---|---|
| 27 August 2015 | Browning-Ferris decision | Broad: indirect control, or control merely reserved by contract without being exercised, is enough |
| 26 February 2020 | NLRB rule | Restrictive: “substantial direct and immediate” control is required |
| 27 October 2023 | New NLRB rule | Return to the broad test |
| 8 March 2024 | Federal court for the Eastern District of Texas | Vacatur of the 2023 rule, held to be “unlawfully overbroad” |
| 27 February 2026 | Official withdrawal of the 2023 rule | Return to the restrictive 2020 test |
The federal judge who vacated the 2023 rule criticised it for treating “virtually every entity that contracts for labor” as a joint employer. The authority gave up defending its rule on appeal in July 2024. The test in force today is therefore the most demanding one: substantial, direct and immediate control over wages, hours, hiring, discipline or supervision.
In France: co-employment, an almost closed route
French law has a related concept, co-employment (co-emploi). It was developed for groups of companies, not for franchise networks, and the social chamber of the Court of Cassation narrowed it considerably in a landmark judgment of 25 November 2020 (no. 18-13.769): there must now be permanent interference in the employer's economic and social management, leading to its total loss of autonomy of action. In other words, a franchisee who keeps control of its staff does not give rise to co-employment.
A 1994 judgment is often miscited in this debate. On 17 May 1994 (no. 93-60394), the Court of Cassation did confirm the existence of an economic and social unit between several McDonald's franchised companies, noting that management powers were concentrated in the same hands. But that decision concerns staff representation between franchisees - it says nothing about whether the franchisor is an employer.
What the Antibes case file shows
The question of the franchisee's real degree of autonomy runs through all the documents of the Collorafi case: the setting of targets, the audits, the approval of expenditure. It appears in McDonald's letters on audits and fees as well as in the exchanges on forecast targets. The French court, in 2000, did not have to characterise the nature of the relationship: it ruled on the way in which the termination clause had been implemented. That is different ground - but the same tension.
The same problem, seen from France
The American question - is the franchisor a joint employer? - arises because the network exercises over the business a control resembling that of an employer: hours, procedures, work rates, audits. This control is not an abuse: it is the know-how, recorded in the operations manual, whose transmission is precisely what justifies the fees of the franchise agreement. That is the whole difficulty: what gives the network its value is also what blurs the line between the principal and the employer.
French law approaches the subject from another angle. It does not look for a joint employer; it follows the business (fonds de commerce). Under a lease-management agreement (location-gérance), employment contracts are attached to the business: when the management ends and the business returns to its owner, the employees follow it - this is article L. 1224-1 of the Labour Code. The practical result is close to the American joint employer, but the reasoning is entirely different.
In both systems, the ultimate issue is the same, and it is economic: from whom can employees claim their wages, and with whom can they negotiate. It is the question of the employer's power over the price of labour - what economists call monopsony.