A recent ruling by U.S. District Court of Massachusetts Judge William G. Young will severely impact the ability of franchise businesses to operate, create jobs and provide millions in economic output in the Commonwealth, the International Franchise Association said today.
“Franchising is a significant source of small business activity in the Commonwealth and has greatly increased small business ownership, particularly among women and minorities,” said IFA Vice President of Government Relations David French. “We feel the judge did not take fully into account the unique attributes of franchising and the federal regulatory oversight of the franchise business model. Wrongfully defining franchisees as employees of the franchisors instead of business owners, as the ruling does, threatens the viability of franchising as a business model in Massachusetts and will likely lead to franchise companies ceasing operations.”
French said that because of the 16,000 franchise businesses in Massachusetts 300,000 jobs are created and $37 million in economic output is provided.
The judge granted summary judgment to plaintiffs based on his conclusion that under Massachusetts’ Independent Contractor Statute, Massachusetts franchisees of the defendant Coverall North America were actually employees misclassified as independent contractors. More.