The Federal Government Is Deciding Who Can (And Who Can’t) Start A Small Business OPINION

This op-ed appeared on The Daily Caller on March 7th, 2024

Just when it seemed impossible for things to get tougher for small businesses, the federal government decided to make things worse.

Small businesses have had a tough run for the last few years. Record inflation, high interest rates, and workforce shortages have led to widespread pessimism among small businesses. The last thing they need is more government interference, but that is exactly what is happening.

The latest regulation from the National Labor Relations Board is yet another blow for small business owners who run franchised companies. The new rule, which is scheduled to take effect on March 11, prevents franchise owners of your favorite local restaurant, gym, or hotel from simply running their own businesses. Instead, they will be demoted from owners to employees — and minority franchise owners will bear the brunt of the harm.

Under current law, most franchise owners are essentially independent small business owners. While they use the same branding as their corporations, they make their own decisions about who to hire, how to market their business, what materials to stock, how to engage with their communities, and more. Because of the true entrepreneurial spirit that these franchise owners embrace, they gladly accept all the challenges and risks that come with the benefits of owning your own business.

But now this rule would take away all the incentives of entrepreneurship and force these risk-takers into functioning as a very small part of a much larger corporation. Though the National Labor Relations Board claims that this rule will protect individual owners — because the liability will roll up to the large corporation — the reality is that bureaucrats in Washington will now decide who can and cannot be their own boss.

While this approach will hurt most franchise owners, minority communities will be disproportionately harmed. Almost one-third of franchise businesses are minority-owned, compared to 18.8% of non-franchised businesses. With the new rule, two-thirds of franchisees said it would be harder for new entrepreneurs to start a franchise, with women and minorities facing the biggest challenges...

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