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McDonald's can be liable for issues at franchise-owned restaurants, NLRB rules

McDonald's Corp. says it has been notified by a labor regulator that it can be named as a "joint employer" for workers in its franchise-owned restaurants.

The decision by the National Labor Relations Board was being closely watched because it could potentially expose McDonald's to liability for the working conditions in its franchisees' stores.

In the U.S., the vast majority of McDonald's more than 14,000 restaurants are owned and operated by franchisees. The same is true for many other fast-food companies, including Yum Brands, which owns KFC, Taco Bell and Pizza Hut. The companies make money by collecting royalty and sales fees from franchisees.

Labor organizers have said McDonald's should be held accountable as a joint employer at its franchise locations because the company has so much control in setting operational terms. The matter has come under the spotlight as fast-food groups backed by the Service Employees International Union have protested in cities around the country since late 2012, in a push for higher wages and the right to unionize.

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