In Williams v. Jani-King, counsel for Jani-King has requested
the Third Circuit en banc reconsider its decision to allow class
certification to franchisees who claim to be employees, rather than
independent contractors. Although the Third Circuit did not reach
the merits of the case, which claims misclassification of the
franchisees as independent contractors, the Third Circuit
considered the controls inherent in the franchise relationship as a
factor under Pennsylvania law. In a strong dissent,
Circuit Judge Cowen recognized franchising as a "bedrock"
of the economy, and the majority decision threatens to undermine
the entire franchise industry by confusing trade mark and
operational controls as evidence of control over employment.
At oral argument, counsel for Jani-King, Aaron D. Vanoort,
argued to the panel that "control over
what" is important. His argument, adopted by the
dissent, is that control over trademarks, required by the federal
Lanham Act, should not be considered at all in the evaluation of
whether franchisees are really employees. In support of the en banc
request, Jani-King argues that the uniform franchise documents used
to support class treatment, should actually be read by the
court to address whether the class action should go forward.
As the merits remain undecided, the case creates uncertainty for
the franchise industry.
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