Alaska News

Lynne Curry: Should I become a franchisee?

Q: I just had the oddest conversation with my boss. He asked if I'd like to own my own business.

When I realized he was serious, I asked, "What's the catch?" He said there wasn't one and that if I became a franchisee, and we created a business to business relationship, it would be a win for him and for me. He said since it would lower his payroll costs, he would guarantee my new small business work from his business and become a subsidy client for me. He acted like we should break out the champagne and celebrate.

I asked if I was being fired. He said of course not, but then he gave the franchise paperwork to sign and a list of Internet websites that I could use to set up my business. He expects my answer today. Could this get me into trouble?

A: Your boss wants to lower his payroll costs. While he presents this strategy to you as a win-win, and it may be if you've always longed to run your own business, think long and hard before you accept. Once you become a franchise owner, you lose standard employee protections, such as overtime and safety protections.

Further, unless you and your former boss truly change how you work together and how you independently build your own business, this paper façade can burn up in a heartbeat. Recently, the U.S. Department of Labor investigated franchises in the construction industry. They learned that more than 1,000 construction workers built houses one day as employees, and then became LLC owners the next day, without wage or safety protection. The DOL went after their former employers and penalized the employers nearly $1 million in damages and penalties, and the franchise owners learned they'd been employees all along.

Could you get into trouble? That depends -- if your new business has safety or other problems, you'll be on your own. If those calamities don't result, and you want your own business, your boss's offer gives you a head start. Your boss, however, takes a risk.

Q: For years, I suffered bad treatment under a calculating, manipulative, deceitful manager. I wasn't the one who blew the whistle on her, but I was glad when it happened. I took part in the subsequent investigation and because I provided the crucial information that torpedoed her career, she now focuses all her anger on me.

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She's found an attorney who's sued me for defamation. My employer said I have nothing to fear. Is that true? They've also told me the company attorney will defend me. Do I need my own attorney?

A: When anyone sues you, it's a good idea to have your own attorney, as this guarantees you unbiased advice. Your attorney can confirm what your employer's attorney tells you, that you're protected unless an unexpected wrinkle occurs. You can then let your employer's attorney handle this entire matter.

Almost all laws relating to workplace employee rights prohibit employers from retaliating in any way against employees who assist in investigations. Although your former supervisor and not your employer now brings suit against you, these laws give your employer a vested interest in protecting you as the suit appears retaliatory.

Two additional defenses protect you from your former supervisor's defamation lawsuit -- truth and privilege. Some states agree that truth is a complete defense. Because your statements were made for a legitimate business purpose, you have the protection of privilege.

You'll find helpful information by looking at the court's ruling in Chambers v. The Travelers Companies. Employees convinced an insurance company's managing director to investigate their supervisor, describing her management style as "blame and shame." Ms. Chambers denied the problems. The company then learned she'd falsified her expense account and fired her for that. Chambers then sued her company for defamation -- but she lost. According to the court's ruling, when an employer learns employees' comments during an investigation, those comments have protection.

You can thus consider this your former supervisor's last hurrah and potentially sue her for a nuisance lawsuit.

Lynne Curry | Alaska Workplace

Lynne Curry writes a weekly column on workplace issues. She is author of “Navigating Conflict,” “Managing for Accountability,” “Beating the Workplace Bully" and “Solutions,” and workplacecoachblog.com. Submit questions at workplacecoachblog.com/ask-a-coach/ or follow her on workplacecoachblog.com, lynnecurryauthor.com or @lynnecurry10 on X/Twitter.

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