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.