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New CEO/President on board at IFA

IFA’s new president/CEO won’t take as long to get up to speed as might be expected in an association leadership change. Stephen Caldeira knows the IFA well, first as a board member when he was Dunkin’ Brands’ executive vice president of global communications and chief public affairs officer and then as a peer over at the National Restaurant Association, where he served as president and COO of the NRA’s Educational Foundation. He was also the restaurant association’s spokesman.

Caldeira replaces Matt Shay, IFA’s president for six years, who left in April to head the National Retail Federation.

In his various roles, Caldeira says he’s already worked closely with IFA’s team in the past and plans to build on the success of his predecessor. His philosophy is to hire great people and get out of the way. “I’m not a micro-manager,” he said. “I’ve been fortunate to be around great leaders, like Steve Reinemund of PepsiCo, Herman Cain (former chairman of Godfather’s Pizza and president of the National Restaurant Association) and Jon Luther (chairman of Dunkin Brands).  I believe hard work gets great results.”

Under Shay’s leadership the focus of the association has adopted a more overt political tone. Caldeira has experience on this front, as well. He’s worked on several political campaigns, including  Ronald Lauder’s bid for mayor of New York in 1989—Lauder was a former ambassador to Austria and the chairman of cosmetic company, Estee Lauder International.

While IFA has “a lot on our plate,” such as continuing to enhance public awareness of franchising, “first and foremost the priority is access to credit for franchisees,” he said. Caldeira feels he’s coming into an association with a solid strategic plan and a supportive board.

Coverall case update

On May 26, a Boston jury ruled against a specific group of Coverall franchisees who had sued the Florida-based commercial cleaning company. The trial was a test of Judge William Young’s March 23rd ruling that Coverall had so much control over its franchisees that they were really employees and entitled to overtime pay, worker’s compensation and other benefits.

But the plaintiffs flunked the test, because one did not show up for the trial, two had signed releases saying they would not litigate against Coverall and the statute of limitations had expired for the fourth.

Norman Leon, of DLA Piper’s Chicago office, who represented Coverall, said, “We prevailed at the trial. The verdict shows how difficult it is to prove class action status in a situation where plaintiffs have such different experiences.”

But the issue is not dead because on June 28, Judge Young agreed to let plaintiffs’ attorney Shannon Liss Riordan file an amended complaint with a new class of representatives, on an opt-in basis only, to test whether the question of employee misclassification could go forward as a class action.  “I feel we lost the battle,” said Liss Riordan, “but we potentially won the war.”

After the March ruling, Coverall had begun treating its 250 Massachusetts franchisees as employees. Leon said the company will continue with that “modified system” until a final decision is made on the reclassification issue. In the meantime, franchisor attorneys are recommending their clients shore up their own practices lest, they, too, are accused of “micromanaging their franchisees,” said Adam Siegelheim with Stark & Stark in New Jersey.   Siegelheim said his firm is advising clients to “reexamine their operating standards and eliminate rules that are not essential to their brand.  Make sure your franchisees are holding themselves out to the public as independent business owners.”

In an online webinar this spring, Nixon Peabody attorneys Arthur Pressman, Gregg Rubenstein and Diana Vilmenay suggested franchisors with company-run units incorporate those stores as separate legal entities. Otherwise, they said, a judge could interpret that the franchisor and franchisee are in the same business, a  red flag in determining employee status.

Liss Riordan said, “This case seems to be building a cottage industry for franchise lawyers, who are alarming their clients about misclassification issues. This case is about the ongoing predatory abuses of immigrant janitorial workers. It does not threaten legitimate franchising.”

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