Why franchisees should organize

I’ve written about low wages and poor working conditions at fast-food restaurant chains, but the fact is that a humane business owner who is a franchisee may not be in a position to treat employees humanely.

Franchisers of fast-food restaurants impose strict controls on franchisees, including the prices that they charge.

So if McDonald’s (to take a hypothetical example) says the price of a double cheeseburger is a dollar, and it costs more than a dollar to make the double cheeseburger, the “owner” of the individual McDonald’s restaurant loses money.

I put “owner” in scare quotes because a franchisee does not have the self-determination of a true owner.  Under a truly independent business owner, the franchisee is not free to raise or lower prices in response to supply and demand.

The effect of unionization of fast-food workers or a higher minimum wage will be to squeeze franchisees while the effects on franchisers at the top of the economic food chain will be minor and indirect.

The answer, as Martin Longman wrote in the Washington Monthly, is for franchisees to unionize to protect their own interests.   As Longman pointed out, franchisees typically pay thousands of dollars just for the right to the franchise, basic business decisions such as prices are made for them, and they often have to buy basic supplies from suppliers designated by the franchiser.  They are in much the same situation as sharecroppers in the Old South in an earlier era, and have just as little ownership rights.

Everybody who is in a position to be squeezed by giant corporations — employee, franchisees, suppliers — has a right to organize collectively to equalize the bargaining power.   It is not in the interest of franchisees and suppliers to be shock absorbers between these giant corporations and the workers who make their profits possible.

If franchisees organize, their organization would of course not be called a “union” [1].  It would be called an “association” or “federation” or something like that.  But the purpose would be the same.

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Some McDonald’s workers have filed a lawsuit charging wage theft, and the lawsuit is not against McDonald’s franchisees, but against McDonald’s itself.  The plaintiffs charge that McDonald’s so micro-manages the franchises that the owners are employees in call but name.

<p<style=”text-align: left;”>Click on Inside Low-Wage Workers; Plan to Sue McDonald’s–and win for a report.

[1]  One of my father’s favorite remarks was that there is nothing more ridiculous than a doctor or a lawyer denouncing labor unions.   What he meant was that the Medical Association and the Bar Association were equivalent to labor unions, but much more powerful.   Unfortunately, this is no longer true of physicians.  Most of them are under the thumbs of insurance companies, health maintenance organizations and Medicare and Medicaid administrators.

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4 Responses to “Why franchisees should organize”

  1. Holden Says:

    I never thought about a franchisee being essentially a sharecropper, but you’re exactly right.

    I witnessed a great example of this in action a few years back when $5 footlongs at subway became popular. A lot of budget conscious (or cheap) people would go to subway for the $5 footlong then not opt for the combo deal.

    One day I was eating my $5 footlong with tap water when I overheard the the owner of the franchise having a meeting at a nearby table mention to his workers that they really need to push combo deals because otherwise they practically aren’t even breaking even on the sale of the sandwich alone.

    Basically, Subway’s marketing ploy was putting the franchisees in a serious crunch.

    Like

  2. Holden Says:

    I also like the idea of an “association” or “federation” more than a union. The word Union has become too demonized in the media. But we see “associations” all the time and seem to have no problem with them.

    It really is no different than any other NGO, Non-profit, Lobbyist org, etc. Its just a collection of people bound together to support a focal point of interest.

    Nice blog post. I never really considered this.

    Like

  3. thetinfoilhatsociety Says:

    The AMA has no one to blame but themselves and their members for the lack of freedom they now suffer under. They have a long history of gaming the system to increase their own wages and expand their territory while trying to prevent complementary practitioners such as naturopaths, osteopaths, nurse practitioners, and chiropractors the right to practice without interference or physician oversight. Witness to this is the fact that many medical schools now offer courses in complementary and alternative medicine, and classes in how to actually listen to your patient and communicate with them. Don’t get me wrong, I work in the medical field and I am friends with physicians, and I sympathize with their current cost constraints, but a look at the publications of the AMA from the turn of the 20th century til now will prove what I’m saying.

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    • Holden Says:

      I think you make a good point in that basically, unions asked for what they’re getting at the moment. Unions didn’t fall out of favor with main stream America just cause, they did it to themselves by abusing their power.

      Like

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