2014 was a challenging year for franchising. While franchising growth was strong (with growth through franchising outpacing growth in the economy overall), new labor-driven attacks targeted the franchise model with a vigor and force unseen in the long history of the industry. These attacks, driven by unions like the Service Industry Employees Union, seek to drive new membership and increase dues through unionizing employees of specific franchise brands.
In 2014, these initiatives largely took two forms:
- Drives to increase the minimum wage in specific jurisdictions. These laws target the franchise industry by classifying franchise owners differently from traditional small business owners. This is accomplished by aggregating the number of employees across all franchised locations in a brand to require franchisees to implement higher minimum wages more quickly than their independent competitors. This unfairly and disproportionately affects, and disadvantages, franchisees vis-a-vis their independent competitors.
- Calling franchisors "joint employers" of their franchisees' employees. The National Labor Relations Board's General Counsel kicked off this anti-franchise campaign in July 2014 when he issued an opinion that McDonald's is a "joint employer" of its franchisees' employees. This position allows employees to attack both McDonald's and its franchisees collectively in asserting wage violations, and, if successful, would also support unionizing employees within a franchise brand.
The International Franchise Association has been vigorously combatting these initiatives through intense lobbying efforts and through grassroots educational outreach. During the IFA's 2015 annual convention, the organization announced a new industry-wide effort to fight the minimum wage and joint-employer problems through its newly-formed group, the Coalition to Save Local Businesses.
Franchisees and franchisors alike should become educated about these efforts by the franchise industry to fight attacks on the franchise model. To learn more and to support the effort by the industry, go to www.savelocalbusinesses.com.