Franchise Outlook

Good Coffee, Franchises, and Human Rights

A Canadian coffee franchise gives franchisees very specific instructions for how to make their famously consistent gourmet coffee. Those step by step instructions, which it requires all franchisees to follow to the letter, mean that Canadians and travelers to Canada can walk into any franchise location with complete confidence, knowing that they’ll get an amazing cup of coffee wherever they are.

This insistence on consistent procedures also may mean that the franchise will be held responsible for human rights violations at one of their franchise locations.

In the U.S., the National Labor Relations Board’s rulings bringing the relationship between franchisors and franchisees to new levels of closeness as “joint employers” have had some consequences for franchisees. But the court case brought in Canada shows how this kind of argument can also affect the corporate office.

The human rights violations being claimed are fairly extreme, not to say quaint. It’s claimed that one franchisee threatened workers from the Philippines, saying they would be sent back to the Philippines if they didn’t accept overtime work without overtime pay.

That’s not part of the franchisor’s system, and the franchisor tried to be removed from the case before it came to trial. They might have a deal with franchisees requiring a certain water temperature but their system certainly doesn’t include shipping people back to their point of origin — or threatening to do so.

More specifically, the franchisor said that “they were not party to any employment contracts with any members of the Complainant Group, had no control over any terms of employment and had no ability to influence the employment relationship.”

In other words, franchisees are small business owners who make their own decisions… apart from the way they make the coffee.

The court refused to dismiss the complaint against the franchisor, even though the brief acknowledges that there is no evidence that the franchise itself engaged in human rights violations. Rather, they say that “if a respondent has the ability to interfere with and influence the employment relationship of the Franchisee Group with its employees and fails to do so” in order to prevent human rights violations, then that respondent — in this case the coffee company — is in a way responsible.

In this case, the franchisor not only demonstrates through its coffee rules that it has influence over franchisees, but they also allow employees to complain about franchisees who mistreat them, and they had specifically helped the workers from the Philippines with things like banking.

No good deed, they say, goes unpunished.

In fact, the franchisor did an audit of the franchisee’s employment records after the complaint was filed, discovered that they owed some $65,000 in overtime pay to a variety of individuals, and sent them a strongly worded letter. Whether this letter had any effect — that is, that the company “has the ability to interfere with and influence” the franchise’s relationship with its workers — is another question.

And that is what the court has concluded so far: there’s enough uncertainty that they won’t dismiss the complaint. Even though this is a Canadian franchise, the decision could influence franchise relationships in the U.S. as well.

Image: Photospin

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