Franchise Outlook

Union Steps Up Franchise Efforts

The Service Employees International Union has been agitating for increased wages for service workers, with a focus on fast food workers. Since so many fast food restaurants are franchises, the SEIU has been engaged with franchise businesses along the way. McDonald’s has been their primary target, though 14 different franchises were named in a petition filed by the union with the FTC.

Recently, the SEIU has reached out to franchisees.

This is a change of approach for the union, which has previously worked directly with employees. However, as they’ve discovered that many franchisees are simply not in a financial position to meet their demands, and franchisors are firm about their inability to force franchisees to rage wages, they’re taking a new tack. If they can get franchisees to join them in their push to involve franchisors in the wage issue, they may have more success.

Therefore, they have filed a petition with the Federal Trade Commission asking for an investigation of “abusive practises” by franchisors.

Instead of accusing franchisees of exploiting their workers as the union has done in the past, SEIU is now claiming that the franchisors are “abusive and predatory” toward their franchisees. The object is to align franchisees and their workers against the franchisors.

One place where this is working is in Puerto Rico, where there is a history of tension between the franchisees and Arcos Dorados, the largest franchisee in the McDonald’s system. Arcos Dorados has control over the individual franchisees in Latin America and the Caribbean, amounting to more than 2,000 franchises with 90,000 employees. Disgruntled franchisees sued in 2007 and filed a complaint with the FTC last year, but have had no redress for their complaints.

This group of McDonald’s franchisees may be ripe to listen to the SEIU, and two joined in a conference call to publicize the petition. Other franchisees on the call included one of the group of 7-11 franchisees who sued the franchisor last year for discrimination, and a former McDonald’s franchisee who lost her franchise.

During the call, SEIU spokesperson Scott Courtney said that the franchise system itself causes low wages. “Franchisers like McDonald’s control virtually every aspect of the business operation at their franchise stores. They set the cost and effectively set the low wages paid throughout the industry,” he said. “Reform of the system is important to ending poverty wages in the franchised food sector.”

However, the SEIU has not been entirely successful in their efforts to get franchisees and their workers together. McDonald’s spokeswoman Lisa McComb was quoted as saying, “It’s ironic that this organization, that has spent more than $80 million during the past two years to disrupt operations of these same businessmen and women, is now appealing to them for an alliance.”

The SEIU has said that franchisees should not have to pay for their employees’ wage hikes in their effort to bring franchisees to their side of the issue, but they have no specific details on how that would work, and their proposals so far have not had any clear benefit for franchisees.

Pending Request