Fast Food Forward protest in New York

Labor activists focusing on restaurant franchise model

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Earlier this year, AFL-CIO president Richard Trumka likened the current union and worker center assault on the restaurant and retail sectors to “a death by a thousand cuts.” Whether it’s the wage and benefit proposals sprouting up across the country or street theater protests and public pressure campaigns, the unions are throwing everything they have at the industry.

While some of the tactics are old school, some newer tactics are actually quite creative. Take for instance one of the newer assault targets – the franchise business model itself. Beginning this past summer, liberal media and blogs started hinting that the franchise business model was at least partly to blame for what they called the poor quality of chain restaurant jobs and alleged incidents of so-called “wage theft.” The way they see it, franchise owners are under such financial pressure from their corporate parents to keep costs low and deliver profit that they in turn are forced to keep wages as low as possible, make their employees work off the clock and engage in countless other nefarious business practices. Activists see the franchise business model simply as a way for some chain restaurant companies to wipe their hands clean of any responsibility for wage and benefit matters at the unit level. In fact, it is becoming a significant area of focus for the unions and their worker center allies, and is aimed at driving a wedge not only between employees and management but also between business allies. Pretty creative.

To their credit, they have been focused on the franchise model for some time, just in a different way. These labor activists recognize with frustration that their efforts to demonize these types of employers through litigation are generally limited to individual franchise owners, since numerous labor law cases over the years have confirmed that franchisors are not the employers of unit-level workers of franchised brands. Yet they continue to attack brands regardless of the corporate parent’s ability to impact individual personnel disputes. Labor historian Nelson Lichtenstein noted big labor’s frustration, telling Dissent Magazine that the lack of legal liability in franchising is “a scam … and so you sort of have to put this pressure on in extrajudicial ways.” And New York University labor professor Cynthia Estlund confirmed the brand destruction tactics in an article on Colorlines.com, pondering, “Can they make the corporations socially liable in the public mind so as to force them to take responsibility?

However creative it is, this approach is likely going to be a tough row for them to hoe. The business community has been trying for decades to make policy makers at all levels of government understand the franchise business model and the impact that legislation aimed at big corporations actually has on the small-business owners who operate the system. I can’t say that we have been able to move the needle too far on that one. The general public is an even bigger reach. Ask any convenience-store owner in the Southeast who happened to sell BP gas in the wake of the massive Gulf of Mexico oil spill. The public just doesn’t understand the model.

The approach, however, has yielded some different media opportunities. In addition to the semi-regular protesting at various corporate headquarters, protesters have recently begun showing up at the offices of small franchisees. This is a risky approach, in my opinion, and could very easily backfire. Reams of polling data show that the public generally has a favorable and sympathetic view of small businesses, which is precisely why the business community itself leverages them as the face of many issues. And in fact, this probably gives us an opportunity and a platform to talk about franchising as the ultimate creator of entrepreneurial opportunities as well as job growth. That is a discussion we should welcome.

This is just one line of attack in a multidimensional reputational assault and should be managed accordingly. However, it is indicative of an overall strategy of disrupting business-to-business relationships of corporate parents. For instance, the Food Chain Workers Alliance, created and managed by Restaurant Opportunities Center founder Saru Jayaraman, is designed precisely to populate worker centers up and down the restaurant supply chain and create pressure on suppliers to, in turn, pressure their corporate partners into modifying their business models with respect to pay and benefits. 

Working to create fissures between suppliers and retailers as well as franchisors and franchisees is potentially an effective strategy. It has, however, one fatal flaw: It can only be successful if we allow it to be. To paraphrase our old friend Benjamin Franklin, we must hang together or we will most assuredly hang separately.

Joe Kefauver is managing partner of Parquet Public Affairs, a national issue management, communications, government relations and reputation assurance firm that specializes in service sector industries. Parquet's clients include Fortune 500 corporations, trade associations, regional businesses and non-profit organizations. For more information, go to www.ParquetPA.com [6]