Service Workers Union Allies With Franchisees, Drawing Ire of Franchise Industry
The Service Employees International Union (SEIU) has faced off against franchisee more than once in fight to raise minimum wage. However, this time franchisees and activists are apparently fighting for the same team.
On Thursday, the SEIU launched "We Are Main Street," an initiative that focuses on how the franchise system negatively impacts franchisees. Much of the SEIU's efforts have been focused on the franchise system hurting employees' rights, as the union works to hold franchisors accountable in labor disputes and raising minimum wage. With this project, however, the SEIU is attacking franchisors from a different angle, by supporting efforts to strengthen franchisee rights.
"The small-business owners behind the corporate brands lack basic business protections," reads the initiative's website. "Franchisors have been accused of taking away franchisees’ businesses unfairly, blocking franchisees from selling or passing on their franchises at a fair price or retaliating when franchisees speak out and join together."
Unsurprisingly, the International Franchise Association did not respond positively to the SEIU's claims that franchisees are often treated unfairly by franchisors and that increased government regulation of the industry was necessary.
“The SEIU is so desperate to lend credibility in its fledging effort to convince government officials to help it unionize franchise workers that it has ginned up a report that grossly misrepresents attitudes toward franchising,” Steve Caldeira, president of the International Franchise Association (IFA), said in a statement. “In truth, multiple surveys have showed that growth among franchise businesses outpaces the overall growth of the U.S. economy."
The IFA pointed to a FRANdata study from 2014 that showed franchisee renewal rates at 94.2 percent a year, as well as a Franchise Business Review survey in which 80 percent of franchisee rated their franchisor as good, very good or excellent. Meanwhile, the SEIU pointed to a poll of 1,100 franchisees that revealed 68 percent reported operating at a loss of making no profit from their business.
While the SEIU's partnership with franchisees seems unlikely at first, this is not the first time the union came to bat for franchisee rights. In California, the SEIU supported the passage of a bill that expands franchisee rights (vetoed in September by the state governor), and is currently helping lobby for a new franchisee bill.
However, while franchisee organizations and the SEIU share a common goal in fighting to protect franchisee rights, the two are still opposed on issues such as treating franchisors as joint employers and increasing minimum wage. While certain franchisees may eagerly seek the SEIU's support on this issue, franchisees will continue to exist in the contested area between franchisor and employee as the minimum wage debates continues. Unfortunately for franchisees, this is the area taking the brunt of the punishment from both sides, as wage hikes most directly eat into franchisees' slim profit margins and franchisors continue to deny responsibility on labor issues.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.