Franchising and Low-Wage Work

The business format of franchising has grown substantially, both in the range of industries that use the model and in the percentage of the workforce employed. The fast food industry uses the franchise model extensively, with the top fast food chains employing roughly 2.3 million workers. They have the lowest average annual earnings of any occupation and have difficulty making a living and supporting a family, and are often dependent on some form of public assistance.

There is currently little empirical research on the franchise model, the franchisor-franchisee relationship, how the profits are shared, and the consequences for work and employment. Labor expert Rosemary Batt and former chair of the National Labor Relations Board Wilma Liebman will organize two one-day workshops to examine the franchise business model in the fast food industry and the consequences of its growing use for the future of work, the quality of jobs, compliance with labor standards, and the achievement of the underlying policy goals of labor laws. The meetings will focus on: (1) understanding the anatomy of the business format franchise model, its business practices generally, and specifically as applied to the fast food industry; (2) examining how the franchise business model shapes a brand’s human resource management, employment, and labor relations practices; and (3) assessing how the business model and its related business practices correspond to existing labor and employment laws, particularly those that determine which business entity should be treated as the “employer” of workers.