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Latest News - May 2015

May 1, 2015
Are franchisees unhappy business owners? Union survey says many are

The battle between labor unions and the franchising industry over organizing workers at fast-food restaurants is getting personal.

Unions aren’t content with their success at getting the National Labor Relations Board to treat franchisers as joint employers with their franchisees. Now they’re trying to make the case that many franchisees are unhappy with their franchising agreements.

Some disgruntled franchisees have teamed with the Service Employees Union International on a new alliance, We Are Main Street, which advocates for stronger franchisee rights. SEIU and other labor unions also commissioned a survey of franchisees, which found that 42 percent are dissatisfied as a franchisee in their system.

More than 50 percent said they don’t “make a fair profit and earn a decent living” from their franchised business. More than 40 percent said their combined salary and profit from their franchise was less than $25,000. More than 60 percent said they wouldn’t recommend investing in their franchise system to their friends and family members.

Nearly 60 percent said they have been required by their franchisers to invest in new equipment or renovations, but only 31 percent of these franchisees said the improvements improved their business results. Nearly 40 percent said they don’t have adequate avenues to address any issues or disputes with their franchisor.

The study was dismissed by the International Franchise Association, which represents franchise companies as well as individual franchisees.

“The SEIU is so desperate to lend credibility in its fledgling effort to convince government officials to help it unionize franchise workers that it has ginned up a report that grossly misrepresents attitudes toward franchising,” said IFA President and CEO Steve Caldeira. “In truth, multiple surveys have showed that growth among franchise businesses outpaces the overall growth of the U.S. economy. That wouldn’t be the case if franchisees were as dissatisfied as the SEIU would like the public to believe. In addition, data consistently have shown that renewal rates for franchisees are 94.2 percent a year.”

Caldeira also pointed to a survey of 25,000 franchise owners by Franchise Business Review, which found that 80 percent rated their franchisor as good, very good or excellent. More than 78 percent said they would recommend their franchise brand to others.

IFA contends SEIU doesn’t care about franchisees; they’re just using them in its campaign to make it easier for them to organize franchise workers.

“The SEIU wants to destroy the time-tested franchise model of doing business for its own self-interest; it doesn’t really care what franchise owners or workers think or want,” Caldeira said.

Jeffrey Tews, who owns BrightStar Care, BrightStar Senior Living and Mr. Handyman franchises in Wisconsin, agrees.

“The SEIU is out to help itself, not my employees,” Tews said. “Its report is transparently self-interested and paints a very different picture than the one that my fellow franchisees and our employees see.”



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