Does anyone remember a time when franchises were not a vibrant part of the American business landscape? For decades, tens of thousands of individually owned businesses with iconic names such as Burger King, IHOP, Jiffy Lube and Howard Johnson’s have channeled the entrepreneurial spirit of men and women, provided jobs to millions of people and contributed to economic life in communities in every corner of the country.

Now, however, the franchise business model that has flourished for over two generations is under attack. The Service Employees International Union, as part of a national campaign to bolster its membership and finances, is leading an assault on franchise businesses. If the unions prevail, nearly 800,000 small business owners who employ more than 8 million workers could face economic uncertainty, even bankruptcy, and thousands of other would-be entrepreneurs could be deterred from pursuing their dreams and creating additional jobs, according to a recent industry report; meanwhile, franchisees are expected to create nearly a quarter million new jobs in 2015 alone. In addition, the franchise model, which involves less risk than that typically associated with a small business startup, has been especially attractive to aspiring women and minority entrepreneurs. Around 20 percent of franchises were owned by minorities in 2007, compared to 14.2 percent of non-franchised businesses.



SEIU is operating under a false premise that if you work at a franchise business then you have two employers, the franchise owner and the corporate franchiser. The chief lawyer for the National Labor Relations Board agrees with SEIU. If the non-elected, five-member NLRB formally adopts this new definition, a Baskin-Robbins owner in Manhattan could find herself under legal attack for alleged workplace violations by a Baskin-Robbins owner in Sante Fe and a charge of unfair business practices leveled at Applebees International could disrupt all individual Applebees restaurants. Franchise business owners will lose control of the nuts and bolts of daily operations and many will find it impossible to stay afloat.

Any franchise business owner will tell you that corporate provides a brand: the logo, guidelines on products and services, advertising, software and other tools, such as a hotel reservation system. But decisions about who to hire, fire and promote, as well as wages, are solely those of the franchisee and these decisions make up most of the management duties and up to two-thirds of the costs of operating a franchise business. The name over the entrance might say Comfort Inn but what housekeepers get paid, who cuts the grass or launders the sheets and towels are the call of the individual hotelier and not the Comfort Inn corporate office. That degree of independence might surprise the average consumer, but unions and public officials should and likely do know better.

The crusade against franchise businesses is, in fact, part of a timely drive to unionize more workers. Under the guise of seeking better wages and working conditions at quick service restaurants such as McDonalds, unions have calculated that making the franchiser and the franchisee one and the same will make it be easier to organize workers. Union leaders recognize it would be much more efficient to take on a single corporate entity than to organize at hundreds or even thousands of individually-owned business.



Organized labor is seizing a unique opportunity to mobilize and revive its flagging fortunes. Only about 6 percent of private sector workers are union members, down from more than 20 percent 30 years ago. Without initiation fees and dues, it is hard to run a union, so labor bosses are moving aggressively to tap public angst about income inequality and pressing for action among labor-friendly administration officials eager to cement a legacy for President Barack Obama in his remaining two years in office. A larger and better funded organized labor movement would certainly improve Democrats’ electoral prospects in 2016.