The union seeking to organize fast-food workers is adopting the
unusual tactic of trying to form an alliance with disgruntled
franchisees of big chains.
The Service Employees International Union said on Monday it has
filed a petition with the Federal Trade Commission to investigate
what the labor group claims are abusive practices on the part of
major franchise companies including McDonald's Corp. and 7-Eleven
Inc. The union alleges that large franchisers have failed to
disclose pertinent financial information to prospective franchisees
and have terminated franchises without cause, among other
things.
The service employees union has been attacking the fast-food
industry and other franchise-dependent sectors on a range of
fronts. The union has gained attention for its push for higher
wages for fast-food workers by backing a series of protests in
cities around the country, and has pushed for franchisers to be
treated as joint employers with its franchisees.
The union's latest tactic is unusual in that franchisees were
seen as a target of its efforts so far. They own the lion's share
of restaurants at McDonald's and many other big chains and
generally set wages for their workers.
McDonald's said it supports and has "a strong working
relationship" with its 3,100 independent franchisees in the U.S.,
and that the union's appeal to franchisees is ironic since the
group has worked over the past two years "to disrupt operations of
these same businessmen and women."
7-Eleven didn't immediately respond to requests for comment.
An FTC spokesman said the agency often receives petitions "about
any number of subjects and we always take them seriously." He
declined to say whether the FTC would investigate this particular
petition or to explain what the process would be or how long it
would take.
The union claims franchisers haven't been transparent about the
financial health of their systems and that they haven't disclosed
the true cost of required capital expenditures such as restaurant
remodeling and equipment upgrades. Union officials on Monday didn't
explicitly say what bearing those claims have on restaurant
workers, but said the union's latest effort is aimed at rebalancing
power between "the little guys in the economy"—including
franchisees and workers—and "the big guys at the
top."
Scott Courtney, the union's organizing director, said workers'
pay raises—even at franchised
restaurants—should come not from the franchisees but from
the chains' profits. He said McDonald's should use cash for that
instead of giving it to shareholders in the form of stock
buybacks.
It doesn't appear that the union has built a very broad
coalition of support among franchisees, however. During a
conference call on Monday announcing the petition, only three
current or former franchisees spoke: a 7-Eleven franchisee, a
former McDonald's operator who has been lobbying for a franchisee
rights bill in California, and a current McDonald's franchisee in
Puerto Rico who claimed that the company has made it harder for
small franchisees there.
The union is asking the FTC to gather extensive information on
the practices of large franchisers and issue recommendations on how
to prevent such practices.
Write to Julie Jargon at julie.jargon@wsj.com
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