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Do Your Employees Know Who They Work For?

In a recent series of research projects conducted by the International Franchise Association, one of the more surprising findings was that most employees of franchisees (of which there are about eight million in the U.S.) think they work for the franchisor brand, not the franchisee. In fact, many of them could not name the franchise entity that signs their paycheck.

Now, the fact that an hourly co-worker might respond to a question about who they work for with the name of the brand is not terribly surprising. After all, the brand is the easiest response. But when the questionnaire drilled down, there was little or no recognition of the franchisee entity or the relationship between the franchisor and the franchisee among franchisee employees.

Every franchisee should be concerned about this. Here’s why:

The Service Employees Industrial Union (SEIU); the Department of Labor, Wage and Hour Division; OSHA; and virtually every attorney representing employees in wage and hour or discrimination issues wants this confusion to persist. It supports their case that franchising as a business model is designed to protect the franchisor from any action resulting from wage and hour violations, discrimination, union organizing and other legal issues, and has little or no other business value.

This theory is at the center of an effort by the U.S. Department of Labor, Wage and Hour Division, to discredit franchising and make it easy for them to go after the franchisor for franchisee labor management issues. This is commonly referred to as the “Joint Employer” issue where the franchisor and franchisee are treated as one employer. If the employees can’t distinguish between the franchisor brand and the franchisee they work for, this clearly reinforces the erroneous representation that there is no difference.

The threat to the franchisee is based on the fact that if these efforts succeed and the business model changes, the relationship between the franchisee and the franchisor, contractually and otherwise, will change with it, and not for the better. Franchisors will not stand idly by if they have liability for franchisee wage and hour, or OSHA charges, or if labor organizing for the entire brand becomes a threat because one franchisee hasn’t managed his human resources correctly.

There is a positive reason why franchisee employees should know who they work for.

As noted above, there are eight million employees of franchisees in the U.S So, if they understand just the basics of the franchise business model and the fact that the company that employs them is a small business, locally owned, and the revenue and employment it generates stays mostly in the community, they can begin to educate the people around them. The current model has worked for decades and the fact that it is a major source of job growth in this country is indisputable.

Later this year the IFA will be reaching out to all US franchisors and franchisees to encourage them to educate their employees, at all levels, about the basic business model including what role they play and who they work for.

If you are a franchisee, start now. At employee meetings, open a discussion about franchising, who is the franchisor, who is the franchisee, where you fit, and the role they play.

Yes, it’s a small step, but it is an important one because, ultimately, ignorance is the biggest threat to the business model on which most of us have built successful careers.

Bob McDevitt CFE,Senior Vice President, Franchise Development
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