McDonald’s Loses Round at N.L.R.B.
There was an important ruling by the National Labor Relations Board (N.L.R.B.) earlier today, one that could dramatically affect franchisees, their businesses and their employees. In the ruling, the N.L.R.B. declared that McDonald’s is jointly responsible for workers at its franchisees’ restaurants. If this decision holds, it would produce turmoil in terms of standard practices among all national franchise networks, and, be a springboard for unionization among the franchisee employee population.
Franchise corporations like Domino’s Pizza, Firehouse Subs, Tropical Smoothies, UPS Stores, 7-11 Stores, Subway Sandwiches, and hundreds more will have to recalibrate their employment policies and labor costs should unionization be allowed among franchisee employees. Approximately ninety percent of all the restaurants in the United States are franchises, so unionization (and the considerably higher wages it would bring to fast-food employees) would wash over restaurant operations like a tsunami.
This is a blockbuster decision if it takes effect.
We have many, many franchisees of all types as clients here at Sareen and Associates, and if the average hourly wage at those stores went up to $12.00, there would be some “Store Closing” signs popping up at different places in our operating area fairly quickly. And, if it went up to $15.00 an hour, as a coalition of fast-food workers and labor representatives are lobbying for, it would be financial pandemonium. And then, of course, there is the regulatory aspect of dealing with a union if you’re a franchisee; having managed people and processes in that environment myself, I can state categorically that it’s a situation that almost all franchise owners are ill-prepared for in almost every way.
There is no reason for panic yet; the ruling could be overturned, or it could be set aside as a result of a settlement between the two parties. And whatever happens, it won’t take effect for a while. But, things are percolating on this front, and whatever occurs, there may be a new normal for franchise owners in the near future.