Recently there were two major rulings. One for colleges and against college athletes that they are not employees and cannot unionize. The other was bad for business and that is the one we will focus on. This one was a hit to franchisors and franchisees. For many years franchisors operated independently of franchisees only being responsible for branding, quality standards but the local franchisees were responsible for their labor negotiations and issues. Franchisees are usually small business owners with one, two or three franchisees, but some own more and are larger corporations. These are not the ones so much affected by the ruling although it will hurt, it will be the smaller franchisees trying to build their own empire. The ruling now ties the franchisor to the franchisee stating that the brand, like McDonalds’, is now responsible for negotiating labor and can be drawn into local labor negotiations all across the country.
This ruling now creates other problems, some of them are listed below:
- Because the NLRB says franchisors are considered one large corporation, the next claim can be that health care must be instituted across the franchisor system, potentially crippling individual franchisees.
- Labor Negotiations in Seattle, for example, will cascade across the country.Say labor in New York gets $20 an hour, well labor in Boise can cite that they are being discriminated against and thus people in Boise or Decatur Texas will have to pay $20 an hour.Potentially cutting jobs or closing restaurants.
- Automation can become more popular
- Job losses will occur over time.
- Cities that pass minimum wage laws or food restrictions can potentially be applied to other restaurants or chains across the country
- Hotel chains might get more expensive for the same reasons.
- Automate where possible – Invest now in systems that will allow you to automate certain processes. While this will be up front dollars it will save you in other costs down the road
- Start incremental price raises where you can. As a franchisee you are contractually obligated in some cases for certain pricing ranges. However, start increasing those slightly over time.
- Develop a culture that is positive and awarding not punitive. Be close to your employees by encouraging them, creating top notch systems. If you start automating and need fewer people, do it a few at a time but through finding them other jobs, or not filling a position when someone leaves, etc.. Don’t tell them what might be happening, but celebrate successes and work on the people that are struggling, helping them self-select out.
- Get organized yourself. If you have happy employees they won’t want to unionize and won’t want to create problems for you.SO listen to them, develop regular formats where you learn from them, and do good things for them. Get your regional and district managers to come in for team days and awards, etc.…The more they feel connected the better for everyone.
- Work with other franchisees in your organization to develop similar systems. If you are all creating the same types of environments there won’t be a large contingent.
- Raise income where can. You might not be able to increase everyone’s salary, but appoint some floor leader, or in charge of fries and give them 10 cents an hour more or a dollar an hour more, whatever you can justify. This shows movement and buys loyalty.
Rodney Mogen, is the president of solveurpuzzles, a business focused company. Solve ur puzzles helps three groups: Small Businesses, Financial Advisors/Agents, and Local Government Entities. Rodney is also a small business advisor focused on developing financial strategies for small business owners and helping them develop their own strategy and ideas to grow, sell, develop the way they want. He is focused on creating proper financial strategies for Advisors and business owners to assist them in their day to day duties by solving their financial puzzles. Rodney is also the Director of Financial Strategy for The Evans Group. Check out more information at www.solvurpuzzles.com.