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Franchising and Wage Theft in Fast Food

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Timothy Noah has a good run-down of wage theft in fast food and the role franchising plays in it:

What’s unusual here aren’t the claims of labor law violations, which are common enough, but rather, who’s being blamed. The wall that fast food workers hope to blast through with these class-action suits is the franchise system. All of the lawsuits name McDonald’s itself as a defendant, even though most of the targeted restaurants are owned not by McDonald’s but by McDonald’s franchisees.

Starting with Howard Johnson’s in the 1930s, franchising enabled fast-food companies largely to get out of the food business. Owning and operating the restaurants was mostly left to franchisees – usually mom and pop businesses that paid McDonald’s or Burger King or Dominos for the right to brandish their corporate trademark and prepare food according to their specifications. Today, most fast-food workers don’t work for McDonald’s or Burger King or Dominos; they work for franchisees licensed to sell their products.

Practically speaking, franchising makes it very difficult to hold fast-food corporations accountable for most labor violations that occur in restaurants bearing their name. Those aren’t our employees, the corporations can say; you got a problem with how burger-flippers are treated, take it up with their franchisee bosses. In franchise agreements – the contracts prospective franchisees must sign on a take-it-or-leave-it basis – franchisors explicitly disavow such responsibility. The McDonald’s contract, for instance, stipulates that “Franchisee and McDonald’s are not and do not intend to be partners, associates, or joint employers in any way.”

Like the subcontracting and outsourcing, franchising exists to increase profit for corporations while protecting them from liability. There is no reason at all why McDonald’s should not be held legally accountable for the actions of its franchisees, much as Wal-Mart and Gap and other apparel companies should be held legally accountable for the deaths at Rana Plaza in Bangladesh last year. In the recent past, judges have thrown these class-action suits out but as Noah points out, this one gathered a lot of evidence of McDonald’s direct involvement with its franchises that might suggest direct involvement in labor practices too that rip off workers.

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