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Gearing Franchises Towards Labor Law Success

by Stacy Huffstetler, Managing Director North America on Jan 28

Whose Responsibility Are Employees, Really?

McDonald’s has recently hit the headlines, and they’re certainly not lovin’ it. The National Labor Relations Board (NLRB) in the US recently ruled that McDonald’s is not responsible for how their franchisees treat their employees. This is the result of a lengthy union case against the fast-food giant, which aimed to ensure they were held responsible for the treatment of fast-food workers in both their corporate and franchise locations.


The franchise staff claimed that their treatment at McDonald’s franchises violated labor laws. The labor law violation claims included that they were assigned harder tasks or fewer hours after they participated in a union-backed protest for a fair wage. The NLRB approved a settlement to them, paid by the corporation, but ruled that McDonald’s were not responsible for their treatment.


The settlement represents a loss for the unions, as the continued separation between franchise and corporation means that franchise labor law violations will continue to go unchecked by the larger parent corporations. There are 14,000 McDonalds in the US. About 90% are franchises.


Franchisors carry different responsibilities around the globe, but in the US, it has long been argued that franchises are used as a way for corporations to distance themselves from how workers are treated McDonald’s argues that franchises are their own individual companies, and have the right to hire, behave and pay as they desire. Essentially, anything which happens as a part of their franchise, and not the corporation directly, cannot be considered their responsibility.


The Impact: A Damaged Reputation

Though McDonald’s faces no legal ramifications, it’s true that they have suffered drastic brand damage. Brand image matters, especially to today’s consumers. Recent research indicates that consumers are more likely to spend with a company that clearly indicates its values. The report demonstrates that consumers across all generations care about what retailers say and how they act. Consumers under 30, in particular, feel a strong affiliation to companies that indicate that they have a larger purpose. Guess who McDonald’s largest consumer base is? That’s right, 18-29-year-olds.


We at Widget Brain would argue that indeed, franchisors should actively encourage franchisees to comply with labor laws. They should provide franchisees with as many tools as possible to protect their brand. After all, a franchise is a direct representative of the larger parent brand, and therefore should be equipped with as much training as possible. McDonald’s have a strong focus on their food supply chain for both their franchise and corporate stores. Similarly, their supply chain of people and franchises must receive the same levels of protection and scrutiny.


The McDonald’s case is reminiscent of the famous Chipotle case in New York, where an employment law scandal resulted in a dramatic drop in stock price of 5%. Employee issues truly do have an impact on the real world. The way a company treats its workers can directly impact the way that their customers behave, the purchasing habits they choose, and the stock price of the company.



Why labor law exists

Beyond customer behavior and the financial status of the company, lie the real lives of franchise workers that are impacted. Labor law exists to make sure that people:

  • Are not overworked
  • Are paid fairly
  • Have a good view of what their upcoming working hours are
  • Work in accordance with their training
  • Work in accordance with local law
  • Have a fair relationship with their employers


When labor law is not adhered to, it means people are being made to come into work at unreasonable times, their hours are used as reward or punishment, they are tired and unsupported. This leads to high turnover, employee unhappiness, and stress. Franchise workers have even less protection from this than regular shift workers, with the lack of corporate backing.


The Solution Lies In Technology

What is the solution? Well, we believe all franchisors should be involved with protecting the employees placed within their franchises. They should encourage their franchisees to adhere to labor laws by providing the means and tools to do so. Right now, it’s clear that many are struggling with three main competing priorities: keeping costs down, employee happiness, and labor law.


Four ways to improve the employee experience

Corporations and franchisees must work together, as a united brand, in order to create scheduling which impacts and improves the employee experience by weaving together these three priorities. This can be done by providing:

  • Fair and impartial schedules which avoid “clopening”
  • Predictive scheduling which shows people when they’re expected to work
  • People working on what they are specifically trained to do
  • A focus on employee happiness through creating a supportive, healthy working environment


Intelligent technology holds the answer to this puzzle. Considered partnerships are there to support franchises and corporations. Through the technology offered by companies like Widget Brain, you can use algorithms to balance the three competing priorities of costs, employee happiness, and labor laws. As a franchise owner creating these schedules, these must be treated just as seriously as if you were the main corporation. Working with these priorities, harnessing the power of technology is a fantastic solution.


With Widget Brain, scheduling is cost-effective, labor law compliant, and employees are kept happy with preferences taken into consideration. Driven by data and our powerful algorithms, the science behind innovative scheduling supports you each step of the way. Workforce optimization allows you to create employee schedules that treat your people fairly, ensuring high levels of employee happiness. Break rules, contracts, roles, skills, and preferences are all woven into the design of the schedule, meaning that every base truly is covered. With the power of AI, rostering can genuinely be easy, whether you’re a franchise or a larger corporation.