Food Industry Booms But Some Franchise Owners Struggle: Poll

A majority of franchise owners struggle to make a living, and some worry about retaliation from their franchisers, according to a poll released Thursday. The survey was conducted by the market research firm FranchiseGrade.com and commissioned by the Service Employees International Union (SEIU). The labor organization has helped fund recent high-profile protests from fast-food employees and other low-wage workers, demanding $15 hourly wages and union representation.

The survey reveals broad discontent with the franchise model, an arrangement most common in the fast-food sector. Only 26 percent of franchisees say they earn a “decent living” from their business; 52 percent say they do not. Only 17 percent of franchise owners say they would recommend friends and family to invest in their franchise system.

The poll also casts some doubt on the economic independence of franchisees. About four in 10 business owners surveyed say their franchiser has notified them they might be terminated based on decisions they thought were appropriate for business.

Companies like McDonald’s have successfully resisted demands to hike wages and improve labor conditions at their stores by arguing they wield little control over the budgets and business practices of their franchisees. When the company promised to boost wages earlier this month, the move applied only to those stores directly owned by McDonald’s, about 10 percent of its stores nationwide. But increasingly the burger giant faces heat on that front. In an ongoing case at the National Labor Relations Board, the agency’s general counsel is arguing -- for the first time -- that McDonald’s bears responsibility for labor violations at some store locations as a “joint employer” with franchisees.

The International Franchise Association, a lobbying group that represents powerhouses like McDonald’s and Yum Brands, which owns KFC and Taco Bell, dismissed the survey as a ploy from Big Labor.

“The SEIU is so desperate to lend credibility in its fledgling effort to convince government officials to help it unionize franchise workers that it has ginned up a report that grossly misrepresents attitudes toward franchising,” the group’s president, Steve Caldeira, said in a statement.

The lobby pointed to separate polling from the Franchise Business Review, which conducts ongoing surveys of franchisees. According to that data, about 4 in 5 store owners would recommend the business to their friends.