Many fast food brands utilise a franchising model whereby a franchisee pays a fee and percentage of profits to the franchisor in return for being able to use its branding and business model. This means that many fast food restaurants are actually run as independent businesses.
The TUC recently published a report (Shifting the Risk) examining business strategies that reduce a businesses’ responsibilities to workers, with franchising being one of the practices examined.
The report states that while the franchisor maintains a high level of control over certain aspects of how the franchisee operates the business, aspects such as worker’s terms and conditions are often left to the franchisee’s discretion. This makes labour costs and worker’s rights one of the key areas that franchisees can cut in order to maximise their profits.
Furthermore, franchisees will often be incentivised to do this in order to balance the cost of paying the franchisor, and this can be exacerbated by a lack of information about franchising contracts leading to them being skewed in the favour of the franchisor.
What can be done about franchising
The system can also make it harder for workers to fight for their rights. And right on cue, right wing blogger Tim Worstall has asked “McDonald's doesn't determine the wages franchisees pay; so why protest McDonald's?”.
However, if companies have the power to influence the payment of a living wage in their supply chains, they can surely take responsibility for the same with their franchisees. McDonald’s and other franchisors have a lot to gain out of allowing their franchisees to get away with paying excessively low wages, while denying responsibility for it. Yet in the UK parties are generally free to agree all the terms of franchise agreements, so there is no obvious reason why wage requirements cannot be written into them.
The TUC report argues for the law to be changed to give the franchiser and the franchisee joint liability for workers’ rights violations. It points to recent legislation in Australia which has drastically increased franchisor liability.
Last September UK McDonalds workers made history by going on strike for the first time ever. The members of the Bakers Food and Allied Workers' Alliance (BFAWU) took the action to demand a real living wage for all employees, including those under 25, an end to zero-hour contracts, and improved working conditions. McDonalds responded by offering its staff their biggest pay-rise in ten years. However, it still leaves workers earning well below Living Wage rates, and it only applied to staff at company owned branches, not franchises.