Restaurants, unions form uneasy alliance for "fair franchising" bill

Last May, California’s state Senate passed a bill intended to give franchise owners a stronger hand in dealing with their corporate franchise systems. The bill stalled in the Assembly, but franchise owners are back in Sacramento this week pushing an amended version. And they’re getting support from an unlikely ally: the Service Employees International Union, whose campaign for higher wages for fast-food workers places it at odds with many franchise owners.

The bill would make it harder for franchisors to terminate franchisees, and would bring California closer in line with Hawaii, Washington, and other states with what supporters call “fair franchising” laws. Labor groups support it on the theory that making franchisees more independent will translate into better treatment for workers.

The main lobbying group for franchising chains, the International Franchise Association, opposes the bill, arguing that it would harm brands by allowing substandard operators to remain in business. Charles Internicola, a franchise lawyer who owns a home-cleaning franchise system called Ecomaids, agrees that the bill would allow poorly run franchises to harm a system’s reputation by opening franchisors to potential litigation. “Franchisors are going to be gun-shy about enforcing their rights,” he says.

That uneasy alliance between franchisees and labor unions shows how franchise owners occupy a strange place in the U.S. economy. They hire, fire, and pay wages like any employer, but they’re also bound by detailed rules set forth by franchise systems.

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