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IFA Chair Hashim Warns about Joint Employer

IFA chairman Aziz Hashim ponders a point at the IFA's recent Legal Symposium (photo/bmm)
IFA chair Hashim ponders a point at the IFA's Legal Symposium (photo/bmm)

WASHINGTON – International Franchise Association chairman Aziz Hashim contends that although at times there may be differences between franchisees and franchisors, now is the time to come together. Why? Because, he argues, there is a common foe that challenges the franchise model itself. He is concerned about the threat of wage hikes, unionization and a possible future National Labor Relations Board ruling.

Currently, franchisees are held solely responsible for illegalities concerning their staff employment practices. In the future, a possible National Labor Relations Board ruling could hold the franchisor jointly responsible because of its directions, mandates and control regarding the franchisee's employees.

Hashim, a franchisee himself, is sounding the alarm.

In 1996 Hashim bought his first franchise, a KFC restaurant in Atlanta. His single-unit chicken eatery quickly developed into a huge multiunit and multi-branded franchise empire of over 80 Domino's, Subway, KFC, Moe's Southwest Grill, Pizza Hut, Popeyes and Taco Bell franchises.

Two years ago he founded private equity firm NRD Capital Management, LLC for franchisee investors, which has since bought franchisors Frisch's Big Boy and Fuzzy's Taco Shop. NRD's philosophy is to buy franchise brands by paying attention and measuring franchise unit-level metrics and to grow the system through better alignment of a franchisor's activities with franchisee profits. To cap off his prolific franchise career, last year Aziz Hashim became the chairman of the 56-year-old International Franchise Association.

This is the third part in a series from interviews with International Franchise Association leaders during its Legal Symposium in May.

DON SNIEGOWSKI: Do you see a change in the IFA? If so, are your needs as a franchisee now being better met by the IFA?

AZIZ HASHIM: Yes. I think organizations evolve. In a very few short years, the IFA has evolved. I'll tell you a very important point is that as Robert [Cresanti, IFA CEO] mentioned, this is not about franchisors versus franchisees. This is about protecting the business model from which both franchisors and franchisees derive their livelihood. I think this focus is on protecting the model. The relationship is a contractual one between franchisee and franchisor. There are almost 4,000 franchisors in America. Therefore, there are almost 4,000 different franchise agreements. Some are good. Some are not so good. Some are horrible. That is not the issue here. The issue is the franchise business model, which allows people like me to come in with nothing, with zero equity, actually with negative equity. The small amount of money that I got started with came from a loan from my parents. So I went from negative equity to get to where I am today.

Aziz Hashim (photo/sniegowski)
Aziz Hashim (photo/sniegowski)

There is no other industry like this.

This model has to be protected. The individual issues, not unlike the issues of landlord and tenant, those things go on. Franchisee associations of good brands are able to dialog with their brand leadership and resolve those issues. I'll tell you, that is a self-filtering process. A brand that treats its franchisees badly will not be around very long.

There are some legacy brands that you might argue are too big to [fail], but for the most part every franchisor knows that not having good relations with franchisees equals bad business.

The order of the day is to protect the model, otherwise all these other things are moot. What Robert and I do is go around and talk to these other associations to say that the model stands above all of us. The model has to be protected. The government is actually attacking the model. They are not attacking franchisors or franchisees. They are attacking the very nature of franchising.

SNIEGOWSKI: Why do you think the franchise model is being challenged?

HASHIM: Well, look at joint-employer. The government is redefining the relationship between the franchisor and the franchisee. That is a direct attack on the model.

SNIEGOWSKI: Will joint-employer status break the franchise model?

HASHIM: It won't break the model. But it will open the pathway to unionization [of store employees]. Many other bad things could happen as a result of that incorrect characterization. It is a direct attack on the [franchise] model.

Now, discriminatory minimum wage increase in Seattle. That is an attack on the model, in which Seattle is characterizing a small shop owner as a conglomerate. It is wrong! If you are associated with a brand that way maybe there are other things you should be doing as a single shop owner that Google has to do as a conglomerate. That is an attack on the model. So today we have to focus as a collective in this industry to protect the model. And the only way you can do that is if we are on the same side of the fence because there are special interests out there [unions] that have taken this perceived division and they are trying to drive a bigger wedge into it. We cannot allow them to do that.

We are on to their game now.

They had a stroke of strategic luck, where they thought that they could step in-between. They thought, "Franchisors and franchisees appear to not be getting along. How can we get in the middle of this and wedge them further apart?"

I think the associations are now all in agreement that we cannot let that happen. We have to have a solid front. All this other bickering, where some franchisors listen and some do not, some agreements are fairer than others, those are insubstantial in light of the bigger picture, which is damage to the [franchise] model. That is what we have to protect.


Read the other parts of this series of interviews:

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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email don@bluemaumau.org.