A Union Ruse to Organize Mom-and-Pop Stores

Steve Caldeira,  president of the International Franchise Association wrote an opinion piece for the Wall Street Journal. He describes the strategy of the S.E.I.U. Regardless of whether one represents the interests of franchisors or franchisees, I am of the opinion that this issue is potentially one of the most serious to ever face the franchise industry.

City councils across America are considering raising the minimum wage. But the fine print in many of their proposals, including one recently signed into law in Seattle, has a provision that increases the wage floor faster for certain small businesses simply because they're affiliated with national chains. The provision is a cynical ploy by its author, the Service Employees International Union, to organize workers more easily. In the guise of trying to help the working poor, the SEIU is trying to help itself.

The approach being used by the S.E.I.U. and other unions has been described before

This is a problem for a union such as the SEIU. Trying to organize thousands of individual, small businesses that have mere handfuls of employees is difficult. A union would prefer to deal with large entities that have lots of workers. It would only need to unionize a few of them to fill its coffers.

With union membership declining and population shifts to more right to work states, this tactic by unions makes sense.

The SEIU has launched a multicity campaign to increase the minimum wage and redefine franchisees as big businesses, not small ones. If the courts and federal agencies go along with the change, unions can start organizing entire national chains. Seattle's city council and mayor recently adopted this radical notion. Other cities, such as Chicago and New York, are on the verge of doing the same.

I haven't seen evidence of this but I wouldn't dismiss the influence and power of the S.E.I.U.

But at the request of the SEIU, the city council and mayor classified franchisees not as the small, locally owned businesses they are, but as giant corporations. The result: The law treats a single hotel or restaurant as if it employs more than 500 people, even if it employs only five people. Put another way, a non-franchise company with 450 workers is considered a small employer and gets extra time to implement the wage increase. But a franchisee with 45 employees is a large employer, and gets less time to raise its wage floor, if its franchise network employs more than 500 workers nationwide.

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Comments

Bad news for SEIU

The increasing cost pressures pushed by SEIU onto individual franchise owners will force many of them to simply close, thus depriving SEIU of the thousands of unskilled workers whose pay checks SEIU so covets. When those paycheck s disappear, it won't matter that SEIU can force the unskilled to cough up a part of their checks every week to fatten the union boss's limo cushions.

Seattle franbuyers will swing to indies if wages are higher

<p>Visitor: &quot;The increasing cost pressures pushed by SEIU onto individual franchise owners will force many of them to simply close&quot;</p>

<p>Yes. Franchise owners are more penalized by the city as far as wage costs and their bottom line for being franchisees. That means that Seattle&#39;s franchise market (buyers of franchises) will swing more to buying independent businesses that have a wage advantage (lower minimum wages) over being a franchise.</p>

<p>Sellers of franchises will find it more difficult to sell in Seattle. THAT is the REAL issue that the IFA is interested in, not the SEIU somehow being able to unionize Seattle fast food workers.</p>

No fan of labor unions but WHAT??

<p>Steve Caldeira: &quot;The provision is a cynical ploy by its author, the Service Employees International Union, to organize workers more easily. In the guise of trying to help the working poor, the SEIU is trying to help itself.&quot;</p>

<p>Huh?</p>

<p>Look. I&#39;m no fan of labor unions (spit on floor) but I don&#39;t understand how the dots connect with the IFA&#39;s fuzzy logic. They are trying to persuade me because Seattle&#39;s city council has passed a law that increases the minimum wage for franchise employees more than workers of independent businesses (spit on floor again) that the next step is that franchised small business employees will become the SEIU&#39;s newest members?!?</p>

<p>I don&#39;t doubt that the SEIU is hungry for members but can someone explain legally what the IFA seems to be struggling to say? What&#39;s next? Will the IFA&#39;s next connection of the dots be that the SEIU is out to change the IFA&#39;s collective bargaining power on behalf of its members to become a bona fide labor union because Minnesota raised its minimum wage? If so, I hope they can be clearer on how.</p>

If Zee workers have higher wage standards, then unionizing next?

<p>The International Franchise Association seems to imply between the lines that:</p>

<p>If a franchise can be charged a higher minimum wage because it is a license in a larger chain, like Seattle&#39;s new law, ergo this sets up some sort of legal precedence for unions to unionize all restaurant employees of all small business restaurants under a chain of licensed businesses, even if they are separate small business entities owned by different people.</p>

<p>I like conspiracy theories. They are fun. But I&#39;m having trouble following this one.</p>

<p>Mentioning unions and an SEIU conspiracy against me and my fellow business owners does get my blood boiling though.</p>

What Steve Caldeira/IFA is saying about SEIU's plan

He is making the point that if SEIU can get laws passed setting a legal standard that classifies a single franchisee as a single "large employer" entity (even if it has only 1 employee) for one purpose, it will set a precedent for expansion to other purposes.

Think about the "joint employer" doctrine that combines all of your separate, small S-corporations or LLCs that own different shops, some with different partners. That doctrine combines all of your businesses as a single entity for purposes of unemployment insurance, health insurance, bringing you under class action lawsuits, sketchy discrimination claims, additional taxes (even state ones like the "success tax" in Massachusetts that raises the tax rates on retail sales that rise over 2 additional thresholds), etc, etc etc.

This is EXACTLY the SEIU plan. Have a bunch of jurisdictions aggregate a franchise chain as a single entity for purposes of something popular, like minimum wage increases, and later try to infect labor laws at the union friendly NLRB with the new legal standard that will let SEIU organize all McDonalds workers everywhere by winning a union vote at a single store that it can cherry pick.

If you don't think that this is what the game plan is, you had better read some of what SEIU publishes to familiarize yourself with whom you are dealing.

Have incomes raised before organizing them into a union?

<p>With due respect, Caldeira did not say this. You make a stronger case than he. (I&#39;ll come back to&nbsp;your stretch of&nbsp;&quot;joint employer&quot; doctrine.)</p>

<p>Look. It&#39;s simple. I can tell you that if minimum wages are raised (God forbid) by the city, my employees will be less likely to organize under the SEIU. If Caldeira has been able to somehow&nbsp;get into the inside back room of what the labor union is&nbsp;scheming, if that is its brilliant convoluted&nbsp;strategy, no wonder unions have dwindled to so little nowadays.</p>

Re: Incomes raised before a union

I make a stronger case because I gave that insight to Steve and his team. I understand the SEIU strategy (and it is multi-pronged).

I agree that it would be harder for SEIU to organize a typical franchised location after the employees get a raise (only to have a union tell them that they have to fork the raise over as dues, and then some). They can't do it with the lower wages and no paid sick time (more on that later) as it is.

But SEIU won't have to organize a typical franchise. If it succeeds in lumping all franchises in a chain into one bargaining unit, it will only have to organize one shop (which it will likely stack with its own "advocates" as employees. It wouldn't be difficult at all given the high turnover in QSR and many units' needs to just hire warm bodies when there aren't more qualified people available.

After wages, it is paid time off. There will be the same strategy of selecting sympathetic jurisdictions, trying to create a confusing patchwork of cities and towns with different rules, state ballot initiatives, federal lobbying, etc, etc. It all gets easier if it can just organize a whole system by organizing a single work unit.

SEIU Should Aim For Bigger Fish

The SEIU should look at trying to organize franchisees. Why not? Those without strong franchisee associations, like the 1,000 remaining Quiznos franchisees, are nothing more than indentured servants. They would certainly benefit by organizing with a group that can provide financial and organizational muscle to match their franchisor rather than continue to spin their wheels with the ineffective franchisee association they currently have.

Is the IFA a labor union?

Are you saying that the International Franchise Association, American Association of Franchisees and Dealers, Coalition of Franchisee Associations, Subway Franchise Association, Burger King Franchise Association, et al are labor unions?

I think the SEIU knows how to lobby and organize members. They could help the IFA in their organizing efforts.

IFA's Caldeira: Labor's War on Franchises

The hired leader of the International Franchise Association, Steve Caldeira, speaks about Seattle's mayor passing a law, with the support of the Service Employees International Union. Passed unanimously by the city council, the new law for Seattle has franchised establishments pay a higher minimum wage than their independent small business counterparts. Caldeira opines with Mary Kissel of the Opinion Journal that the SEIU has much bigger plans— the national destruction of the franchise industry.

Honestly...

Honestly, anyone who is stuuuupid enough to open a business in a liberal city or state is just getting what they deserve. I have zero sympathy. No one forced them to franchise in the land of liberals.

NLRB

Thanks to recent SCOTUS ruling the union friendly NLRB shouldn't be an issue for the foreseeable future

NLRB

While the appointees' initial placement was ruled unconstitutional, those exact same labor shills are still in place and were co firmed by the Democrat Parth majority under the new rules forced through by Harry Reid.

It is the exact same NLRB. They will immediately commence pushing the Big Labor Agenda and reinforcing any ruling that they made which might be invalidated, and probably go even further to the extreme.

The only 'ruse' is the IFA's story against the union

I am finding this thread amusing primarily because you are all way off base with what's going on - although I'm willing to bet Caldeira knows and its not what is making it out to be.  I am no fan of unions in any way but their strategy here is actually brilliant.  No reason to say any more - I'm just going to sit back and watch. . .and smile.

What are some of the other serious issues facing franchising?

Ed,

You said "I am of the opinion that this issue is potentially one of the most serious to ever face the franchise industry." I don't disagree, I'm interested to know since this is just one what in your opinion are some of the other "serious" issues to face the franchise industry?

IFA looking out for itself

Ed, I see you are defending your fellow Nassau County GOP machine mate, Steve Caldeira. But in reality, IFA is out for itself in Seattle and Chicago.

1. IFA could care less about 4 years grace versus 7 years grace for franchisees. They'd only fail and be rechurable by the franchisor, anyway.

2. Rather, Steve wants photo-ops. That's why you see his greasy hair mop almost everywhere.

3. IFA especially wants to defend McDonald's, Marriott and Sir Speedy from joint employer charges. Why? Follow the money.

4. Why is IFA wasting its time and member dues on legal action in Washington and Illinois (eventually)? To send some grease towards its real customers, the attorneys and political ops consultants it so values. Its kinda like a public works project: build a road, tear it up and rebuild it again.

Working together with self-serving groups

I take it that you dislike a self-serving IFA more than you dislike paying a $15 minimum wage.

Chicago is next to discriminate against franchisees

On the heels of the Seattle minimum wage hike whereby franchisees were not considered small business owners, look for Chicago to be next. From Crains "Mr. Emanuel endorsed a recommendation to raise the city's minimum wage to $13 an hour within four years. Experts disagree about the impact of such a move, but everyone should concur that small businesses — our city's most vulnerable enterprises — should at least be treated equally. Unfortunately, a proposal making the rounds among aldermen would single out certain kinds of small businesses for harsher treatment." This means franchises

Chicago's Mayor Emanuel backs $13 minimum wage

Here is the link to the Crain's Chicago Business story about Rohm Emanuel on Monday endorsing the $13 minimum wage proposal, which was commented below. Here's also the Chicago Tribune on the wage increase.

Any thoughts on the various ways this law would work against franchise owners?

Any thoughts on how it might work for franchise owners?

Chicago's Mayor Emanuel backs $13 minimum wage

Here is the link to the Crain's Chicago Business story about Rohm Emanuel on Monday endorsing the $13 minimum wage proposal, which was commented below. Here's also the Chicago Tribune on the wage increase.

Any thoughts on the various ways this law would work against franchise owners?

Any thoughts on how it might work for franchise owners?