Opinion: Fast food: AB 1228 helps California franchise owners
If there’s one thing economists know about the low-wage labor market, it’s that fast food jobs are bad jobs. The average worker in the industry earns just $433 a week, according to the most recent data. Why are wages so low? A major factor is the franchised business model, where a corporate franchisor licenses independent franchisees to operate establishments under its brand name in exchange for an agreement to follow its detailed instructions on how to run the business.
This allows franchisors to enjoy the benefits of controlling vast business empires without incurring the legal responsibilities as employers of the people who work there. Research over the past several years shows the manifold ways this is unfair to both the franchisees who operate the restaurants, and the frontline workers who are employed by them.
In many cases the revenue side of the profit equation is out of franchisee control too: 56% of contracts give franchisors the right to restrict franchisee pricing. According to the Washington Post, after one McDonald’s franchisee complained to her franchisor about price controls, the company told her to “just pay your employees less.”
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