The NLRB decision would hold McDonald's liable for the employment decisions that its ~13k U.S. franchisees make. Basically, if a franchisee violates the law—overtime, wages, non-discrimination, for example—the corporation, headquartered in Oak Brook, Illinois, could face sanctions.
“Big deal. So what?” some might wonder.
It is a very big deal and matters a whole lot and not just to those who love value meals.
What the decision really means:
- Step 1: It would assign responsibility for setting wages, hours, hiring, and firing to the corporation.
- Step 2: It would make it easier for labor organizers to turn local McDonald’s into a one-union shop.
According to the Chicago Tribune, a McDonald’s spokesperson said: “This decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States.” For its part, the National Retail Federation called the NLRB decision “outrageous.”
One McDonald’s competitor, the CEO of CKE Restaurants (which includes Hardee’s and Carl’s Jr.), Andrew Pudzer, wrote in the Wall Street Journal: “The franchise business model is predicated on the idea that franchisers do not involve themselves in those aspects of employment.” Pudzer argues the franchisee system works “because it allows franchisees to control costs, such as labor, and reap the benefits of running their businesses profitably.” The NLRB decision “would essentially destroy the business model.”
Why the sudden turn about? After all, the model works and has worked well for a very long time. Even the NRLB agrees. So, why open the door to lawsuits and force corporate operations to be altered?
The answer may be found in a tweet concerning the NLRB decision. The Services Employees International Union (SEIU) sent the following:
“HUGE victory for labor & fast food workers!”
Those SEIU bosses believe they would have an easier time dealing at the corporate level than with individual franchisees to achieve their objective of increasing membership…and, of course, fatten their coffers and paychecks.
Okay. Who really cares? Just tack the additional cost onto products sold at McDonald’s. Let the 25M people in the USA served daily by McDonald’s fund the SEIU.
But, the SEIU bosses aren’t just targeting McDonald’s and other food franchisers. No, in 2012, ~750k franchise establishments in the U.S. employed ~8.1M people (that’s 15% of all private sector jobs in the USA). Those SEIU bosses are focused on U.S. franchisers in general, which include hotel, automobile, and real estate franchisees.
Given the Obama administration's complex and nontransparent involvement in similar matters, don’t be surprised if the NLRB received an email doing the SEIU’s bidding from an unnamed, high-ranking Obama administration official. Of course, the NLRB hard drive has crashed and it will be virtually impossible to reconstruct the data.
Let the discussion begin…
To read the Chicago Tribune article, click on the following link:
To read the Wall Street Journal article, click on the following link: