Unions Out to Destroy Franchise Business Model Says IFA President and CEO Steve Caldeira
By International Franchise Association President and CEO Steve Caldeira
Published on Sept. 5, 2014 in the Puget Sound Business Journal
The fast-food strikes that have occurred in Seattle and other cities have been portrayed as a grassroots movement led by workers. In fact, the strikes were part of a national campaign that was led from the top down by the Service Employees International Union.
One of the groups leading the charge in Seattle was called Working Washington, which describes itself as a grassroots coalition of groups and individuals. In fact, as the Seattle Times reported, Working Washington is a front organization for the SEIU.
Why is SEIU hiding behind another group? Some media outlets have speculated that it will elicit more sympathy from the public if it portrayed the fast-food strikes and the allied campaign for a $15-an-hour minimum wage as a “grassroots movement.”
But the reality is more complicated – and Machiavellian – than that. According to newly discovered documents filed as part of a lawsuit by the organization I represent, the International Franchise Association, against the city of Seattle, the ruse was perpetrated to help SEIU financially.
Specifically, emails unearthed by lawyers in the case show that David Rolf, president of the SEIU in Washington, admits that part of the union’s motivation for the higher wage in Seattle was to break the business model for franchises. In so doing, he would clear the way for the SEIU to more easily unionize fast-food employees and expand the union’s dwindling membership ranks and financial coffers.
Seattle’s new minimum wage law treats franchisees not as the small, locally owned businesses that they are, but as big, out-of-state businesses. Franchisees, even if they have only a handful of employees, must adopt the higher minimum wage on the same timetable as businesses with more than 500 workers.
This blatantly unfair and discriminatory provision was added at the request of the SEIU, according to statements and emails revealed in court documents.
The SEIU’s assault on small-business franchisees is not confined to Seattle. After pressure and lobbying by SEIU, the general counsel of the National Labor Relations Board in July overturned decades of legal precedent by saying that franchisees and their franchisors can be designated as “joint employers.” This decision, if upheld, would mean that thousands of small franchisees would lose control of the businesses they worked so hard to build.
The same principle applies in Seattle. If franchisees and their franchisors are considered large employers, then the SEIU can more effectively unionize their employees and expand its power. It’s a lot harder to organize thousands of small businesses than one or two large businesses.
Put another way, the union hasn’t had much luck finding new members among small businesses. But if those locally owned franchises were suddenly considered units of big corporations, the SEIU’s power grab suddenly makes a lot of sense.
Franchising is a business model that has thrived for more than a century because it gives people an opportunity to start small businesses under a proven concept. Franchise businesses are responsible for one out of every eight private-sector jobs and 3.4 percent of the U.S. gross domestic product. Franchisees create new jobs and businesses at twice the rate of other business segments.
This is the business model that the SEIU seeks to destroy in its search for more members. For the sake of the 600 franchisees in Seattle that employ 19,000 people, and for the sake of our national economy, Seattle shouldn’t be allowed to become the SEIU’s new piggy bank.
Steve Caldeira is president and CEO of the International Franchise Association, which represents 1,350 franchisor companies and more than 12,000 franchisees around the country.
ADDITIONAL INFORMATION
Ad Campaign Exposes SEIU’s Hidden Agenda Behind $15 Minimum Wage Law in Seattle (August 20,2014)