Opening a new front in the War Against Franchising, the Wall Street Journal is reporting today that the Service Employees International Union or SEIU has targeted disgruntled franchisees and former franchisees in an attempt to form an alliance against some of the biggest franchisors, including McDonald's Corp. and 7-Eleven Inc. According to today's article, the effort centers on allegations of failures to disclose financial information to prospective franchisees and wrongful termination of franchisees. The centerpiece of the effort is a petition filed with the Federal Trade Commission to investigate what the SEIU claims are "abusive and predatory practices" of franchisors.
As the Wall Street Journal notes, it doesn't appear that the SEIU has been able to build a large or strong coalition of franchisees for its effort. And that shouldn't come as a surprise. For the past several years now, the SEIU and has been front-and-center in an effort to attack the entire franchise industry–franchisors and franchisees alike–pushing for dramatically higher minimum wages and the so-called "joint employer doctrine". Now, perhaps sensing that its expensive public relations effort aimed at destroying the franchise industry is failing, the SEIU wants franchisees to join its crusade? It does not surprise me that franchisees are saying "no".
I'm not going to say that the franchise industry is perfect. Every industry has a few bad apples. But we know that the vast majority of franchisees are satisfied, successful small business owners. We also know that the FTC Franchise Rule and the disclosure requirements of the Franchise Disclosure Document–not to mention the many state disclosure laws and regulations–when properly followed, provide prospective franchisees with a wealth of information about the realities of running a franchised business. And we know that there are many state regulators and franchisee-side attorneys who are ready to hold franchisors accountable if the franchise contract, or the law and its regulations, are not properly followed.
As Steve Caldeira of the IFA noted recently, independent studies show that 80 percent of franchisees would recommend their brand to others and nearly 75 percent would do it "all over again" even knowing what they now know about their brand. That doesn't suggest to me the existence of systemic abuses of franchisees by franchisors, as claimed by the SEIU. Instead, it suggests to me that the SEIU has a "solution" in search of a nonexistent problem.
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