PI Original Ellyn Fortino Thursday April 30th, 2015, 5:45pm

SEIU, Franchisees Form Alliance In Support Of Industry Reforms

SEIU and franchisees launched a new campaign Thursday called "We Are Main Street" that will push for reforms to the U.S. franchise industry. Progress Illinois details why the labor group and franchisees have formed this unusual partnership.

SEIU* and franchisees are joining forces in a push to reform the nation's franchise industry as part of a new alliance announced Thursday being called "We Are Main Street."

Those with the campaign "will support efforts to strengthen franchisee rights, share franchisee voices and provide research to fuel efforts for reform," according to the We Are Main Street website launched today by SEIU.

The alliance comes as SEIU works with franchisees in California in support of newly-proposed legislation seeking to bolster the rights of franchisees in that state.

Tia Orr, senior legislative director of the SEIU California State Council, said the union and franchisees are teaming up "because we share a common interest."

"It's really to hold large corporations that are very profitable like McDonald's accountable for its workers and for franchisees," Orr told reporters on a conference call. "Workers and franchisees, we believe, will both benefit from greater fairness and balance in the franchising sector."

Speaking specifically to the fast-food industry -- the target of workers across the nation calling for higher wages and union rights as part of the Fight for $15 campaign -- Orr said, "The same fast-food business model that locks workers in poverty also squeezes franchisees, who have no power to build better businesses."

Joining SEIU on Thursday's conference call to announce the We Are Main Street campaign was Keith Miller, chairman of the Coalition of Franchisee Associations (CFA) and an owner of three Subway stores.

"Franchisees, as a class, are the largest investor in franchising, and as such, should be treated as co-investors in their respective brands," he said.

Franchisees, Miller added, are constantly "under extreme pressure" to "maintain any kind of profit" margin. At the same time, large corporations are enjoying profits often at the expense of franchisees, who are asked to shoulder substantial costs and risk, Miller explained.

"As a franchisee, we would love to be in a position to pay workers more, because then we can retain workers longer," Miller explained. But providing higher wages is difficult when franchisees are "constantly fighting to maintain" a profit margin, he said.

Orr said large corporations, like McDonald's, rake in massive profits and are ultimately responsible for the low-wages being paid to their workers, not the franchisees. 

Kathryn Slater-Carter, who formerly operated a McDonald's franchise store in California with her husband for nearly 30 years, also spoke to reporters.

Slater-Carter lost her McDonald's store recently after the company, she said, abruptly declined to renew the franchise contract. The lack of contract renewal rights for many franchisees across various sectors is just one reason why industry reforms are needed, Slater-Carter explained.

"Just like that, McDonald's took away a business that my husband and I had spent our lives building together," she said. "We had nowhere to turn. We were voiceless. Companies like McDonald's have left franchisees no choice but to stand together to demand basic reforms needed to bring balance and fairness to the franchise industry."

We Are Main Street leaders said the results of a new national survey of 1,122 franchisees provide further evidence of problems in the franchise industry.

The survey was conducted February 16 through March 16 by the market research company FranchiseGrade.com on behalf of Change to Win, a federation of unions that includes SEIU.

Franchisees from 10 different sectors were surveyed on a range of topics such as their economic success and their satisfaction level as a franchisee.

Among other notable findings, 52 percent of franchisees indicated that they do not make a fair profit and cannot earn a decent living from their franchised business. Most respondents, 58 percent, also said they "have been required to make major investments into equipment, facility renovations, or other capital investments" in their franchised business.

"We have been seeing costs piled onto the franchisee from the franchisor, and, as the survey says, we haven't seen the increase in business to offset those costs," added Slater-Carter.

The survey also asked respondents various questions about their relationship with their franchisor.

According to the results, 46 percent of franchisees answered 'yes' to at least one of the following items: "My franchisor has indicated that there could be negative consequences to participating in a franchisee association", "My franchisor has indicated that there could be negative consequences to speaking out about problems within the franchise system", or "My franchisor has increased the frequency of inspections or evaluations of my business after I raised questions or spoke out about problems in the system."

FranchiseGrade.com CEO Jeff Lefler said his company has been surveying franchisees over the past three years. Survey results, he said, have been fairly consistent over that time.

"The legislation we support focuses on franchisee profitability, protecting franchisee equity, and ensuring security in their investment," Miller said. "This poll underscores franchisee concerns and the need for dramatic change in these areas."

*The SEIU Illinois Council sponsors this website.

Image: AP

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