Franchise Ownership and Challenges to the Equitable Implementation of Fair Workweek Laws

Background: Low-wage workers in retail and food service industries are subject to employer’s widespread use of precarious scheduling practices, such as posting the schedule with short notice, making last-minute changes once posted, and varying the number and timing of hours week to week. Fair Workweek Laws (FWLs) aim to establish new labor standards that regulate these scheduling practices by requiring employers to provide greater schedule predictability and access to work hours for their low-paid employees. Several municipalities, including Seattle, New York City, Philadelphia, and Chicago, and one state, Oregon, have enacted FWLs, and there are more initiatives underway.

The high prevalence of franchise ownership in these sectors is likely to challenge the equitable implementation of FWLs. Studies show that franchise-owned businesses are more likely to violate labor standards due to their limited resources and weaker motivation to comply compared to corporate-owned businesses. This may be especially true of FWLs, which have multiple provisions and require that employees be paid extra for manager-driven schedule changes. A growing controversy is whether franchises should even be covered by FWLs or treated as small businesses which are generally excluded from coverage.

In this study, we compare franchise-owned versus corporate-owned businesses to examine the factors that may contribute to ownership-based divergence in the implementation process of FWLs. Additionally, we unpack variation among franchises to identify the conditions under which franchises are able to align their practices with specific FWL provisions.

Methods: The study draws on in-depth interviews conducted with frontline managers in worksites covered by Seattle’s Secure Scheduling Ordinance (SSO), which went into effect July 2017. The managers interviewed were all directly responsible for scheduling workers at SSO-covered retail and food service worksites. To ensure variation in business type, employee size and geographic locations within Seattle, a comparative organizational case study method (Yin 2014) was used for sampling. Managers were asked about their scheduling practices, their understanding of the SSO, and the support and pressures received from the larger corporation or franchising organization. A total of 44 worksite interviews (20 franchise and 24 corporate-owned) are analyzed by rating the level of alignment between manager practices and each provision of the SSO.

Results: Preliminary findings indicate that corporate-owned business managers generally align their scheduling practices more closely with the SSO than franchise managers, particularly in terms of providing 14-days advance notice, avoiding closely-spaced shifts, and fulfilling documentation requirements. Corporate-owned business managers also demonstrate greater knowledge of the law and report more support from the larger organization. However, we also observe wide variation among franchises, allowing us to identify several factors that enable franchises to effectively implement specific SSO provisions.

Implications: The rapid expansion of franchising in low-wage industries has raised concerns about the equitable implementation of labor standards that are intended to protect low-paid workers and about the capacity of franchisees to implement the provisions in FWLs. Our findings suggest that these are legitimate concerns but that franchisees are able to implement many of the provisions in FWLs when provided with support and information.