The Federal Trade Commission Act gives the commission tremendous power to go after franchisors for practices that are unfair or deceptive or involve unfair methods of competition. These powers have typically gone unused, but under Commissioner Lina Khan, that’s changing in a major way.
The commission is taking a sweeping view of how to wield its full range of statutory powers and has indicated it is considering flexing its muscles to right the power imbalance that plagues the franchise industry, which is responsible for a massive 5.6 percent of all nonfarm private employment in the country, or about 10 million workers.
And that could mean big changes for fast-food cooks and cashiers, who are perhaps the most taken advantage of by the unchecked power of huge multinational corporations like McDonald’s, Burger King and Wendy’s.
SEIU, the labor organization I am privileged to lead, along with the labor federation we’re a part of, the Strategic Organizing Center, submitted information last week requested by Khan seeking to examine the unequal bargaining relationship between franchisors and their franchisees, including — importantly — how that power imbalance affects workers. Khan’s initiative goes well beyond previous attempts to reform the Federal Trade Commission’s (FTC) decades-old Franchise Rule, which requires franchisors merely to make limited disclosures to franchisees, but is far from rigorous and leaves workers out entirely.
Our interest in the franchise business...
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