Washington Law Review

Article

An Empirical Study of Fast-Food Franchsing Contracts: Towards a New "Intermediary" Theory of Joint Employment

March 31, 2019 | 94 Wash. L. Rev. 171

Abstract: The “Fight for Fifteen and a Union” movement among fast-food workers and their allies has raised awareness about wage inequality in the United States. Rather than negotiating for better wages and working conditions with economically weak restaurant-level franchisees, the movement aims to affect the practices of what they view as the all-powerful brands—the franchisors. Few would dispute the notion that the franchisor brands, not their franchisees, set industry-wide standards and, thus, have the ability to offset rising wage inequality and improve working conditions. And yet, the movement has raised controversial law and policy questions about the legal responsibilities of these fast-food Goliaths under current labor and employment laws. Should fast-food brands, as franchisors, be legally responsible as “employers” for the wage-and-hour violations suffered by the individuals who serve us fast food in their franchised stores, pursuant to the Fair Labor Standards Act (FLSA)? Do they have a legal obligation, under the National Labor Relations Act (NLRA), to bargain with the labor unions representing fast-food workers in their franchised stores? This Article addresses these timely questions with original empirical research of forty-four contracts between top fifty fast-food franchisors and their franchisees in 2016. The contractual analysis reveals a new theory of joint employment via franchisor influence over franchisees’ managers. Unlike prior foci on franchisor-franchisee relations, and franchisor-crew member relations, this Article brings a new party to light: franchisees’ supervisorial managers. Jurisprudential analogy to the agricultural context, and case law regarding farm labor contractors as grower intermediaries, supports this proposed analytical lens. In sum, the theory developed from this rare dataset postulates why some of the Goliaths of fast food may indeed be “employers” with legal obligations to the workers in their franchised restaurants. Thus, courts, administrative agencies and legislators should be mindful of franchisor influence through intermediaries, as well as the complex relationships embedded in the franchise system that make disaggregating direct from indirect forms of influence difficult to impossible.

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