The movement in the US for a higher minimum wage has taken a new angle in attacking large franchisors, and it could threaten to rip apart the franchising industry as we know it. There are now consolidated cases going before the National Labour Relation Board which claim that a franchisor – such as McDonald’s, one of the companies being attacked – is actually a joint owner with its franchisees.
If the board rules against McDonald’s, it would mean that the corporation could be liable for wage underpayments or other violations, even things that aren’t related to the franchise agreement. The franchise owners would also basically lose their “business owner” status and be more subject to corporate policies. They would become, essentially, corporately-controlled outlets instead of franchises.
In this article we discuss how auditing software could help franchisors with current labor disputes.
Overnight Growth Blues
Many a budding entrepreneur has laid awake at night dreaming of overnight success with their business. Few ever contemplated having to practically absorb and assimilate hundreds or thousands of new outlets overnight. That’s more scary than exciting.
There could be thousands of different systems and processes in place across the franchise’s spectrum, and now they would all need to come together under a single set of systems and processes. Again, a nightmare. This development hasn’t made its way to our shores yet, but if the franchises in the US are adversely affected by this, then it’s sure to find its way to Australia eventually.
Proactive Measures Help
The cases in the US could just as easily be thrown out, as they might change the franchising world, but the very fact that they are happening means that businesses need to be more proactive about their interactions with partners, franchisees, supply chains, and any third-party vendors and service providers.
Franchises always have rules and guidelines that will preserve the continuity of the brand name and identity across locations, but if the companies lose their cases they’ll need even more regulations to govern their franchisees. They’ll also need to incorporate every franchise location into their corporate compliance and auditing systems. In our modern regulatory structures, it only makes sense for businesses to start incorporating these types of measures now with their partners.
The Central Authority
This is of course primarily directed at Franschisors in light of the current cases in the US, but the basic idea of end-to-end compliance is as good for business as it is for staying out of regulatory or legal trouble. Consistency is expected in brands, and that goes for processes and quality controls, as well as image and product.
That requires auditing that is identical from end to end and is able to be monitored and administered from a central corporate office – without requiring extensive training or travel. Our Compliance Checkpoint auditing app solves this problem by providing cloud-based software in an app that simplifies and standardises the entire auditing process.