Why Franchisors Should Prepare for More Unionization

    Enlightened employee relations are the best protections against unionization.

    Restaurant dining room.
    Adobe Stock
    Contract negotiations can be lengthy, and success is not guaranteed.

    The unionization of fast-food restaurants is not going away anytime soon.

    As has been the case so far, such unionization attempts will involve unique questions of strategy and law. The pace of the spread may be influenced by union efforts under way in New York State to negotiate a new contract with unionized workers at a Starbucks store in Buffalo.

    If a new contract is achieved, the outcome could influence thousands of Starbucks stores nationwide and could have a ripple effect throughout the fast food industry. First contracts, however, are difficult to achieve and the level of employee turnover in all industries, in particular the fast food industry, can mean varying degrees of support for the union throughout negotiations.

    At the Starbucks store, at least the scope of the bargaining unit is determined. This determination is a major issue in the fast-food franchise industry from both strategic and legal perspectives. Does the union want to target an individual store, all the stores owned by the franchisee, or include stores not owned by the franchisee but within the scope of the franchisor? The applicable legal standards for these questions have changed significantly under the Obama Board and the Trump Board and will likely change again under the Biden Board.

    The issues primarily involve the degree of deference to the union on the scope of the bargaining unit, and the definition of who may be a joint employer. Proposed bargaining units that push the limited and expansive boundaries are most likely to be caught up in litigation. These areas involve case law changes, the Board’s exercise of its rulemaking authority, the courts, and varying degrees of court deference to the Board.

    Enlightened employee relations are the best protections against unionization. Franchisees and owners should educate themselves and their management staff with regard to the law, enlightened employee relations, employers’ rights and responsibilities, and most particularly, the unique issues that apply to fast-food franchisees. Management staff should not be confused on these issues.

    They should be provided clear direction with regard to their employer’s position on joint employment and with regard to the protection of property rights at their businesses, which are open to the public. A training schedule for supervisors and managers should be developed so that the company can maintain its relationship with its employees, without third-party interference, if that is the company’s desire.

    If a fast-food franchise is organized, the union then has the task of attempting to negotiate a first contract. Such negotiations can be lengthy, and success is not guaranteed. Depending upon the level of turnover at a particular franchise, the bargaining unit composition could significantly change as negotiations continue.

    A high level of turnover makes union claims of speaking for the employees questionable. If the first contract does not come quickly, and because the employer is required to maintain status quo through negotiations, employees can easily become dissatisfied.

    Union promises usually involve promises of better benefits, better pay, job security, and workplace safety. Whether benefits are of interest at any particular fast food establishment will likely vary greatly based on the composition of the workforce. Wage gains have occurred in recent years and appear to be ongoing with the tight labor market and inflation. These developments may undercut union promises regarding additional wage gains. Job security may not be as high a concern in the fast food industry as in other industries. Workplace safety is always part of the union pitch but should also be a goal of any employer.

    In sum, the unionization of fast-food restaurants is not going away anytime soon. To the extent unions are successful with organizing campaigns, they will likely also have to be successful in obtaining beneficial first contracts, which can be difficult. The best defense of any franchisee or owner against unionization is a knowledgeable and well-trained group of supervisors and managers.

    Poorly trained or poorly-performing supervisors and managers are the most frequent reason for a successful union campaign. The fast food industry, particularly with regard to unit determinations, employer identity, and personal property rights, involves unique legal and strategic issues that underscore the need for an informed, well trained, and optimally performing management staff.

    Thomas Gibney is a Member in Eastman & Smith’s Labor & Employment group in Toledo, Ohio. He can be reached at tjgibney@eastmansmith.com.