April 30, 2016

‘New Day’ for Joint Employer Litigation

- and not in a good way: Franchise Times
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7 comments:

Anonymous said...

From the recent o/o survey === “There are major minimum wage initiatives happening around the country and McDonald’s is not addressing the crew and managers needed to run the stores.”

“We cannot upgrade technology every day, buying new registers, buying new card machines, new training computers, remodels, etc., etc. – thankfully OPNAD is paying for new menu boards!”

“Still too much discounting. Corporation still shifting costs to operators. Reinvestment demands are UNREALISTIC. As many as 40%-50% of Operators are not financially stable. Unionization a big negative concern, and Corporate is on the WRONG side of this issue. The same goes for minimum wage/$15.00 wage. Regions not uniform in enforcing standards. Operators’ morale still at historic lows. Operator equity continues to DECLINE.”

“We expect much higher labor costs, some tick up in food costs, and increases in most of the operating costs. Profit After Controllables will be down as well as cash flow and profitability. Plus more pressure to purchase newest equipment and remodels. More and more of the older/long-time Operators are leaving. Chatter has started about who is thinking about retiring.”

Anonymous said...

I'm more optimistic than I've been in a long time with the leadership being provided by Easterbrook. However, I don't think he or others fully understand how many serious problems are being created by the regions. Too many Regional Managers, QSC VP's and their immediate staff have personal agendas, self importance, personal ambition and little concern for the system. MCD does not care about operator equity or about older operators leaving the system. All of that is just fine with them. They are allowing an environment of "Us against them" that is, the Region against the operators to grow and there is little oversight from Oak Brook. Overall compentcy in the regions have declined. Real Estate, finance, field service and leadership are terrible. The company recently closed over 200 stores that should have never been opened in the first place. Decisions are being made that have little to do with good business judgment or positive cash flow. Social issues are more important than profitability. I realize that new leadership has a big mess to correct but the entrenched staffing and attitudes are huge to overcome. In the meantime debt levels at the stores are increasing although sales are up they are not up enough. There are too many stores, too much discounting and too many operators. Smaller operators in average volume stores cannot participate in required reinvestments, payroll increases, fend off law suits without taking on more and more debt and accepting smaller returns on their own investments. Many can't afford to retire and the longer they stay in the harder it becomes. Many if not all of these problems have been self inflected by poor leadership by the company and by giving too much authority to the regions. Leadership at the top has got to get a firm grip on these issues and soon.

Anonymous said...

McDonald's Corporation and their franchisees are most certainly going to lose this case at the NLRB level and possibly the Federal Appeals Court level this will mostly likely be heard at the US Supreme Court some years down the road if either the NLRB/Unions or McDonald's wants to appeal to that level and not accept the decision of the lower court whatever that might be.

Some of the very small sample of reasons NLRB / Unions will win at lower levels are;
1. You are required to use McDonald's scheduling system which tells you how many people to schedule.
2. You use McDonald's time and attendance system (which has many reasons how this ties into joint employer argument).
3. McDonald's training systems employees have access to the system during non-working hours even though McDonald's designed and ultimately controls the T&A system "so they can all make more profits".
4. Your BC / FSM at your business reviews discusses the amount of managers you have in the restaurants thus controling the amount of jobs available.
5. Your business consultant talks profits with you, reviews how many people you have on shifts, tell you when you should open the 2nd side of the prep table, cashier booth, table service etc.

You can see from the small sample of arguments the NLRB / Unions will have a lot how the Corporation or Franchisor controls your business and the employees that work for you in your business. Much of this will totally depend on what political party is in power over the next few years and if the NLRB wants to continue down this road and working on the unions agenda. The courts will also depend on political party in power too.

The franchise model could ultimately change a lot in this country in the coming years if the NLRB prevails and this argument is held up by our US Supreme Court.

Richard Adams said...

The above comment on the NLRB case was submitted anonymously and may or may not represent the position or opinion of the owner of this web site.

Anonymous said...

The real issue here is that the NLRB is going to make a political decision not one based upon the legal facts. The majority of the NLRB members are political appointee's of the Democratic party which is owned by unions. Of course, you never know what an administrative judge will do but it is expected that the NLRB decision will go against MCD because of politics. If true, the decision will be appealed and taken into a court of law. A fact based case will likely be in favor of MCD. It will be a long and expensive journey.

The franchise model in this country WILL ultimately change but not solely because of this money grab by the unions. Economic forces will be the biggest driver of change. As labor cost increases there will be adjustments to staffing levels. As costs of raw products, (commodities) increase there will be adjustments in pricing and other costs of opening and operating a restaurant. Technology will be a huge factor. The restaurant of today doesn't look or operate like our restaurants in the fifties and sixities. Our restaurants in the future will have a whole different look and feel. Our growing pains will be the model for the industry. Those chains that fall too far behind too soon will never catch up. Our employee's of tomorrow will be better educated, motivated, technology savvy, they will seek us out to learn high tech skills, hospitality, cutting edge banking, They will see organizations like unions as byzantine relics of another time. MCD will be the source of knowledge about nutrition, farming, food safety, sustainability of plants and animals, marketing using social media. The pace of change will increase and be expensive and risky. Those within the system that resist will fall behind and out. Of those in the system total commitment will be required. To get there the company will need to change the most. Operators will be asked to lead by example meaning huge reinvestments, retraining, intense financial management and operational excellence. There will be little room for the faint hearted or the weak. Leadership at the top will be critical. Substance will be required of those leaders, cheer leaders need not apply. Exciting.

Richard Adams said...

"unions as byzantine relics of another time" ... They already are, they just don't know it yet.Trouble is, as they die they could do a lot of harm to a lot of employers.

Anonymous said...

Reading the list of reasons given to support unions sounds like what union organizers talk about among themselves. I could tick off a good retort to each of them but who really cares at this point. The "list" demonstrates how miss informed the writer is about these matters. I don't read anything in his post that would support the argument that MCD is a joint employer or a business partner with the operator. He seems to believe that these things are "REQUIRED" throughout the MCD system and that as a result the operators comply. As a factual matter MCD does not control our business or our employee's. They do make suggestions regarding store operations and some operators are eager to comply to be favorably viewed by their region. The MCD/operator relationship is controlled by the franchise agreement signed by both parties. If an operator makes a suggestion to MCD and they do it that does not mean we are joint employers or business partners. When the facts are known and this issue is out of the political arena the unions will look a bit stupid for spending so much money to put forward such shallow arguments.