Are Franchises Bad Employers?

Abstract

Franchise jobs are often viewed as epitomizing a “low-road” employee-management approach characterized by high turnover and several practices that are deemed unsophisticated, such as low investment in training, deskilling of work, and little encouragement of employee involvement. Research on franchise operations suggests, however, that the basic operating principles and practices of franchises tend to be more sophisticated than those of equivalent independent operators. Might their employee management practices be more advanced as well, notwithstanding the stereotype of franchise jobs? This study uses data from a national probability sample of establishments, drawn from surveys conducted in the mid-1990s, to examine the relationship between franchise status and employment practices. Descriptive statistics suggest that franchise operations used low-road practices, but once industry, size, and other control variables are included in the analysis, these operations appear to have offered better jobs with more sophisticated systems of employee management than did similar non-franchise operations.