The Progressive Case Against Franchising — and Why Congress Should Reject It

Put the franchise owner back in the picture — the person who signed the lease, guaranteed the debt, hired the employees, and makes payroll — and the progressive theory becomes much harder to defend.

The opposition has a real argument. It deserves an answer. It is still wrong about who the employer is.”

My friends at the IFA have worked very hard to move the American Franchise Act, and they deserve credit. But votes are not won by pretending the opposition has no argument. They are not won with another glossy brochure about the American dream, or by repeating “Franchising is Local” as though the slogan ends the discussion. It does not. The other side has a theory, and Congress needs to hear it answered.

The progressive case is not hard to state. It says franchisors keep the power that matters; push capital risk, employment liability, and daily headaches down to local operators; and then rely on the franchise agreement when responsibility arrives. In that telling, the franchisee is less an owner than a buffer between the brand and the consequences of the brand’s decisions.

Brian Callaci makes this case forcefully in Chains of Command: The Rise and Cruel Reign of the Franchise Economy. I wrote a lengthy prebuttal to the book based on his earlier work. Callaci is a polished, more current version of David Weil, and in my view his book is more compelling than The Fissured Workplace. That is exactly why it should be answered rather than brushed aside.

Callaci asserts that franchising preserves corporate power while pushing legal and financial responsibility down to “independent” operators.[1] The AFL-CIO — and, for disclosure, I am a member of UAW Local 1981, AFL-CIO, the National Writers Union — makes a related case against the American Franchise Act.[2] A March 2026 coalition letter argued that the bill would leave workers and franchisees responsible for conditions dictated by the brand.[3] Congress should hear the strongest version of that argument — then it should reject it.

Some of the criticism is deserved

I have no interest in pretending every franchise system is well run. Some franchisors sell before the economics are ready, collect fees without building the support they promised, and impose requirements without understanding what those requirements cost at the unit level. Some outsource the critical work of recruiting and selecting franchisees to third-party sellers and then act surprised when the people who bought the franchise don’t meet their standards or fit into their culture. Some want control when control produces revenue — and instant independence when a claim arrives. We have some bad actors, and the franchise community does itself no favor by denying it.

A franchise agreement does not turn bad conduct into good conduct. Workers who are owed wages should be paid. Franchisees who were deceived or abused should have real remedies. A franchisor that actually takes over hiring, pay, scheduling, supervision, or discipline should accept employer responsibility. But none of that answers the question before Congress. Bad franchising is a reason for better enforcement and better franchise policy. It is not a reason to call every franchisor the employer of people hired and managed by someone else.

Where the argument goes wrong

The progressive argument starts with a true statement: franchisors can have enormous commercial influence. Then it makes the leap that influence is employment. That leap is the problem.

A franchisor may approve suppliers, require technology, set operating hours, establish service standards, and shape pricing architecture. Those decisions affect the economics of the business; of course they do. But they do not tell us who hired the person working Tuesday night, who set her pay, who wrote her schedule, who supervised the shift, or who decided to discipline her.

Lenders, landlords, insurers, platforms, and major customers all exercise leverage. We regulate that leverage when it is abused. We do not call every powerful contracting party the employer of everyone downstream. The employer should not be defined as the company with the best-known name or the deepest pocket. That is not an employment test — it is a collection strategy.

The franchisee is not scenery

Too much of the progressive critique works only if the franchise owner is moved to the edge of the picture. Put the owner back: the person who invested the capital, signed the lease, guaranteed the loan, hired the employees, makes payroll, pays the taxes, and bears the loss when the business fails. That person is not scenery, and they are not simply managing a corporate branch.

Callaci calls franchisees “tenant entrepreneurs.” It is a sharp phrase, and there is some truth in it. I have described franchisees as formula entrepreneurs, or entrepreneurs lite, because they buy a formula rather than invent one. But they are still owners. Every business owner operates inside constraints — capital, leases, regulation, insurance, suppliers, technology, and customer expectations. A contract does not erase ownership, and it does not transfer every employment decision to the party with greater bargaining power.

Franchisees are not all small, powerless or inexperienced. Many are sophisticated multi-unit, multi-brand operators. Some manage well and some do not. Some comply with employment law and some violate it. That is precisely the point: they are real business owners making real employment decisions. A theory of franchising that can explain the brand only by making the owner disappear is not a complete theory of franchising.

Why the national brand matters to organizers

Callaci was unusually candid in 2024 when he compared Starbucks with Dunkin’. Starbucks gave organizers one vertically integrated national company. Dunkin’ and most other fast-food franchise systems presented thousands of local employers. That difference is not incidental. It is the organizing problem that an expanded joint-employer doctrine is being asked to solve.[4]

SEIU is the driver

Let’s stop dancing around this. SEIU is not simply one participant among many: it has been the principal institutional force behind using joint-employer doctrine as an organizing tool in franchised workplaces. Academics developed the theory; advocacy groups supplied the language; regulators supplied the forum; and SEIU supplied the money, the organizers, the worker network, the campaign, and the national target.[5]

I do not fault SEIU for doing its job. It is a labor union. Its job is to organize workers, increase bargaining power, and grow membership. It would be negligent not to look for legal rules that make those tasks easier. The mistake would be for Congress — or for us in franchising — to pretend this is only a technical disagreement among labor lawyers. It is not. Union organizing is the material issue.

The numbers explain the urgency: In 1983, 20.1 percent of wage and salary workers belonged to unions. By 2025, the number was 10.0 percent. Private-sector membership was 5.9 percent, and in food services and drinking places it was only 1.8 percent. Fast food is a very large workforce with very little union penetration. For SEIU, that is an opportunity and a difficult organizing problem.[6]

Franchising is what makes the problem difficult. The sign is national, but the employers are local. There are thousands of franchise owners, separate companies, different labor markets, and separate groups of employees. Organizing and bargaining one employer at a time is slow, expensive, and uncertain. A broader joint-employer rule changes the map. It gives the campaign a national company to pressure and, potentially, a national party at the bargaining table.

The Fight for $15 was always about a union

The wage number got the headlines, but the campaign’s full name was the Fight for $15 and a Union. SEIU’s own history treats Mary Kay Henry’s decision to back the fast-food campaign as one of the union’s defining initiatives, and its materials repeatedly identify McDonald’s as the principal corporate target. The campaign began with fast-food strikes in 2012 and grew into a national political, public-relations, and organizing effort. It changed the wage debate. It also built the worker network, publicity, and legal pressure needed to test a broader joint-employer theory.[7]

McDonald’s was the obvious test case: a famous national brand, a largely franchised system, a large workforce, and enormous reputational value. Charges arising from fast-food protests began reaching the NLRB in 2012. In July 2014, the NLRB General Counsel announced that McDonald’s USA could be named as a joint-employer respondent. In December, the General Counsel issued consolidated complaints against McDonald’s and a group of franchisees. That was the agency’s prosecutorial position. It was not a final Board finding.

The case never produced the national joint-employer ruling SEIU wanted. After years of hearings, a later General Counsel and McDonald’s reached settlements covering the alleged violations by the franchisees. In 2019, the Board ordered those settlements approved. The affected employees received full relief for the alleged substantive violations, but the settlements did not find McDonald’s to be a joint employer and did not impose joint-and-several liability on it. SEIU and the Fast Food Workers Committee challenged that result. In 2022, the D.C. Circuit denied their petition and upheld the Board’s approval. McDonald’s did not receive a sweeping ruling that it could never be a joint employer; SEIU did not get the precedent it had set out to obtain. The case ended without a joint-employer finding.[8]

SEIU was candid about what it wanted. One of its locals called the General Counsel’s 2014 action a major victory in the fight for “$15 an hour and a union” and said, bluntly, that “McDonald’s is the employer.”[9] That quote gets closer to the real dispute than most policy letters. The campaign was not satisfied to pursue only the local owner who hired and paid the worker. It wanted a legal bridge to the national brand. A joint-employer finding would not automatically create one national bargaining unit or make McDonald’s responsible for every employment decision in every restaurant. But it would change who could be brought into unfair-labor-practice cases, who might have bargaining duties over matters within its control, and where national pressure could be applied.

The objective is national and sectoral

SEIU’s current policy materials are just as candid. Its Build Power, Win Justice resolution calls for breakthroughs in fast food and for sectoral victories through legislative or executive action. When SEIU rejoined the AFL-CIO in 2025, the organizations promised strategies that build worker power across employers and entire industries. This is not a secret conspiracy. It is a published organizing plan.[10]

The IFA says “Franchising is Local.” That is true, but it does not answer SEIU’s argument. SEIU already knows employment is local. Locality is the obstacle. The national brand is valuable precisely because the local employers are numerous and fragmented. Joint employment is the bridge from local employment to national leverage.

Once we say that plainly, the policy choice becomes cleaner. SEIU wants an employment rule that makes chain-wide and sectoral organizing easier. Franchise owners and franchisors want employer duties to follow the party that actually controls the employment decisions. Congress is not resolving a vocabulary dispute. It is deciding whether employer status follows employer conduct or the needs of an organizing strategy.

Workers have every right to organize, and SEIU has every right to pursue a strategy that advances its members and its institution. But difficulty organizing the actual employers does not make someone else the employer. Ease of organizing is not a legal test.

If Congress wants national or sectoral bargaining in fast food, it should hold that debate openly and enact that system directly. It should not get there indirectly by stretching joint employment until brand standards, software, training, field support, and commercial influence are bundled together and relabeled as employment control.

The line still matters

To be fair, software and operating systems can be used to control employment. If a franchisor locks the wage rate, writes the schedule, prevents the franchisee from correcting an unlawful setting, selects the person to be hired or fired, or directs the employee’s daily work, those facts should count. Calling the control “technology” does not make it disappear.

The American Franchise Act does not ask a court to ignore that conduct — it asks the court to identify it. An operating-hours requirement is not the same as an employee schedule. A staffing standard is not the selection of individual employees. Training materials are not daily supervision. Reporting misconduct is not making the disciplinary decision.

That is why I support the bill. It does not ask Congress to believe that every franchise system is good or that every franchisor is harmless. It asks courts and agencies to separate brand management from employment management, and to hold the party that made the employment decision responsible for it. In my experience, that is how well-run franchise systems actually operate.

A vote for the American Franchise Act is not a vote against workers

If the Act is passed, workers will not lose the protections of wage-and-hour law, organizing rights, anti-discrimination law, safety law, or state employment law. The franchisee will remain responsible as the direct employer. A franchisor that actually satisfies the statutory test will remain responsible as a joint employer. The point is not to hide wrongdoing — it is to identify the employer honestly.

Opponents are also entitled to say that the bill may make it harder to reach a larger defendant in some cases. That is true, and it is one reason they oppose it. But access to a larger defendant cannot substitute for proof that the larger defendant was an employer.

I do not see a vote for the American Franchise Act as a vote against workers. I see it as a vote against turning brand standards into employment decisions and independent owners into branch managers because doing so would make organizing and collection easier. Those may be useful outcomes for SEIU, but usefulness is not the same as legal responsibility.

Congress can regulate franchising. It can police fraud, improve disclosure, enforce wage law, and hold bad franchisors accountable. None of that requires the law to pretend that the person who invested the capital, signed the guarantees, hired the workforce, and bears the risk is merely a middleman. The American Franchise Act asks Congress to keep the line between brand control and employment control. Congress should vote yes.

This is the third in a series of articles about the American Franchise Act. Part One describes the American Franchise Act, while Part Two details why brand standards are not employment decisions. Part Four will present a final case for passage of the Act.

Michael Seid is Managing Director of MSA Worldwide. You can reach him at mseid@msaworldwide.com or 860-523-4257.

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[1]  Brian Callaci, Chains of Command: The Rise and Cruel Reign of the Franchise Economy (University of Chicago Press 2026).

[2]  AFL-CIO, “House Letter Opposing Legislation That Would Undermine Workers’ Rights to Good Faith Bargaining,” Dec. 1, 2025.

[3]  AFL-CIO and allied organizations, “Letter Opposing Legislation That Is Anti-Worker, Anti-Union, and Anti-Small Business,” Mar. 27, 2026.

[4]  Brian Callaci, “Lessons from Starbucks Workers United and the Fight for $15,” Dissent, Apr. 29, 2024, republished by the Open Markets Institute. Callaci contrasts a vertically integrated chain with franchised restaurant systems and emphasizes the significance of a single national bargaining target.

[5]  SEIU’s own materials describe former president Mary Kay Henry’s decision to back the Fight for $15 and a Union as a defining strategic initiative and identify McDonald’s as the campaign’s most notable corporate target. See Service Employees International Union, “Mary Kay Henry”; SEIU, “2010 to 2024: Big Bets and Worker Breakthroughs,” Feb. 2024; and SEIU, “About” (fast-food movement timeline). The characterization of SEIU as the principal institutional driver is an inference from that public record.

[6]  U.S. Bureau of Labor Statistics, Union Members—2025, USDL-26-0229 (Feb. 18, 2026). BLS reports an overall union membership rate of 10.0 percent in 2025, down from 20.1 percent in 1983; the 2025 private-sector rate was 5.9 percent and the rate in food services and drinking places was 1.8 percent.

[7]  SEIU, “Fight for $15 and a Union Activist, McDonald’s Employee Terrence Wise Testifies Before Congress on the $15/Hour Minimum Wage Bill,” Feb. 8, 2019 (describing the campaign’s 2012 launch and union objective); SEIU, “McDonald’s Workers, Fight for $15 Activists and SEIU Members Are Joined by Poor People’s Campaign as They Demand $15/Hour Wages and Union Rights,” May 24, 2018.

[8]  National Labor Relations Board, Office of the General Counsel, “Authorizes Complaints Against McDonald’s Franchisees and Determines McDonald’s, USA, LLC Is a Joint Employer,” July 29, 2014; NLRB Office of the General Counsel, “Issues Consolidated Complaints Against McDonald’s Franchisees and Their Franchisor McDonald’s, USA, LLC as Joint Employers,” Dec. 19, 2014; McDonald’s USA, LLC, 368 NLRB No. 134 (2019) (ordering approval of settlements that provided full remedies for the alleged substantive violations but did not impose joint-and-several liability on McDonald’s as a joint employer); Fast Food Workers Committee v. NLRB, 31 F.4th 807 (D.C. Cir. 2022) (denying the unions’ petition for review and upholding the Board’s approval of the settlements).

[9]  SEIU Local 105, “NLRB Determines McDonald’s IS the Boss,” Aug. 22, 2014. The union local described the General Counsel’s action as a major victory in the campaign for higher wages and union representation and stated that McDonald’s was the employer.

[10]  SEIU, Build Power, Win Justice Resolution (calling for breakthroughs in fast food and “sectoral victories through legislative or executive action”); SEIU and AFL-CIO, “SEIU Joins AFL-CIO to Build Unprecedented Worker Power, Win Unions for All Workers,” Jan. 8, 2025 (committing to organizing and bargaining strategies across employers and entire industries).