How the franchise system is rigged (with Marshall Steinbaum)

Pitchfork Economics with Nick Hanauer

Civic Ventures

Business, Government, News, Politics

4.8 • 1.5K Ratings

🗓️ 13 June 2023

⏱️ 44 minutes

🔗️ Recording | iTunes | RSS

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Summary

In the 20th century, big corporations sold franchising to Americans as a less risky way to buy into business ownership. But in recent years, the franchise industry has tipped hugely in favor of franchisors, extracting wealth from both franchisees and the employees who work for them through complicated contracts that kill competition and rig the system. Economist Marshall Steinbaum returns to the podcast to share the findings from his deep dive into the (intentionally) complex and arcane franchise system, and to explain the latest data from Washington State’s recent enforcement campaign against no-poach clauses in franchising contracts. Marshall Steinbaum is an Assistant Professor of Economics at the University of Utah and a Senior Fellow in Higher Education Finance at Jain Family Institute. Twitter: @Econ_Marshall Vertical Restraints and Labor Markets in Franchised Industries https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4155571 The Effect of Franchise No-poaching Restrictions on Worker Earnings https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4155577 Coercive Rideshare Practices: At the Intersection of Antitrust and Consumer Protection Law in the Gig Economy https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4196215 Shared Security, Shared Growth https://democracyjournal.org/magazine/37/shared-security-shared-growth Website: http://pitchforkeconomics.com Twitter: @PitchforkEcon Instagram: @pitchforkeconomics Nick’s twitter: @NickHanauer

Transcript

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0:00.0	You have so many people employed in an industry that is designed to be
0:05.0	arcane and complicated so as to disempower them and lower their wages.
0:09.2	Basically, the structure of the franchise system is such that the
0:12.1	national chain earns all the profits and has all the power, but the workers who
0:16.3	work at the individual franchising restaurants who have no way of
0:19.4	bargaining directly with or gaining access to the profits of the national chain.
0:23.6	It just makes you feel different about walking into that McDonald's, doesn't it?
0:30.0	From the home offices of civic ventures in downtown Seattle, this is
0:36.3	pitchfork economics, with Nick Hanauer, the best place to get the truth about who
0:41.0	gets what and why.
0:48.7	I'm Nick Hanauer, founder of Civic Ventures.
0:52.0	I'm David Goldstein, senior fellow at Civic Ventures.
1:00.1	Goldie in a wide-ranging conversation with our old friend, Marshall Steinbaum,
1:05.5	a few weeks ago, I was reminded by how much great work he's done on the
1:11.2	nefarious labor practices of franchises and you know, since we last had
1:19.2	Marshall on the pod, he's done a lot of really great research dissecting this
1:26.5	fairly complex and arcane corner of labor law and our economy.
1:32.8	And I'm super excited to get to chat with him today about the research he's been doing
1:39.6	and to share with us the results of some changes that were spearheaded here in
1:44.4	Washington among other places.
1:46.8	Right, a state where we don't have franchises anymore, right?
1:51.9	Yeah, we imposed restrictions on that, made them pay their wages,
	...

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