Are Franchises Bad Employers?
Franchise jobs are often described as representing the epitome of the "low road" approach to managing employees: high turnover, little training, deskilled jobs, and little employee involvement, practices often seen as unsophisticated. 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. We might therefore expect their employee management practices to be more advanced as well, challenging the stereotype of franchise jobs. We use data from a national probability sample of establishments to examine the relationship between franchise status and employment practices. While descriptive statistics suggest that franchise operations use low road practices, once industry, size, and other control variables are included in the analysis, franchise operations appear on important dimensions to offer better jobs with more sophisticated systems of employee management than similar non-franchise operations.
This article is forthcoming in Industrial and Labor Relations Review. Thanks to David Hsu and Anne Marie Knott for helpful comments. The research in this paper was conducted while the authors were Special Sworn Status researchers of the U.S. Census Bureau at the Center for Economic Studies. Research results and conclusions expressed are those of the authors and do not necessarily reflect the views of the Census Bureau. This paper has been screened to insure that no confidential data are revealed. Financial support was provided by the Center for Human Resources at the Wharton School. Please address comments to the first author at: Department of Management, The Wharton School, University of Pennsylvania, Philadelphia, PA 19104-6370 or Cappelli@wharton.upenn.edu. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Peter Cappelli & Monika Hamori, 2008. "Are Franchises Bad Employers?," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 61(2), pages 147-162, January.