The Blog

Who Is My Employer, the franchisor of the franchisee?

Technically speaking an employer is defined by who pays the salary of the worker, but in the franchise world this fundamental statement may need more in-depth exploration.

A franchise is a way in which an established, mature, business evolves once it has reached certain point of development. Instead of opening and operating a new unit or branch the business becomes a “franchise” by selling to a third party the rights to use its brand, marketing strategy, operational procedures, products or services under its recognized brand.

A franchisee is an independent party bind to the franchisor by a complete set of rules (the franchise agreement) including some rules regarding the franchisee’s workers, so at the end, even if the franchisee pays the worker some level of control over the worker comes from the franchise itself.

An employer is the one that pays your salary and establishes your assignments and provides you all the means for you to develop your work, but an employer is also anyone who has enough control over the terms and conditions of a person’s employment so in a sense the franchise is also the employer, depending the amount of control it has over the worker. Not a clear cut here.

A lot of debate about this issue that even overflows the barriers of country frontiers. Big franchise companies like McDonald’s, have hundreds of thousands of employees all over the world if considered under the definition that the final employer is McDonald’s but in reality most of the control over the workers does not rely on the corporate McDonald’s but on the individual owners of the independent stores.

At the end, an employer is not only who pays an employer the salary, but who also controls the conditions of the employment, assignments and work conditions. This is really a gray zone because, first, not all franchises operate the same, second because most of the times the franchisee holds more much control over the employees than the corporate franchise.