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The Impact of Franchising on Labor Standards Compliance

Author

Listed:
  • MinWoong Ji
  • David Weil

Abstract

Recent studies document pervasive noncompliance with basic labor standards in industries with high concentrations of low-wage workers. The authors examine how franchising, a common form of business organization in low-wage industries, affects compliance. They estimate the effect of franchise ownership on compliance with federal minimum wage and overtime standards in the fast food industry using unique data on Top 20 branded restaurants. Franchised outlets have far higher levels of noncompliance than comparable company-owned establishments. The authors argue that observed differences arise from internal incentives facing franchisees versus franchisors rather than from external enforcement pressures facing the parties.

Suggested Citation

  • MinWoong Ji & David Weil, 2015. "The Impact of Franchising on Labor Standards Compliance," ILR Review, Cornell University, ILR School, vol. 68(5), pages 977-1006, October.
    • Handle: RePEc:sae:ilrrev:v:68:y:2015:i:5:p:977-1006
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    Citations

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    Cited by:

    1. Ankita Patnaik, "undated". "Exploring External Data to Enhance Monitoring and Evaluation of WHD’s Compliance Strategies," Mathematica Policy Research Reports 13d036c972ee44c491704e496, Mathematica Policy Research.
    2. Mark D Easton & Andrea M Noack & Leah F Vosko, 2021. "Are franchisees more prone to employment standards violations than other businesses? Evidence from Ontario, Canada," The Economic and Labour Relations Review, , vol. 32(1), pages 39-64, March.
    3. Bernhardt, Annette & Batt, Rosemary & Houseman, Susan & Appelbaum, Eileen, 2016. "Domestic Outsourcing in the U.S.: A Research Agenda to Assess Trends and Effects on Job Quality," Institute for Research on Labor and Employment, Working Paper Series qt2fm4m444, Institute of Industrial Relations, UC Berkeley.
    4. Annette Bernhardt & Rosemary L. Batt & Susan Houseman & Eileen Appelbaum, 2016. "Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," Upjohn Working Papers 16-253, W.E. Upjohn Institute for Employment Research.
    5. Jakob Utgård, 2018. "Retail Chains’ Corporate Social Responsibility Communication," Journal of Business Ethics, Springer, vol. 147(2), pages 385-400, January.
    6. Andrew S. Green, 2017. "Hours Off the Clock," Working Papers 17-44, Center for Economic Studies, U.S. Census Bureau.
    7. Billinger, Stephan & Rosenbaum, Stephen Mark, 2019. "Discretionary mechanisms and cooperation in hierarchies: An experimental study," Journal of Economic Psychology, Elsevier, vol. 74(C).

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