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March 2024
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Federal Overreach? Regulators Cast a Wide Workplace Net
The National Labor Relations Board (NLRB) has issued a new version of an old rule, defining franchisors as “joint employers” of their franchisees’ workers. The measure has ignited a battle in the courts and Congress — for good reason. My take on this: I think it’s nuts. It ignores the reality of the franchising system, which serves an important business purpose as an efficient finance model for expanding franchisors’ distribution networks. Business groups are battling the measure, and a federal judge in Texas has blocked implementation. The new rule is likely to remain mired in litigation for some time. Under the NLRB’s latest proposed rule, franchisors would be required to bargain with franchisees’ labor unions if they were classified as joint employers — that is, if the franchisor had any control over pay, scheduling, work rules, supervision, or other terms of employment. The measure defines “control” broadly, as either direct or indirect authority, whether or not the franchisor actually uses it. My technical opinion on that language? It’s stupid. Either you’re a joint employer or you’re not. If the motivation was really to regulate joint employment situations, you would define it as actually exercising control. What the regulators are actually trying to do is to expand franchisors’ liability — to prevent them from avoiding it downstream. The fact that the NLRB feels a need to include that language underscores the reason it’s stupid. Defining this franchise relationship can get weird in a hurry, though. As a franchisee, one thing I want the franchisor to do is figure certain things out for me. For example, if a franchisor comes up with scheduling software that integrates with my other technology, I don’t have to go out and find that product myself. I also want the franchisor to figure it out and show me how to install it and get it running. Once any vendor is chosen for a franchising
system, they are expected to support the franchisees. It would be a shame if those setups were used as evidence of some sort of joint employment relationship. My advice to clients, however, would be to draw a separation whenever possible. If I use a franchisor’s predictive software to model staffing needs, that could create the appearance of a joint employment relationship. There’s a fine line to be drawn here: Are you tapping into a database that is owned by the franchisor? Or is the franchisor providing it for use with your own separate account? The latter would be wiser, in my view. Supporters of the pending rule argue that it would help workers. But would employees actually be better off under this measure? I don’t believe so. This rule is aiming to solve a problem that doesn’t exist. Based on what I see in my clients’ businesses, they hire and promote from within. People who show up and are ambitious, smart, and hardworking get promoted and move ahead, and that is a system that should remain untouched by regulatory overreach. Small businesses are the bedrock of our communities and our economy. To issue mandates that undermine them just doesn’t make sense. The joint employer concept is not new. In fact, it is starting to resemble one of those pop-up clowns that won’t stay down. You think you’ve knocked it out, but the next time you turn around, it’s back. When the NLRB last tried this, in 2015, franchisors freaked out and changed their customary practice of setting rubrics, or sets of instructions for staffing, business hours, and so on. By that point, franchisees who were successful had already stopped using the rubrics because of the tensions inherent in the franchisor- franchisee relationship. Since then, franchisors themselves have seen that it was only a matter of time before some plaintiffs’ lawyers tried to use the rubrics as evidence of a joint employer relationship, and decided to stop using them, too.
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This Beautiful City Is Straight Out of a Fairy Tale ADD SINTRA, PORTUGAL, TO YOUR TRAVEL PLANS!
This season, you might already have plans to travel to Punta Cana, London, Key West, Paris, or a similar destination city. One more to add to your travel checklist is Sintra, Portugal. This beautiful town rests on the hills of Serra de Sintra, just outside the capital, Lisbon. The two castles within the city are the main draws, and it’s easy to see why.
Some rooms are painted as an optical illusion, with doors and hallways looking three-dimensional when they’re just flat.
Once you head back outside, the rest of the grounds are just as lovely. The enormous gardens have many trails, marked and unmarked. You can get lost in the beautiful oasis, and we encourage you to put aside at least half a day to explore the gardens. QUINTA DA REGALEIRA Quinta da Regaleira is the city’s second significant castle boasting beautiful gardens, but its main draw is the initiation well. This 80-foot- deep well is a wonder as it sinks into the earth with mossy walls. We suggest you go early, as this is another big attraction for those visiting the city, and officials try to keep people moving as they arrive, mainly as it’s one-way traffic on the steps themselves. Once on the grounds, you can explore many grottos by following their main paths. The castle itself isn’t as opulent as Pena Palace, but it’s still a lovely location to visit. Sintra is perfect for any vacation, and though these are the main draws for the city, by no means are they the only ones. We encourage you to check out this city and see if it fits your travel plans.
PENA PALACE AND GARDENS The National Pena Palace and
Gardens are absolutely stunning. The palace is adorned in primary colors, with intricately carved yellow, red, and blue buildings. It’ll cost you 10 euros to
explore the grounds and a couple of extra euros to go inside, but it’s worth it! The carvings include many styles, including Neo-Islamic and Neo-Renaissance. Everything is opulent, and you’ll have a great time as you take in the extravagance.
Flipping the Script
RISING LABOR COSTS HURT FAST FOOD OPERATORS
Retaining workers has long been one of the biggest challenges for fast- food franchisees. Now, the landscape for fast-food wages is changing in a way that will pose new challenges for restaurant operators. Labor costs are continuing to rise. A minimum-wage increase set to take effect April 1 for fast-food workers in California is no April Fools’ joke. Employees’ wages will rise by 25% to $20 an hour, based on an agreement reached by fast-food franchisors, the Service Employees International Union, and Gov. Gavin Newsom. The California agreement covers quick-service restaurants with more than 60 locations nationwide, including McDonald’s, Chipotle Mexican Grill, Starbucks, Yum Brands’ Taco Bell, In-N-Out Burger, and other franchisors. These companies are expected to raise menu prices by about 5% or more as a result. Restaurant operators will be watching to see whether labor organizers’ campaigns to increase fast-food wages spread to other states. Also, restaurant operators’ post-pandemic increases in menu prices are taking a toll. At first, customers ignored the increases, but a recent survey of 1,000 restaurant customers found nearly 60% thought prices had risen too much, according to the Restaurant Finance Monitor, an industry publication. As a result, most fast-food restaurants have been
posting declines in year-over-year same-store traffic each month since early 2023. Low-income customers in particular are relying more on convenience stores and discounters such as the dollar stores for snacks. Among the hardest hit are the quick-service and pizza chains that compete for low-income customers. Successful operators will focus this year on getting back to the basics of building customer counts. These include compelling marketing, appealing promotions, clean restaurants with open dining rooms, and well-trained, friendly employees. If fast-food operators succeed in these efforts, they should be able to attain about the same customer traffic levels as last year, according to the Restaurant Finance Monitor. Restaurant operators also will have to find creative ways to broaden their demographic appeal, according to the National Restaurant Association. Co-branding, or adding a second restaurant brand to a single facility, is one way to offer diners a wider range of choices. Examples include two restaurants sharing a physical location, as Dunkin’ Donuts and Baskin Robbins do. Other companies will appeal to younger consumers by sponsoring a youth sports team or treating participants to an occasional free meal. These and other strategies can help keep a restaurant brand fresh in consumers’ minds and get them excited again about eating out!
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Boost Your Sales Strategies for Teaching Fast- Food Staff the Art of Upselling
them to purchase the entire menu item. Another benefit is that handing out small samples is low in cost. Allow your employees to sample the menu items too, so they can recommend them with confidence. The 25% Rule. Avoid pitching menu items that are more than 25% more expensive than the one the customer initially ordered. If a customer is considering a chicken sandwich for $8, for example, don’t suggest a $15 basket of ribs. Instead, try recommending a side dish or additional topping for a few dollars more. Also, suggesting that customers add a packaged take-out item to their order, such as cookies or a dessert, can be an effective upselling technique. Build Trust. Above all, show your staff how to use these techniques in a polite and helpful way, with the goal of increasing the customer’s engagement and trust in your brand. Employees must listen well, heed diners’ verbal and nonverbal cues, and learn to de-escalate upselling efforts if the diner shows no interest. Upselling should feel more like great service than a hard sell. Also, retrain your employees frequently to ensure top performance. Including the art of upselling in an ongoing employee training program can make the difference between meeting or missing your key performance indicators. And you may be surprised by the positive impact of a skillful upselling program on customer engagement!
Encouraging fast-food customers to incorporate pricier or additional items into their orders can significantly impact restaurant operators’ profits. Coaching employees to achieve these upselling goals in a way that enhances customer engagement without causing offense demands a certain level of finesse.
Implementing upselling is critical in today’s hyper-competitive fast-food market. Here are some techniques to prepare your employees to upsell with skill.
System Prompts. Build upselling prompts into your point-of-sale system and teach employees to heed them as they take orders. These systems can tap data collected from past customers’ decisions to increase the likelihood of upselling success. Consider running a competition or posting a leaderboard to identify employees who are the most successful upsellers. Offer a meaningful reward, such as a cash bonus for the winner. And don’t forget to say thank you to top performers.
Free Samples. Providing customers with a taste of a dish or special topping can be enough to close the deal. Whetting a customer’s appetite can entice
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My preference was always that the rubrics be dropped. I represent franchisees, and I support their efforts to exercise discretion over their operations. I don’t believe my clients need to be told how to staff their restaurants. Since then, the NLRB has flip-flopped on this issue two more times. After changing the standard in 2015 to broaden parent company liability, the agency reversed itself in 2020 under former President Trump, and reversed itself again this year. Each time Washington changes the rules, the industry spends a lot of time and money to provide comments or file lawsuits. The resulting lack of predictability is a hindrance to business. As some anonymous writer once said, small business isn’t for the faint of heart. It’s for the brave, the patient, and the persistent. It’s for the overcomer. As the quote suggests, franchising is here to stay. The franchising model is often at the forefront of financial and organizational innovation in this country. Even if this rule eventually does take effect, franchisors and franchisees will find a way to deal with it.
Classic Cheesecake
Ingredients •
24 graham crackers, crushed
• • • • •
1 cup granulated sugar
• •
1/4 cup butter, melted
3 large eggs
3 8-ounce packages of cream cheese, softened
1 tsp vanilla extract
2 tbsp all-purpose flour
1 cup sour cream
Directions 1.
Preheat oven to 350 F. 2. Combine graham cracker crumbs and butter; press onto the bottom and up the sides of a 9-inch springform pan. 3. Beat cream cheese and sugar in a large bowl with an electric mixer until smooth. 4. Add eggs, one at a time, beating until blended. 5. Add vanilla extract, flour, and sour cream; mix until blended. 6. Pour into prepared pan. 7. Bake for 45 minutes or until the center is almost set. 8. Cool completely before serving. 3 (206) 724-0846
–Nate Riordan
PRST STD US POSTAGE PAID BOISE, ID PERMIT 411
600 Stewart Street #1300 Seattle, WA 98101
westcoastfranchiselaw.com | (206) 724-0846
IN THIS ISSUE
1
A New Move to Impose Joint Employer Liability
2
Exploring Sintra, Portugal
Back to Basics: Rebuilding Customer Counts
3
Expand Fast-Food Revenue Through Upselling
Classic Cheesecake
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Reshaping Sales Conversations
Master the Art of Conversation and Sales
Have you ever encountered a salesperson who launched right into their spiel without talking to you beforehand? If so, you know firsthand the importance of listening first. Not only do salespeople like this make you feel like a commodity, but it often leads to misaligned sales attempts. The secret lies in asking the right questions. Start by asking about their business. “Why” questions are particularly powerful. For instance, why are they launching a new product, or what prompted them to add staff? These questions show your interest in their business and give insight into their motivations and challenges.
Being a good conversationalist, no matter who you are, leaves a positive impression and makes you memorable. Through these interactions, you lay the foundation for relationships, — and as we know, people do business with those they know and trust. How can your
prospects know and trust you if you don’t take the time to know and trust them?
The art of conversation in sales and life is about finding a balance between being informative and attentive. It’s about listening and understanding the prospect’s unique needs and goals. Embracing this will grow your sales and strengthen your business relationships, turning them into long-term clients. Let’s step out of the traditional sales script and start listening. We can transform our sales tactics one conversation at a time.
To ask meaningful questions, you must come prepared. Visit their website, read their “About”
page, and familiarize yourself with key staff members. This background information equips you to ask relevant questions and demonstrates your genuine interest in their business.
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