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View Diary: Wendy's franchise cutting worker hours to avoid Obamacare, despite backlash to other chains (149 comments)

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  •  They can revoke franchises if a franchisee... (11+ / 0-)

    ...does things which negatively impact the corporation as a whole.  

    If I own a franchise, and I purposefully do something that draws negative attention causes problems for other franchisees across the nation and the corporation, I could have the franchise rights pulled.  Usually though, other corrective measures will be tried before they resort to that.  

    It has happened before.  Usually the way it plays out is that  the franchisor will go to court and file suit and get a temporary injunction against the franchisee ordering them to stop using the franchise name until the matter is settled in court.  They will claim that whatever issue is being argued is causing damage to the corporation's and other franchisee's reputation, and it is an ongoing tort that must be stopped until the issue is resolved.  This usually results in solving the problem altogether, since once the franchisee loses the right to use the franchise name (even temporarily, pending the outcome of litigation), their revenues go out the window (they lose their marketing and supply chain) and can't pay their lawyers.  

    It happened to a franchisee here in my city.  Made the newspaper because of how insidious the violation was.  Of course, plenty of people saw it the other way around and saw the big, bad franchisor and their armies of New York lawyers as picking on a local businessman trying to feed his family, etc...    

    It's extreme, but it can happen.  My guess is that Wendy's Corporate counsel will send an STFU letter and, if the owner has any sense, he'll listen to it cause franchisors legal counsels take brand degradation very, very seriously and will get nasty in a hurry.  It may not fix the problem, but at least the guy won't go around telling the world why he's doing it.      

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