Disenfranchised: Why Are Americans Still Buying Into the Franchise Dream?

By Timothy Noah • March 04, 2014 • 6:00 AM

Bhupinder “Bob” Baber bought two Quiznos franchises in Long Beach, California, in 1998 and 1999. His investment totaled $500,000, and Baber’s wife, Ratty, quit her job to work at the restaurants for no pay. The Babers did this because, as Bob would later recall, he “trusted in Quiznos.” But, as he soon found out, being a franchisee can be a very swift and painful way to lose a lot of money.

Over the past year, thousands of fast-food workers have staged protests and rallies for a higher hourly wage. As they see it, big corporations like McDonald’s and Domino’s can well afford to pay workers more. But the vast majority of these workers don’t work for these giants. They work for people like Bob Baber. Franchisees don’t enjoy the market powers and economies of scale of their parent companies. Rather, they run small businesses with narrow profit margins, high failure rates, and plenty of anti-corporate grievances of their own. Anyone who wants to help immiserated fast-food workers, in other words, also needs to spare a few thoughts for their immiserated bosses. That means reforming the deeply troublesome franchise system.