Closing the Enforcement Gap team members Mark Easton, Andrea M. Noack, and Leah F. Vosko have recently published a new article in the Economic and Labour Relations Review on franchising and employment standards enforcement.
“Are franchisees more prone to employment standards violations than other businesses? Evidence
from Ontario, Canada” uses an administrative dataset from the Ontario Ministry of Labour and investigates three hypotheses about employment standards violations among franchised businesses:
(1) franchisees have a higher probability of violating employment standards than other
businesses, (2) franchisees have a higher probability of monetary/wage-related ES
violations than other businesses, and (3) franchisees have a lower probability of repaying
monetary/wage-related violations than other businesses. The results suggest that overall, franchisees are indeed more likely to violate ES, have a higher probability of monetary/wage-related violations, and are less likely to repay such violations. However, the results vary substantially by industry. While franchisees had only marginally higher probabilities of an ES violation in two of the seven industry groups
examined, five of the seven industries showed substantially higher probabilities of a monetary violation. The results also show that franchisees in three industry groups (retail, accommodation and food services, and education, public administration, healthcare and social services) are particularly prone to monetary violations.