Thump, thump, thump. That’s the sound of yet another nail being driven into the coffin of economic liberty in America. It joins countless others, further entombing a liberty that, once gone entirely, will turn our other rights into relics.
This particular nail is aimed at the franchise business model by Big Labor and Big Law, and it’s being facilitated by a government increasingly pursuing an agenda of economic fascism.
America has been built and buoyed by entrepreneurial spirit. People willing to risk working for themselves have, millions of times in the nation’s history, built successful businesses and ventures. They provide for themselves and their families, they provide “better mousetraps” to their fellows, they provide jobs and careers to others, and they add to the overall wealth of the nation. Risk is a critical concept in understanding economic activities, and in particular to understanding the idea of a franchise.
Lets say you have an entrepreneurial spirit. You want to work for yourself, you want to devote your time and energy to a venture that, you hope, will bring you success (monetary, personal satisfaction, etc). Perhaps you have a great idea but no practical experience in actualizing it. Or, perhaps you don’t have an idea, but want to go down the entrepreneurial path anyway. Or, perhaps you don’t have the room in your life to take a full-up start-from-zero risk. The franchise model may be just the ticket for you. In exchange for foregoing some up-side potential (money, autonomy, flexibility), you can “buy” a proven model and work it yourself with the backing of a major company.
McDonalds is just one of many companies that works the franchise model. While it does have some “corporate” stores (i.e. those owned and operated directly by the company), more than 4 in 5 McDonalds locations are franchises. There are countless other companies, restaurant and non-restaurant, that employ the franchise model. It’s a mutually beneficial arrangement. The franchisee gets to be an entrepreneur with less risk and a greater chance of success. The parent company gets locations operated by people with “skin” in the game (i.e. they profit directly by running a better shop), it distributes out risk, and it draws external capital investments. Win-win, as is the norm in free markets.
But, there are people not content with the results that free markets produce, and they look to the government to force outcomes that benefit them at the expense of others. Such is the case with the mountains of regulations that government imposes on businesses large and small, such is the case with minimum wage laws, overtime laws, and other laws that interfere with the freedom that employers and employees should have to contract with each other. The particular nail thumping on the coffin today is an effort by the parasite classes to hold franchisors liable for franchisees’ actions. It, in effect, attaches franchise employees to the parent company.
There is a provision in the Affordable Care Act that exempts smaller employers from having to provide mandated health care coverage (or pay a fine in lieu). However, there is an exemption to that provision for franchises. If an employer owns several franchises, no matter that each is an independent operation, the employee totals are aggregated for the purposes of Obamacare. This new press to “aggregate” employees of franchises upward to the parent company is of the same vein.
Both fit in with the preferred form of economic management of our current government. Heavy government control of privately-owned business is a hallmark of fascism, and economic fascism is the most apt description of how things work in America today. “Fascism” is a word with very ugly connotations, and it’s not experiencing (nor likely to experience) the re-branding being attempted with socialism. It is, however, an apt description.
One element of economic fascism, or perhaps an outcome, is that the number of privately owned businesses is small. The system either presses for or naturally produces a relatively few but very large companies. They’re easier to control, for one thing, and they’re easier to “work with,” for another. Obamacare has created an environment that’s leading to individual practitioners are being gobbled up by big hospital networks, and the government’s actions regarding franchises seems to be pushing matters away from franchisee independence and more pass-through control from on high. By linking parent companies more tightly (in the eyes of the law and the government) to franchisees, the government is imposing a more fascistic model on yet another segment of the nation’s economy. It’s not going to help franchisees, and it’s not going to foster the entrepreneurial spirit that brings people to franchises.
Small government advocates of libertarian, conservative and other flavors lament the steady erosion of our rights. They often focus on speech, religion, arms, privacy and due process, but tend to overlook the liberty that’s most eroded in today’s society: economic liberty. Minimum wage laws, overtime laws, anti-discrimination laws, public accommodation theory, restrictions on what you can buy or sell, restrictions on what you can do with that which you own, occupational licensing, price controls, production controls, contractual interferences, and dozens upon dozens of government agencies that supervise and control every imaginable economic transaction speak to the near-total destruction of economic liberty in America. Once it’s completely gone, the rest of your rights become pale shadows of themselves.
Next time you see the government interfering in a business relationship, object. No matter which side you choose to take in your opinion of that relationship, you should first choose freedom from government interference.
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