Let’s Lay All Our Cards On The Table


After the National Coalition’s Board of Directors meeting in San Antonio in October, there were whispers among franchisees and SEI higher-ups not in attendance that NCASEF Vice Chair Jas Dhillon and I had invited a prominent Dallas litigator to the meeting. There was talk that we were planning a lawsuit against our franchisor. Well, allow me to set the record straight: Yes, Jas and I did talk to several lawyers across the country and decided to get some clarity on our independent contractor status from Marc Culp, the lawyer who settled the OFF/Valente lawsuit in the 1990s and helped negotiate the 2004 Agreement. Let me clarify why we sought that advice.

The National Labor Relations Board (NLRB) has brought multiple proceedings against McDonald’s, alleging that the fast feeder is a co-employer of the workers hired by its franchisees. So we suspect and fear that after McDonald’s, SEI may be next on the NLRB’s list—or on the list of the U.S. Department of Labor—and it appears that the sword of an investigation could someday soon be hanging over SEI’s head. In fact, one analyst believes that the NLRB should skip McDonald’s and go after SEI directly because it can prove its case much easier.

In January, a franchising consulting company hired by SEI to conduct a comprehensive study of the entire system interviewed me. They interviewed plenty of folks at SEI and many other franchisees. During my meeting with the consultant, I outlined what is wrong with our system. I told them how SEI has too much control over all aspects of our stores. I told them about our ordering window restrictions, and about an ordering system that costs us too much more in labor. I mentioned franchisees financing the CDC distribution system, which we did not ask for or want. I told them about our contract, which was changed from 15 years to 10 years, and that our franchisor gradually took away a big chunk of our profits, and drastically changed the gradual split and renewal fee. I told them how the gasoline credit card fees have affected franchisees’ bottom lines, the introduction of Mitsui as our broker with vendors even though we are big enough in many instances to deal directly with vendors ourselves, and a maintenance system that has saved SEI millions of dollars by shifting more of its costs to franchisees. The list goes on.

Getting back to the NLRB, we do not want SEI to be investigated or labeled as our co-employer because it would wreak havoc on our system and our livelihoods. Any NLRB or DOL action, if successful, could mark a radical change in franchising in this country and in our system. But with the current contract and SEI’s current direction—with a rigid top-to-bottom system full of management silos that do not communicate with each other—and no commitment to meaningful dialogue concerning the 2019 contract, I see us heading that way.

What we are hoping is that SEI understands the severity of this issue and that it is in their own interest to give franchisees a contract that will eliminate the sword hanging over their head, and give franchisees room to operate our stores at a profit and with more autonomy. SEI has an army of lawyers and consultants. We as franchisees are good at selling Slurpees, not negotiating contracts. Hence, the reason we sought a lawyer to understand the conflict between the assurance that we are independent contractors and the excessive control exercised by SEI. This is our way of being prepared to enter into a meaningful and good faith negotiation over a fair and balanced contract for 2019.

These are my thoughts and opinions. They do not represent the opinion of the National Coalition or any other member of the Board. I welcome your opinion, blessing or criticism!