Franchise Legal

Women in Franchising: Employment and Labour Law Concerns Arising in the Franchise World Due to Non-Standard Employment BY PETER SNELL

This article looks at the employment and labour law concerns that arise due to non-standard employment (“NSE”) in the franchise world. In particular, this article looks at the concerns that arise for the new female franchisee as she starts up her franchised business.

In today’s economy, many people are engaged in NSE. Different phrases describe the changing economy, for example “Alternative Work Platform” or “Gig-Economy”. Franchising’s flexible model can also fit under the umbrella of NSE arrangements, new concerns are raised concerning labour standards that have been designed to apply to workers in traditional employment relationships.

These concerns are especially pertinent to the increasing number of women who are entering the world of franchising. Many women are attracted to franchising due to its potentially flexible model, because some franchises allows women to have careers outside of the traditional nine-to-five role. As such, the flexible model allows women to build a career around their other commitments, and to have the support of the franchisor.

While the flexibility of NSE in the franchise world can be a huge draw for potential female franchisees, both franchisors and potential franchisees must first understand how NSE arrangements can work for and against them. These arrangements are not always successful, and the concept that the franchisor and franchisee chooses must make sense in their circumstances.

General Pros and Cons: On the one hand, NSE can offer flexibility, enabling women who become franchisees to meet personal and family obligations and contribute to an improved work-life balance. It can also help franchisors remain competitive and increase profits by allowing them to build a flexible and agile business model, which in turn incentivizes women to become franchisees. On the other hand, NSE can create legal, financial, scheduling, overtime pay, efficiency, work environment, and other types of challenges for workers. For example, the British Columbia Employment Standards Act (“ESA”) was designed to protect the average British Columbian in a standard work arrangement, but that, as fewer workers are engaged in this type of work arrangement, a growing number of people may not be entitled to legislative protections. This means that there are a rising number of workers not protected by the ESA or other federal programs like the Canada Pension Plan (“CPP”) and Employment Insurance (“EI”). Those not covered could include the new franchisee starting up her franchised business, and the workers that she may hire.

Luckily, the franchise model allows potential franchisees to shop around and see which NSE works for them. Some franchise systems allow the franchisee to operate from a home office, and do not require spending long hours at a specific location. Each franchisor places their own restrictions, which could be anything from hours of operation, to products and services, to location. By looking indepth at what the franchisor is offering, the potential franchisee is able to make informed decisions on employment and labour protection, as well as what kind of workers she may need to hire.

Common Employment and Labour Legal Issues that Arise Due to NSE: Franchisees are usually the sole employer of those working for the franchised business, which includes the franchisee herself. 1 As legislation has had a hard time keeping up with the increasing prevalence of NSE, many workers are calling for more minimum statutory standards for their protection, because they cannot look to a trade union or legislation to protect their interests. This means that franchisees must be aware of the employment and labour legal issues surrounding their own circumstances, as well as her employee’s circumstances.

Problem 1: The scope of an “employee” is hard to define. One common problem with NSE is that it is hard to identify the scope of an “employee” as defined by the ESA. Some NSE arrangements involve varying degrees of worker autonomy, some of which are within the scope of the ESA, and others that may be outside of it.

As franchisees are generally the employer, they do not have to be concerned if their scope of work falls within the definition of “employee”.

However, if the franchisee hires workers, she must be aware if the worker’s NSE arrangement falls outside of the scope of the ESA. For example, if the arrangement is for task-based work, or part-time work on an as-need basis, then the worker may not be an “employee” under the ESA and is not entitled to employment and labour protections.

Accordingly, franchisees must be aware of the employment and labour protections they are offering under the chosen NSE arrangement, if any.

Problem 2: Flexibility often goes hand-in-hand with accessibility, leading to difficulties in tracking hours worked. While the flexible hours in the franchising world are appealing, the other side is that flexibility often goes hand-in-hand with accessibility, which means that the franchisee and her workers may feel like they are always on-call.

For both the franchisee and her workers, accessibility could mean working more than 8 hours a day; and those “on-call” hours may not be paid or accounted for. For the franchisee’s own hours, this is less of an issue because she is the employer and starting up and running a business commonly requires long hours. However, it is a concern for her workers’ hours because they may feel entitled to overtime pay due to the “on-call” hours, or for hours worked over statutory holidays.

Additionally, keeping track of hours worked outside of the standard 9-5 office setting can be difficult. On the one hand, a common concern for franchisees with allowing her workers to work at home is that it is hard to police if the worker is actually working. On the other hand, a common concern for workers is that they are always accessible to their employers, and therefore feel as though they are always working. Taken together, the total hours worked can look very different depending on which lens you are looking through.

Problem 3: A home office can lead to occupational health and safety concerns. Working from home can trigger occupational health and safety concerns that WorkSafeBC governs. Every employer has a general duty to ensure that the workplace is safe. Therefore, if WorkSafeBC determines that the franchisee is operating an office out of her home, then her home office must comply with WorkSafe BC standards. Additionally, franchisors sometimes delineate in the franchise agreements that the franchisor is not responsible for the home office creation or maintenance. Therefore, for franchisees who operate out of their home, it is good practice to comply with WorkSafeBC standards.

If the franchisee hires workers and they fall under the ESA definition of “employee”, then the franchisee must ensure that the workers have a workplace that complies with WorkSafeBC standards. However, if the worker does not fall under the definition of “employee”, then the franchisee may not have a duty to ensure a safe workplace for the worker. For workers, this is a definite concern.

How to Make NSE More Attractive For Franchises: Both franchisors and franchisees have the ability to choose which concept of NSE works for them. Franchisors are able to place restrictions on how the franchise operates. This means that franchisors can structure their agreements to suit the needs of women who are increasingly entering the franchise world. Potential female franchisees are then able to shop around and see which concept best suits their needs.

Franchisors can make their franchise business more attractive for potential female franchisees by advertising the unique way their franchise is flexible, as well as how their concept will still provide her with the support she needs.

Potential female franchisees are often looking for a way to start a business while receiving support along the way. Therefore, franchisors can also make their franchise business attractive by creating a reputation for providing support. This includes support in areas such as hiring, scheduling, training, marketing, brand awareness, and being available for consulting.

Finally, potential female franchisees are also looking for networking opportunities as another avenue of support when starting their franchise business. As such, franchisors should provide her with networking and peer-to-peer mentorship opportunities. For example, informing her of the Women’s Franchise Network (WFN); the Canadian Women’s Business Network (“CWBN”); the Canadian Association of Women Executives and Entrepreneurs (CAWEE); and financial initiatives, such as Bank of Montreal’s commitment to advancing $3 billion in capital to women-owned businesses across Canada over the next 3 years.

Concluding Thoughts: Women who are looking to enter the franchise world have many reasons to do so, with the flexibility of NSE being just one of many. However, with this flexibility comes a few concerns regarding employment and labour compliance in today’s NSE economy

This article is just the tip of the iceberg of informing women of the employment and labour considerations they should make before they choose the franchise business that best suits their goals and needs.

ABOUT THE AUTHOR Peter V. Snell is a partner at Gowling WLG. He is based in Gowling WLG’s Vancouver office and is called to the bar in British Columbia and Ontario. Peter is the National Co-Chair of Gowling WLG’s franchise practice. Peter acted as General Counsel to the Canadian Franchise Association (CFA) from 2015 to 2019. Peter also served as the Chair of the CFA’s Legal and Legislative Affairs Committee from 2011 to 2015 and was on the Board of Directors of the CFA from 2011 to 2019.