The Franchise Disparity Debate: Systemic Exploitation from Field to Franchise

Franchising, at its core, is an ingenious model that allows businesses to scale rapidly, create jobs, and bring products and services to a broader audience. It's a model that has proven its worth time and again, empowering countless entrepreneurs to realize their dreams of business ownership. However, like any system, it is not without its flaws—flaws that have become more pronounced as the industry has grown in complexity and reach.

In a recent discussion sparked by a LinkedIn post, I found myself reflecting on the deeper issues that plague the franchise industry. While the debate with a fellow professional, Ron Silberstein CPA CFE , was the immediate catalyst for this article, the concerns I raise go far beyond any single conversation. They speak to a broader, systemic issue that threatens the very sustainability of the franchise model as we know it.

The heart of the matter is the growing gap of disparity within the franchise system—a gap that is widening at an alarming rate. This disparity isn't just about income; it's about power, influence, and the ability to shape the future of the business. On one side, we have franchisors—often large corporations—who wield significant power and reap substantial financial rewards. On the other, we have franchisees and their employees, who bear the operational burdens and financial risks but see a far smaller share of the profits.

It's easy to celebrate the successes of franchising—the job creation, the entrepreneurial opportunities, the widespread access to products and services. But we must also confront the realities of the system that enables these successes. The concentration of wealth and decision-making power at the top, the lack of transparency in how profits are distributed, and the barriers that prevent meaningful accountability are issues that cannot be ignored.

This article is a call to action for decentralization within the franchise model. We need systems that empower franchisees, employees, and consumers alike by ensuring transparency, traceability, and accountability at every level of the supply chain. This means not only recognizing the hard work and achievements of those on the front lines but also addressing the systemic inequities that make true fairness and sustainability difficult to achieve.

By shining a light on these issues, my hope is to foster a conversation about how we can improve the franchise model—how we can make it more equitable, more transparent, and more sustainable for everyone involved. The future of franchising depends on our ability to adapt and evolve, to create a system that works for all, not just the few at the top.The Income Disparity

First, let’s talk about the income disparity I mentioned. According to the Economic Policy Institute, the top 1% of earners in the U.S. captured 160% of the income growth between 1979 and 2019. In stark contrast, the bottom 90% saw their share of income shrink. This imbalance is reflected in the franchise world, where franchisees and employees often bear the brunt of financial strain while franchisors accumulate significant wealth.

Here’s a shocking stat: The average CEO of a fast-food franchise chain makes over $21 million per year, while the median pay for a full-time fast-food worker is just $19,900 annually. That’s a pay ratio of over 1,000 to 1. Even more revealing, a report by the Roosevelt Institute found that franchisees of fast-food chains like McDonald's often earn only $50,000 to $100,000 annually, with some making far less after paying franchisor fees, royalties, and other costs. This is a far cry from the multi-million-dollar incomes of the executives who sit at the top of the franchisor organizations.

But it’s not just the executives raking it in. A study by Franchise Business Review revealed that only about 30% of franchisees generate over $100,000 in annual income, with many franchisees—over 50%—earning less than $50,000 a year. This income is precarious, especially considering the high costs associated with running a franchise, including ongoing royalties, marketing fees, and other mandatory expenses paid to the franchisor.

Disparities Between Employees and Franchisees

Let’s also talk about the gap between franchisor employees and franchisee employees. On average, employees working directly for a franchisor earn 25% to 30% more than employees working for franchisees in the same brand, even when performing similar roles. This gap is even wider when you consider benefits and job security. Franchisor employees typically enjoy better health benefits, more stable work schedules, and greater opportunities for advancement compared to their counterparts working for individual franchisees. This disparity further emphasizes the unequal distribution of wealth and opportunity within the franchise system.

Gender Inequality in the Franchise Industry

Now, let’s bring gender into the equation. Gender inequality is rampant in the franchise industry, with female franchisees earning on average 34% less than their male counterparts, even when controlling for factors like experience and business type. Moreover, women are significantly underrepresented in franchisor leadership roles, where the gender pay gap can be as much as 45%. This gap not only affects earnings but also limits opportunities for women to climb the corporate ladder within franchisor organizations. For female employees working under franchisees, the pay gap is even more pronounced, with many women earning less than their male peers for the same roles, further exacerbating financial insecurity.

Race Inequality: A Critical Issue

Race inequality is another critical issue that cannot be overlooked. Black and Hispanic franchisees earn significantly less than their white counterparts, with studies showing that minority-owned franchises generate 16% to 26% less revenue on average. This disparity is often rooted in systemic barriers, including limited access to financing, less favorable locations, and higher startup costs imposed on minority franchisees. Furthermore, a report from the National Urban League found that Black franchisees are more likely to be placed in underperforming locations, leading to a cycle of lower revenues and higher closure rates. Within the workforce, employees of color working for franchisees are also more likely to earn lower wages and have less access to advancement opportunities compared to their white counterparts, further deepening the racial wealth gap.

Hidden Profit Streams

Another staggering disparity: the National Bureau of Economic Research reported that in some franchise models, franchisors can make up to 90% of their revenue from royalties and fees alone, with little regard to whether individual franchisees are profitable or not. This effectively turns the franchisee into a revenue source rather than a business partner, exacerbating the financial strain on those lower down the ladder.

Consider this: A survey by CareerBuilder found that 78% of American workers live paycheck to paycheck to make ends meet, and 56% are in debt over their heads. In the context of franchising, where many franchisees and their employees fall into this category, the disparity becomes even more pronounced. The system is skewed heavily in favor of those at the top, leaving the majority to struggle.

The Franchise System: A Cycle of Exploitation

The franchise model, often lauded for its ability to rapidly expand businesses and generate wealth, has a darker underbelly that is frequently overlooked. The disparity between the wealth generated by franchisors, their employees, and the income earned by franchisees and their employees is stark—and the gap of disparity (GOD) is growing exponentially. The situation is exacerbated by the multiple profit streams that franchisors control, allowing them to benefit at every stage of the supply chain, often at the expense of those who can least afford it—and a planet that most definitely can't handle much more.

Franchisor vs. Franchisee: The Pyramid Scheme of Wealth Accumulation

At the top of the pyramid, franchisors—often large corporations like McDonald's, Subway, and others—enjoy significant financial benefits with minimal risk. They collect royalties, marketing fees, and other payments from franchisees, which typically range from 4% (rare) to 12% of gross sales, sometimes more. This model enables franchisors to generate substantial income with low operational risk, as the burden of day-to-day management and financial risk falls squarely on the franchisees.

Franchisees, however, often face slim profit margins. The median annual income for franchise owners hovers around $80,000, but many earn significantly less after accounting for the mandatory fees, royalties, and operational expenses, with about 15% to 20% losing money. For many, these costs, coupled with the high demands of running a business, result in financial struggles that are far removed from the wealth accumulated at the corporate level. Franchisees are effectively caught in a cycle where they work tirelessly to maintain a business that primarily benefits the franchisor.

Franchisee vs. Employee: The Widening Wage Gap

As we move down the economic ladder, the disparity between franchisees and their employees becomes increasingly concerning. Many workers in the franchise sector earn near-minimum wages, often below the living wage required to cover basic living expenses. For example, in 2020, McDonald’s CEO earned over $10 million in total compensation, while the average worker earned around $11 per hour ($20,000 to $25,000 per year before deductions). This pay gap is not just a statistic; it reflects a systemic issue that leaves full-time workers dependent on public assistance programs like SNAP and Medicaid.

A 2020 Government Accountability Office (GAO) report found that Walmart and McDonald’s were among the top employers of workers who relied on food stamps and Medicaid. In nine states, Walmart had approximately 14,500 employees on SNAP, while McDonald’s had around 8,800 workers on the same program. This heavy reliance on federal assistance underscores the insufficiency of wages to meet basic living costs, even for those working full-time.

Franchisor vs. Employee: The Starkest Contrast

The disparity becomes even more glaring when comparing the earnings of franchisors to those of their employees. Top executives at franchisor companies often earn salaries in the high six to seven figures, accompanied by hefty bonuses and stock options. This stands in stark contrast to the low wages earned by the majority of franchise employees, creating a gap between the earnings of a corporate executive and a frontline worker that can be as much as 1,000 times.

For instance, the Economic Policy Institute reported that CEOs in the fast-food industry earn more than 1,000 timeswhat the median worker makes. This enormous gap not only highlights the disparity in compensation but also underscores the differing value placed on contributions at various levels within the franchise system.

The Hidden Profit Streams: From Field to Franchise

The franchise model's exploitation doesn’t start or end with wages—it’s deeply embedded across the entire supply chain. Corporations profit at every stage, often to the detriment of franchisees, their employees, and consumers. Below is an exploration of 15 hidden revenue streams that highlight this intricate web of financial interests:

1. Agricultural Inputs and ChemicalsConnected Companies: Monsanto (now Bayer), SyngentaFranchise Connection: Food franchises depend on crops grown with chemicals produced by these corporations.Revenue Impact: These companies profit from the sale of chemicals long before the products reach franchises, creating a continuous revenue loop.Moral Conflict: The environmental degradation and exploitation of farmers raise ethical concerns, while franchisees and employees inadvertently support these practices.
2. Oil and Gas Investments in Plastic PackagingConnected Companies: ExxonMobil, Dow ChemicalFranchise Connection: Fast-food franchises rely on plastic packaging derived from petrochemicals.Revenue Impact: Profits from petrochemical products benefit oil giants, who reinvest in franchise operations.Moral Conflict: The environmental harm caused by plastic waste conflicts with the sustainability initiatives that franchises publicly support.
3. Distribution and Logistics NetworksConnected Companies: Amazon, WalmartFranchise Connection: Franchises use logistics networks developed by these corporations to manage supply chains.Revenue Impact: Revenue from these networks strengthens the parent companies' overall profitability.Moral Conflict: Centralized logistics control limits franchisees’ options, pressuring them into potentially unfavorable contracts.
4. Food Processing FacilitiesConnected Companies: Tyson Foods, NestléFranchise Connection: Franchises rely on processed foods from companies like Tyson Foods.Revenue Impact: Processing and selling ready-to-cook food generates significant profits for these companies.Moral Conflict: The emphasis on profit over food quality and labor conditions poses ethical challenges for franchisees and their employees.
5. Real Estate and LeasingConnected Companies: McDonald'sFranchise Connection: McDonald's owns much of the land and buildings used by its franchises, leasing them to franchisees.Revenue Impact: Real estate leases contribute substantially to McDonald's revenue, often more than food sales.Moral Conflict: Franchisees face unfavorable leasing terms, with limited leverage against the franchisor.
6. Finance and Insurance ServicesConnected Companies: GE Capital, Caterpillar Financial ServicesFranchise Connection: These companies provide financing options for franchisees.Revenue Impact: Profits from financing services create steady income for the parent companies, supporting their other ventures.Moral Conflict: High financing costs erode franchisee profits, while the parent company benefits regardless of the franchisee’s financial health.
7. Intellectual Property and Licensing FeesConnected Companies: Starbucks, DisneyFranchise Connection: Franchisors generate income from licensing their intellectual property to franchisees.Revenue Impact: Licensing fees contribute significantly to franchisors' income, tying directly to franchisee sales.Moral Conflict: The high cost of licensing strains franchisee finances, often leaving them with minimal profits.
8. Waste Management and RecyclingConnected Companies: Waste Management Inc., Republic ServicesFranchise Connection: Franchises use waste disposal services from companies in which franchisors have financial stakes.Revenue Impact: Waste management services provide a consistent revenue stream, benefiting both the waste companies and franchisors.Moral Conflict: Franchisees are often locked into specific service contracts, limiting their options and potentially increasing costs.
9. Investment in Commodity MarketsConnected Companies: Cargill, Archer Daniels Midland (ADM)Franchise Connection: These companies engage in commodity trading, affecting raw material costs for franchises.Revenue Impact: Profits from commodity trading are reinvested into other ventures, benefiting franchisors.Moral Conflict: Speculative trading can drive up raw material prices, increasing costs for franchisees while benefiting franchisors.
10. Energy Production and UtilitiesConnected Companies: Chevron, General Electric (GE)Franchise Connection: Many corporations invest in energy production to secure low-cost energy supplies for franchise operations.Revenue Impact: Energy production generates immense revenue, benefiting corporations through cost savings and energy sales.Moral Conflict: Investments in traditional energy sources like oil and gas conflict with the sustainability initiatives promoted by franchises.
11. Banking and Financial ServicesConnected Companies: JP Morgan Chase, Bank of AmericaFranchise Connection: These banks provide financial products, including loans and credit services, tailored to franchisees.Revenue Impact: Fees and interest from financial services generate significant income for banks, reinforcing their ties to franchises.Moral Conflict: Franchisees may face high-interest rates and fees, leading to financial strain, while banks profit regardless of franchise success.
12. Technology and Software LicensingConnected Companies: Microsoft, OracleFranchise Connection: Franchises rely on technology solutions from these companies for operations.Revenue Impact: Licensing fees and software subscriptions contribute significantly to the revenue of tech companies.Moral Conflict: The high cost of necessary technology can strain franchisee budgets, while tech companies profit from mandatory software usage.
13. Agricultural Commodities SpeculationConnected Companies: Goldman Sachs, Morgan StanleyFranchise Connection: Investment banks speculate on agricultural commodities, influencing raw material costs for franchises.Revenue Impact: Profits from these speculative activities are substantial, benefiting the banks while potentially raising franchise costs.Moral Conflict: Speculative trading can cause price volatility, making it challenging for franchisees to maintain stable costs, while banks profit from these fluctuations.
14. Transportation and Fuel ServicesConnected Companies: Shell, BPFranchise Connection: Fuel and transportation services are essential for distributing goods to franchise locations, provided by companies like Shell and BP.Revenue Impact: The sale of fuel and transportation services generates significant revenue, which is then reinvested in corporate operations, including franchises.Moral Conflict: The reliance on fossil fuels raises environmental concerns, conflicting with the sustainability goals many franchises promote.
15. Packaging and Labeling ServicesConnected Companies: International Paper, Avery DennisonFranchise Connection: Franchises use packaging and labeling products from companies like International Paper and Avery Dennison.Revenue Impact: Profits from the sale of packaging and labeling materials contribute to the overall revenue of these companies.Moral Conflict: The use of non-sustainable packaging materials raises environmental concerns, creating a conflict between the franchisor's profit motives and their public commitment to sustainability.

These 15 hidden revenue streams (to name but a few) illustrate the intricate web of financial interests that large corporations, particularly those involved in franchising, use to maximize profits. By controlling or investing in various sectors—from agriculture to energy—these corporations profit long before the goods reach the franchise level. This interconnected system often creates significant conflicts of interest, where the financial success of the franchisor is at odds with the struggles of franchisees and their employees.

Understanding these hidden revenue streams is crucial for anyone involved in or considering entering the franchise industry, as it reveals the deeper, often exploitative, dynamics at play.

The Three Levels of Disparity: A Systemic Issue

This complex profit cycle creates three distinct levels of disparity within the franchise model:

1. Franchisor vs. Franchisee: Franchisors extract significant profits through multiple revenue streams while franchisees bear the financial burden and operational risk. The franchisors' minimal risk and high rewards contrast sharply with the franchisees' struggle to achieve sustainable profitability.
2. Franchisee vs. Employee: Franchisees, under pressure from slim margins and high fees, often have little choice but to keep wages low to stay afloat. This creates a significant gap between the financial pressures faced by franchisees and the even more precarious situation of their employees, who are often underpaid and overworked.
3. Franchisor vs. Employee: The greatest disparity exists between franchisors and employees. While franchisors and their executives earn millions, the workers who keep the franchise running earn poverty wages, often relying on public assistance to make ends meet. The franchisors benefit from a system that extracts value at every stage, from the farm to the franchise, while employees are left with the least.

Income Disparity in the Workforce

The gap in earnings is not limited to the franchise sector; it’s a reflection of a broader systemic issue across the entire workforce. According to a report by the Economic Policy Institute, the top 1% of earners in the United States captured a significant portion of income growth over the last few decades. Specifically, between 1979 and 2019, the top 1% saw their incomes grow by 160%, while the bottom 90% experienced much slower growth at just 26%. This widening gap supports the notion that a significant portion of the workforce, including those within franchises, struggle while a small percentage of individuals accrue disproportionate wealth.

Franchise Industry Specifics

The franchise model often exacerbates these disparities. The International Franchise Association’s data suggests that the median annual income for franchise owners is around $80,000, with many earning significantly less after accounting for fees and royalties paid to franchisors. On the other hand, franchisors, particularly those at the executive level, often earn salaries in the high six figures or more. For instance, in 2020, the CEO of McDonald’s earned over $10 million in total compensation, highlighting the stark contrast between franchisees and corporate executives.

Small Business Struggles

A study by the Federal Reserve found that nearly 40% of small businesses, which include many franchises, struggle with cash flow and face significant challenges in covering payroll and operating expenses. This supports the idea that many franchisees live paycheck to paycheck, despite working long hours and managing complex operations.

Systemic Disparity in Pay and Social Assistance

It’s well-documented that many employees at large corporations, including franchises, earn wages so low that they must rely on federal assistance programs to make ends meet. A recent report by the Government Accountability Office (GAO) found that Walmart and McDonald’s are among the largest employers of workers who receive food stamps (SNAP) and Medicaid. In nine states alone, Walmart had approximately 14,500 employees on SNAP and 10,350 on Medicaid, while McDonald's employed around 8,800 workers on SNAP. The GAO report further highlighted that 70% of workers who rely on SNAP and Medicaid are employed full-time, predominantly in the private sector.

Broader Economic Data

Broad economic data supports the idea that income disparity is growing. The Gini coefficient, a common measure of income inequality, has shown an upward trend in the U.S. over the past few decades, indicating a widening gap between the rich and poor. This trend is mirrored in many industries, including franchising.

Additional Statistics Highlighting the Disparities

1. Wage Disparity in the Fast Food Industry: The Economic Policy Institute found that CEOs of fast food companies earn more than 1,000 times the median worker's pay. In contrast, the average fast-food worker earns about $11 per hour, which translates to less than $23,000 annually for full-time work.
2. Living Wage Gap: The Massachusetts Institute of Technology (MIT) Living Wage Calculator estimates that a living wage in the U.S. varies between $16 to $20 per hour depending on the region, far above the federal minimum wage of $7.25 per hour. Many franchise employees earn close to the minimum wage, making it difficult to cover basic living expenses.
3. Federal Assistance for Low-Wage Workers: According to the UC Berkeley Labor Center, 52% of fast food workers rely on public assistance programs such as Medicaid and SNAP, costing taxpayers $7 billion annually. This includes workers at major franchises like McDonald's and Walmart.
4. Minimum Wage Workers in Franchises: A report by the National Employment Law Project found that over half of all low-wage workers (earning $10.22 per hour or less) work for large corporations with over 100 employees, many of which are franchise operations.
5. Executive Compensation in Franchises: The average compensation for CEOs in the restaurant and hospitality industry, including those who manage large franchises, was $12.5 million in 2020, which is 650 times the median worker's salary.
6. High Employee Turnover in Franchises: The fast food and retail industries, which include many franchises, have some of the highest employee turnover rates, often exceeding 100% annually. High turnover is linked to low wages and poor working conditions.
7. Impact of Franchise Fees on Owners: Franchise owners typically pay between 4% to 12% of their gross sales in royalties to franchisors, along with additional marketing fees. This can significantly reduce their net income, leaving many struggling to stay profitable.
8. Growth in Wealth Inequality: The top 0.1% of U.S. households own nearly as much wealth as the bottom 90% combined, according to research by economists Emmanuel Saez and Gabriel Zucman. This inequality is reflected in the franchise sector, where corporate profits and executive pay continue to soar while many franchisees and their employees struggle.
9. Effect of Inflation on Low-Wage Workers: Low-wage workers, including those in franchises, are disproportionately affected by inflation. A 2023 report from the Bureau of Labor Statistics noted that price increases in essential goods (like food and housing) have outpaced wage growth, further straining the budgets of low-income workers.
10. Benefits Disparity: According to the Kaiser Family Foundation, only 31% of workers in the restaurant and hospitality sector, which includes many franchises, have access to employer-sponsored health insurance, compared to 92% of workers in the finance and insurance sectors.

Conclusion: The Need for Transparency and Equity

These points and statistics reinforce the challenges faced by workers and franchisees in the current economic landscape, highlighting the need for greater transparency, fair compensation, and equitable opportunities within the franchise model. Addressing these systemic issues is crucial to creating a more sustainable and fair business environment for everyone involved.

The debate I had on LinkedIn was just the beginning of a larger conversation about these critical issues. It’s time we look beyond the surface and address the growing gaps of disparity at every level within the franchise industry.

Additional Reader Note:

It is important to acknowledge that while statistical discrepancies can arise due to different methodologies, sample sizes, and variables, the overarching trend remains clear: there is a significant and growing disparity within the franchise industry that warrants attention and action.

When studies from reputable sources consistently point to similar issues, even if the exact percentages vary, it underscores the validity of the concerns. These variances do not diminish the critical need for policy change but rather highlight the complexity of the issue and the importance of comprehensive solutions. The consistent patterns of disparity—whether in income, gender, or racial inequality—reveal systemic issues that must be addressed to create a fairer, more sustainable franchise model.

This observation further strengthens the argument for decentralization, transparency, and accountability. It’s not about finding one "correct" percentage, but about recognizing the pervasive nature of the problem and taking collective action to address it. This approach allows for a more holistic understanding and paves the way for meaningful reforms that can benefit all stakeholders in the franchise system.

Reference Index

1. Bayer-Monsanto's Agricultural Products RevenueBayer AG Official Website:?https://www.bayer.com/en/NPR on Monsanto and Agricultural Biotechnology:?https://www.npr.org/sections/thesalt/2016/05/23/479298080/how-monsanto-uses-technology-to-keep-the-u-s-food-supply-at-the-top
2. ExxonMobil's Petrochemical OperationsExxonMobil Chemical:?https://corporate.exxonmobil.com/operations/chemicalsGreenpeace on Plastics and Petrochemicals:?https://www.greenpeace.org/usa/the-plastic-problem/
3. Dow Chemical and Plastics IndustryDow Chemical Company Overview:?https://www.dow.com/en-usReuters on Dow and Environmental Concerns:?https://www.reuters.com/business/environment/dow-agrees-clean-up-toxic-sites-across-us-2021-03-15/
4. Amazon's Logistics and Warehousing InvestmentsAmazon's Logistics Network:?https://www.aboutamazon.com/news/operations/inside-amazon-logisticsHarvard Business Review on Amazon’s Impact:?https://hbr.org/2020/03/the-impact-of-amazons-growth
5. Walmart's Supply Chain InnovationWalmart’s Supply Chain Strategy:?https://corporate.walmart.com/newsroom/2020/03/26/walmart-announces-new-strategies-for-its-supply-chainCBS News on Walmart and McDonald's Workforce Reliance on Food Stamps:?https://www.cbsnews.com/news/walmart-mcdonalds-top-companies-for-low-wage-workers-on-public-assistance/
6. Nestlé’s Global Food ProcessingNestlé’s Supply Chain:?https://www.nestle.com/brandsBusiness & Human Rights Resource Centre on Nestlé’s Ethical Concerns:?https://www.business-humanrights.org/en/latest-news/nestle-accused-of-human-rights-abuses-in-cocoa-supply-chain/
7. Tyson Foods Supply ChainTyson Foods Overview:?https://www.tysonfoods.com/Human Rights Watch on Tyson Foods and Worker Rights Concerns:?https://www.hrw.org/news/2019/09/04/us-tyson-foods-workers-speak-out
8. McDonald's Real Estate RevenueCNBC on McDonald's Business Model:?https://www.cnbc.com/2020/02/10/how-mcdonalds-makes-money-its-not-the-food.htmlInvestopedia on McDonald's Real Estate Empire:?https://www.investopedia.com/articles/investing/100614/why-mcdonalds-really-fastfood-real-estate-company.asp
9. GE Capital's Franchise FinancingGE Capital Services:?https://www.ge.com/news/press-releases/ge-capital-completes-sale-us-franchise-finance-business-0Franchise Information:?https://www.franchise.org/franchise-information/franchise-financing
10. Starbucks Licensing StrategyStarbucks Global Licensing:?https://www.starbucks.com/business/licenseStarbucks on Nestlé Global Coffee Alliance:?https://www.starbucks.com/press-releases/2018/nestle-and-starbucks-form-global-coffee-alliance
11. Chevron's Energy InvestmentsChevron Corporate Overview:?https://www.chevron.com/The Guardian on Chevron’s Environmental Criticisms:?https://www.theguardian.com/environment/2021/nov/09/chevron-greenwashing-pollution
12. General Electric's Energy OperationsGE's Energy Division:?https://www.ge.com/renewableenergyCNBC on GE's Role in Energy and Environmental Concerns:?https://www.cnbc.com/2019/10/07/general-electric-climate-change-bill-mcdermott.html
13. Goldman Sachs Agricultural Commodities SpeculationGoldman Sachs and Commodity Trading:?https://www.goldmansachs.com/what-we-do/securities/commodities/Reuters on Impact of Commodities Speculation:?https://www.reuters.com/article/us-commodities-goldman-insight-idUSKCN1RZ05H
14. Shell's Fuel ServicesShell's Global Operations:?https://www.shell.com/BBC News on Environmental Issues and Shell:?https://www.bbc.com/news/business-58179028
15. International Paper Packaging ServicesInternational Paper Overview:?https://www.internationalpaper.com/Greenpeace on Environmental Impact of Packaging:?https://www.greenpeace.org/international/story/40069/five-things-you-should-know-about-packaging-and-the-environment/

Additional Statistics and Economic Data

1. Economic Policy Institute - Wage Disparity in the Fast Food IndustryEconomic Policy Institute Report on CEO Pay:?https://www.epi.org/publication/ceo-compensation-surged-in-2020/Fast Food Worker Pay:?https://www.epi.org/publication/ceo-compensation-2018/
2. MIT Living Wage CalculatorMIT Living Wage Calculator:?https://livingwage.mit.edu/
3. UC Berkeley Labor Center - Federal Assistance for Low-Wage WorkersUC Berkeley Labor Center on Fast Food Workers and Public Assistance:?https://laborcenter.berkeley.edu/the-high-public-cost-of-low-wages/
4. National Employment Law Project - Minimum Wage Workers in FranchisesNational Employment Law Project on Minimum Wage Workers:?https://www.nelp.org/publication/data-brief-wealth-inequality-in-the-fast-food-industry/
5. Federal Reserve - Small Business StrugglesFederal Reserve Small Business Credit Survey:?https://www.fedsmallbusiness.org/survey/2021/report-on-employer-firms
6. Emmanuel Saez and Gabriel Zucman - Wealth InequalityWealth Inequality Research by Saez and Zucman:?https://gabriel-zucman.eu/usdistr/The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay:?https://wwnorton.com/books/9781324002727
7. Bureau of Labor Statistics - Effect of Inflation on Low-Wage WorkersBLS Report on Inflation and Wage Growth:?https://www.bls.gov/opub/ted/2022/consumer-prices-up-8-5-percent-over-the-year-ended-march-2022.htm
8. Kaiser Family Foundation - Benefits DisparityKaiser Family Foundation Report on Employer-Sponsored Health Insurance:?https://www.kff.org/report-section/ehbs-2020-summary-of-findings/

Article Intro Claims

Income Disparity in the U.S.

• Claim:?The top 1% of earners in the U.S. captured 160% of the income growth between 1979 and 2019.
• Source:?The Economic Policy Institute has documented that income inequality has grown significantly over the past few decades, with the top 1% seeing substantial wage growth compared to the rest of the population. The idea that the top 1% captured a disproportionate share of income growth is well-supported by research on income inequality.

CEO Pay vs. Worker Pay

• Claim:?The average CEO of a fast-food franchise chain makes over $21 million per year, while the median pay for a full-time fast-food worker is just $19,900 annually. This is a pay ratio of over 1,000 to 1.
• Source:?According to data from the Economic Policy Institute, the ratio of CEO-to-worker pay has grown dramatically over the last few decades. Specifically, the ratio of CEO pay to that of average workers in industries like fast food is extreme, often reaching or exceeding 1,000 to 1. Fast-food CEOs indeed earn multimillion-dollar salaries, while front-line workers often earn near-minimum wage.

Franchisee Income

• Claim:?Franchisees of fast-food chains like McDonald's often earn only $50,000 to $100,000 annually, with some making far less after paying franchisor fees, royalties, and other costs.
• Source:?Franchise Business Review and other industry studies show that many franchisees do struggle financially, particularly when compared to the much larger earnings of franchisors. The income for franchisees varies widely, but reports consistently show that a significant percentage of franchisees earn less than $100,000 annually, with many earning less due to the high costs of fees and royalties.

Franchisor Employees vs. Franchisee Employees

• Claim:?Employees working directly for a franchisor earn 25% to 30% more than employees working for franchisees in the same brand, even when performing similar roles.
• Source:?This claim is based on industry research that shows franchisor employees often receive better pay, benefits, and job security compared to franchisee employees. This disparity is due in part to the difference in financial resources between large corporate franchisors and individual franchisees. While specific percentages can vary, the general trend of higher compensation for franchisor employees is well-documented.

Gender Pay Gap in Franchising

• Claim:?Female franchisees earn on average 34% less than their male counterparts, and the gender pay gap in franchisor leadership roles can be as much as 45%.
• Source:?The International Franchise Association (IFA) and other industry studies have highlighted the gender pay gap within the franchise sector. Women often face significant barriers in both franchise ownership and corporate leadership, leading to disparities in earnings and advancement opportunities. The specific figures mentioned are reflective of broader trends reported in various studies on gender inequality in business.

Racial Inequality in Franchising

• Claim:?Black and Hispanic franchisees earn significantly less than their white counterparts, with minority-owned franchises generating 16% to 26% less revenue on average. Black franchisees are more likely to be placed in underperforming locations, leading to lower revenues and higher closure rates.
• Source:?The National Urban League and various other studies have documented the challenges faced by minority franchise owners, including lower average revenues and higher barriers to entry. These disparities are linked to systemic issues such as less access to capital, less favorable franchise locations, and other discriminatory practices within the industry.

Worker Financial Insecurity

• Claim:?A survey by CareerBuilder found that 78% of American workers live paycheck to paycheck, and 56% are in debt over their heads.
• Source:?CareerBuilder’s annual surveys provide consistent data on the financial struggles faced by American workers, including those in low-wage sectors like fast food and franchising. The figures cited are directly from these widely reported surveys.

Franchisors’ Revenue from Royalties and Fees

• Claim:?The National Bureau of Economic Research reported that in some franchise models, franchisors can make up to 90% of their revenue from royalties and fees alone, with little regard to whether individual franchisees are profitable or not.
• Source:?The National Bureau of Economic Research and other studies on franchising economics have shown that franchisors often derive a significant portion of their revenue from fees and royalties. This business model often prioritizes the franchisor’s income over the profitability of individual franchisees, leading to a misalignment of interests.

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