Are Franchises Bad Employers?

Posted: 19 Sep 2007

See all articles by Peter Cappelli

Peter Cappelli

University of Pennsylvania Wharton School - Center for Human Resources; National Bureau of Economic Research (NBER); University of Pennsylvania - Management Department

Monika Hamori

Instituto de Empresa

Multiple version iconThere are 2 versions of this paper

Date Written: March 17, 2006


Franchise jobs are often described as representing the epitome of the "low road" approach to managing employees - high turnover, little training, deskilled jobs, and little employee involvement, practices often seen as unsophisticated. Research on franchise operations suggests, however, that the basic operating principles and practices of franchises tend to be more professional and advanced than those of equivalent independent operators. We might therefore expect their employee management practices to be more advanced as well, challenging the stereotype of franchise jobs. We use data from a national probability sample of establishments to examine the relationship between franchise status and employment practices. While descriptive statistics suggest that franchise operations use low road practices, once industry, size, and other control variables are included in the analysis, franchise operations appear on important dimensions to offer better jobs with more sophisticated systems of employee management than similar non-franchise operations.

Keywords: employment practices, franchise organizations

JEL Classification: L1, L2, Z00

Suggested Citation

Cappelli, Peter and Hamori, Monika, Are Franchises Bad Employers? (March 17, 2006). Instituto de Empresa Business School Working Paper No. WP06-11. Available at SSRN:

Peter Cappelli

University of Pennsylvania Wharton School - Center for Human Resources ( email )

3733 Spruce Street, Vance Hall
Philadelphia, PA 19104-6358
United States


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

Monika Hamori (Contact Author)

Instituto de Empresa ( email )

Mª Molina, 12 - 5º
Madrid, 28006
915689619 (Phone)

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