While franchises are often promoted as a great way to get into business, there are some in the cleaning industry who argue that both workers and some owner-operators are losing out.
According to a report by Radio New Zealand Insight presenter Teresa Cowie, cleaners say that ‘they are being pushed out of their jobs by the aggressive tactics of commercial cleaning companies and the law that should be protecting them isn’t working’.
Similarly, ‘some smaller owner-operators complain the business model is putting such a squeeze on their earnings they are paying themselves less than the minimum wage’.
“E Tū has been approached by owner-operator franchisees who said they often made less than the equivalent of the minimum wage after costs,” shared E Tū union assistant national secretary John Ryall. “Some parent companies appear to just be collecting their fees and turning a blind eye to what their franchisees have to deal with.”
Miss Cowie revealed that Insight managed to obtain documents that showed the financial distress faced by one franchisee. The franchisee in question believed ‘its parent company was underquoting on jobs so it could win contracts’ and that ‘these quotes were so low that the franchisee couldn’t make a living because it took more time to do the cleaning than was promised’.
A number of the cleaners Miss Cowie interviewed said ‘they believed the franchisees they worked for were struggling’. For example, some cleaners were upset that they were often blamed for not being able to meet hygiene standards due to severe rationing of equipment.
“Not providing proper equipment could be part of a strategy to undermine cleaners’ work, garner complaints and make it easier to get rid of them and put in a franchisee, so that parent companies could then charge licensing fees and avoid the costs of having wage-earning employees,” stated E Tū industry coordinator Jill Ovens.
Lillian Small, chief executive of commercial cleaning company lobby group Building Service Contractors, said “its members had to sign an agreement to meet standards of minimum pay and anyone abusing that would have their membership withdrawn”.
“If a contract has changed hands at a significantly reduced price, it does bring cause for concern on pay rates and conditions,” she stated. “In a nutshell, if the price is too good to be true, then it probably is.”
Business New Zealand chief executive Kirk Hope said “anyone taking on a cleaning franchise should get serious about doing their homework and getting independent advice on whether it was a good business deal”.
“If you’re going to buy a cleaning franchise or any business, you need to be really clear about the value in that business, and how you’re going to meet not just the expectations of your franchisor, but how you are going to make your minimum earnings requirement,” he said.