You call it religious freedom; I call it discrimination
Illustration by Jonathan Hankin
Never have so many franchise execs made themselves so scarce as when I called around to get comments about the new North Carolina and Mississippi laws passed in early April. Supporters call them religious freedom laws; protesters call them discriminatory—and a rash of CEOs were suddenly “unavailable” or “out of the country.”
But then Tom Lewison, CEO of Wild Wing Cafe, agreed to an interview, and his thoughtful comments made me think in a more nuanced way about what franchisors should do when such a controversy arises in states where they do business. (And it’s coming—the American Civil Liberties Union says nearly 100 bills have been proposed in legislatures in 2016 invoking religious beliefs as justification for refusing services to gay people, for example.)
My first reaction—why don’t more franchise brands, especially those that talk incessantly about their “inclusive company values,” step up and speak out when the opportunity arises—became more complicated.
“This is quite a subject,” Lewison said, explaining Wild Wing Cafe has six restaurants in North Carolina, three franchised and three corporate, and he owns 16 other restaurants himself as a franchisee of other brands. “First, we ride the fence. We abide by whatever the laws are, local or federal. And when it comes to politics...we try to focus on our business at hand.”
But isn’t that the wimpy way out? After all, prominent corporate CEOs from PayPal to Target to Salesforce.com to the NBA made bold statements blasting the law in North Carolina, which among other things prescribes that people use the bathroom corresponding to their gender at birth, and in Mississippi, which allows private business owners to refuse service to people who are LGBT.
The difference in Lewison’s mind: franchise owners. “To me, we do not discriminate in any way, shape or form,” he says. “We treat people with equity and fairness in our business, and that’s part of the culture of who we are.” But when it comes to franchise owners, as long as it’s legal it’s their right to decide because it’s their pocketbook, he says. “I think that anyone in the service industry risks losing transactions by taking polarizing stances.
“We don’t get involved with politics but our franchisees might,” he said. “We can’t and we won’t tell a franchisee what to believe or how to act. It’s their freedom of speech as well.”
Not everyone was mincing words, although to be clear none of them was a franchise executive. “It’s crazy, right? What a mess for the state,” said Tom Spiggle, a labor attorney at Spiggle Law Firm in Arlington, Virginia, when reached right after the MS and NC bills were signed into law.
Could he think of anything like this that has come before? “Racial segregation in the 1950s is the only thing I can think of in recent memory, where you have entire classes of people being told what public accommodations they can use,” Spiggle said. “It’s certainly not new for franchisors to deal with different laws across states, but nothing as high-profile as this before.”
The first week in April brought strange juxtapositions of news. In the same news cycles as the NC and MS laws, California passed a $15 minimum wage statewide, and San Francisco made news with the first fully funded family leave policy for employees in the city. Add the Supreme Court’s ruling for gay marriage and the high-profile transformation of Bruce to Caitlyn Jenner last year, and that partly explains why supporters of the bills in the two states may feel culturally under siege.
“The basic issue is we can’t let Caitlyn Jenner into our bathrooms because she’ll pervert our children,” said Fred LeFranc, who operates restaurant consulting firm Results Thru Strategy in Charlotte, North Carolina. He was speaking tongue-in-cheek, mocking the scare-tactics language he says bill supporters used to push the law through.
“On a personal level I think it’s crazy. It makes very little sense, and of course more importantly you can see already the effect on business,” LeFranc says about the North Carolina law. “It takes the halo off the city.”
But here’s the rub for franchisors: A poll in the Charlotte Business Journal in April showed a 50-50 split between those who support the state law and those who want it repealed. “If the public is very undecided about a particular issue, chances are a brand’s franchise community is as well, especially a geographically diverse franchise base,” said Brad Ritter, CEO of Ritter Communications and Real World Media Training in Los Angeles.
He challenged my assertion that Hyatt Hotels, PayPal, Target and others “got a lot of goodwill,” as I had put it, from taking a stand against the laws. “When you say they got a lot of goodwill, how do you know that?” Ritter asked. Fifty percent of people may say they’ll always book at a Hyatt in the future because of its corporate stand. “And maybe 50 percent will quietly say they’ll never book at a Hyatt again.”
To prove Ritter’s point, by early May a petition started by the American Family Association to boycott Target over its transgender bathroom policy had drawn more than a million signatures and counting. Target was standing firm: “As a company that firmly stands behind what it means to offer our team an inclusive place to work—and our guests an inclusive place to shop—we continue to believe that this is the right thing for Target,” a spokeswoman said.
Jamie Izaks, owner of All Points PR in Chicago, said taking a stand would “definitely” be a risk for franchisors, but they should consider doing so anyway. “I think there’s something every business needs to live up to...it’s your values as an organization.”
I admire the likes of Target that back up what they say are their company values with actions, and the likes of Lewison who will talk about thorny issues. I applaud Hyatt Hotels and Choice Hotels, the only two franchise brands that signed a letter protesting the Mississippi laws. But I get, after reporting this column, that it’s not so easily said as done.
Said Lewison: “We’re Switzerland. We try to stay neutral.” It may not be courageous, but likely it’s prudent.
Beth Ewen is editor-in-chief of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to firstname.lastname@example.org.