Re: Perks vs. wages

I read Mike’s letter and found myself looking for his reasoning behind his comments. So I am here to
help set him and others that think like him.

The first assumption about employers wanting to eliminate coffee/smoke breaks is wrong, by law an employer needs to give any employee who works 5 or more hrs a 30 min break, that break can be divided into to 15 min breaks but at employer’s discretion. There is no section in the employment standards act saying an employer must give an employee a smoke/coffee break if they work less than 5 hrs to do so is a perk.

The second assumption was about making an employee pay half their benefits, I believe this is entirely fair, if a person goes out and purchases extended health/life insurance they would pay 100%, I appreciate my boss for paying half. Some employers even pay more than half based on seniority, I worked for a company for 15 years and I only paid 10% my owner paid the other 90%. Extended health benefits is also not a right for an employee it is a perk.

His third and most erroneous assumption is that owning a franchisee is a licence to print money, that is a joke. Many franchisee owners take home less than their employees and in the case of my owners have not paid themselves in a couple months. I am going to break down some of the costs of owning a franchise.

Initial cost of purchasing a franchise is anywhere from $300,000 to over $1,000,000 depending on the company and unless you are a millionaire you need a bank loan and business loans are unlike a mortgage, you can’t take a 20 year amortization, cost $5000-$10,000 per month. Next is franchise fees, these are the fees you pay the main company for using their name and trademarks, these again vary based on the franchise anywhere from 10-15% off the top. Now let’s get to the actual cost of running a restaurant, most stores try to keep labour at 25% of sales but realistically it is 30% this is off gross sales not net. Now add in Work Safe fees, employer contribution to benefits (if offered) we will add 3% to that. Cost of goods, you need to purchase the product you sell, we call it food and paper cost and it runs you 25-30% of gross not net. Then we have operating costs these can fluctuate monthly and are difficult to calculate, these include equipment repair, utilities, business licence, insurance, building maintenance, and probably a few I forgot.

So lets look at this from a financial standpoint: gross sales $100,000/month, a 1.2 million dollar store. Labour $35,000 loan payment $10,000, cost of goods $25,000, franchise fees $15,000. Now these already add up to $85,000, and I haven’t added in operating costs which again fluctuate But take you monthly power, gas water bill, phone and internet and multiply them by 5 and see what’s left.

What I am trying to show by this is it is not the franchisee that has a license to print money but the corporations that win. One more thing, most franchisee’s do not have control over pricing, they need to ask corporate office before any price increase can be implemented and then when they do raise prices the customers all complain, it’s a lose/lose for them.

So when they raise the minimum wage by $3.00 tell me where is that money supposed to come from? Lay off staff, take away perks, raise prices (if corporate lets them) or the franchisee takes a pay cut, and it is hard to get less than zero.

Darren VanOs

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