The Dark Side of the FoFo Model: A Disadvantage for Employees

 The franchise business model has gained significant traction worldwide, offering expansion opportunities for brands without the need for direct investment. One such model is the FoFo (Franchise-Owned, Franchise-Operated) model, where an independent business owner purchases the rights to operate under a well-known brand name. While this structure benefits corporations and franchise owners, it often leaves employees in a vulnerable position, especially when disputes arise over salaries, incentives, or unfair treatment.

What is the FoFo Model?

In a FoFo model, the franchisee (business owner) has full control over the operations, finances, and management of the business while using the brand’s name and reputation. The corporate company provides branding, marketing support, and operational guidelines but does not interfere in daily decision-making. Unlike corporate-owned businesses, where employees can escalate issues directly to a central authority, FoFo employees have limited options if they face problems.

The Losses Employees Face in a FoFo Model

1. Lack of Corporate Accountability

When employees of a FoFo franchise face salary delays or incentive denials, they often turn to corporate headquarters for help. However, corporate companies distance themselves from such issues, stating that they do not have control over franchise operations. Instead of intervening, they merely forward complaints back to the franchise owner, who may continue ignoring the employees' concerns.

2. Risk of Salary and Incentive Fraud

Many FoFo franchisees, in an attempt to cut costs, exploit employees by delaying payments or outright refusing to pay salaries and incentives. Since the franchisee is not directly governed by corporate financial policies, employees have no guaranteed protection. If the franchise owner decides to withhold wages, employees have to struggle to recover their rightful earnings.

3. Harsh and Unregulated Work Environments

Unlike corporate-owned outlets where employee policies are strictly enforced, FoFo franchises can create their own rules regarding working conditions, leaves, and overtime. Some franchise owners impose harsh working conditions, and employees have little recourse since corporate offices rarely intervene.

4. Limited Legal Recourse

While employees can take legal action against franchise owners, the process is often time-consuming and expensive. Many workers, especially in industries like fitness, retail, and hospitality, are hesitant to pursue legal action due to the high costs and uncertain outcomes. Meanwhile, the franchise owner continues business as usual, sometimes even shutting down and reopening under a new name.

5. Lack of Career Growth Opportunities

Employees in a FoFo model rarely have a clear career growth path compared to those working directly under corporate management. Training programs, promotions, and benefits are inconsistent and entirely dependent on the franchise owner’s willingness to invest in employee development.

How Can Employees Protect Themselves?

Understand the Employment Contract: Before joining a FoFo franchise, employees must review their contract carefully, ensuring that salary, incentives, and policies are clearly defined.

Document Everything: Keeping records of salary slips, incentive agreements, and any communication with management can be crucial if disputes arise.

Raise Awareness: Employees should share their experiences on platforms like Google Reviews, social media, and employee forums to warn others about unfair practices.

Seek Legal Help When Necessary: If salary fraud occurs, consulting with labor authorities or legal professionals can help employees recover their payments.

Final Thoughts

While the FoFo model offers financial benefits for corporations and franchise owners, it often comes at the cost of employee welfare. Without direct corporate intervention, workers are left to fend for themselves against exploitative business owners. It’s time for corporations to take greater responsibility for the brand’s reputation by enforcing fair labor policies across all franchises. Until then, employees must remain vigilant and proactive to protect their rights in a system that too often ignores them.

I've written a blog post explaining the FoFo model and how it negatively affects employees, especially regarding salary and incentive disputes. Let