Debut of Politico’s ‘Morning Shift’ Raises Ethical Questions Around IFA Sponsorship

Arun Gupta October 14, 2014

McDonald's is a member of the International Franchise Association, an industry group that sponsors Politico's labor content.

I was pleased to learn in late Sep­tem­ber of Politico’s plans to launch a labor report­ing desk — I am of a more the mer­ri­er” mind­set when it comes to jour­nal­ism, espe­cial­ly on a top­ic so under­re­port­ed as labor. 

Politi­co appar­ent­ly sees mon­ey to be made in labor jour­nal­ism, even as this vital beat fades in news­rooms across the coun­try. Accord­ing to the Huff­in­g­ton Post, Politico’s mar­ket research sug­gest­ed that stake­hold­ers in gov­ern­ment, lob­by­ing and For­tune 500 com­pa­nies were look­ing for the nit­ty-grit­ty’ details of labor pol­i­cy.” Labor and Work­place Pol­i­cy” will join Politico’s port­fo­lio of 13 oth­er Pro Ver­ti­cals,” pay­wall-pro­tect­ed sec­tions that cov­er sin­gle top­ics like edu­ca­tion, trans­porta­tion, tech­nol­o­gy and the mil­i­tary. Sub­scrip­tions to the ver­ti­cals can run into the thou­sands of dol­lars, the Huff­Post says.

It’s an impor­tant ser­vice, even if Politico’s focus sounds less like tra­di­tion­al labor report­ing (on top­ics like orga­niz­ing cam­paigns and con­tract nego­ti­a­tions) and more busi­ness-ori­ent­ed: The site promis­es to cov­er devel­op­ments at [the] Depart­ment of Labor and NRLB [sic], as well as intel­li­gence on unions, immi­gra­tion, min­i­mum wage, unem­ploy­ment, retire­ment, pen­sions and pay, health care and ACA imple­men­ta­tion, work­force train­ing and court cases.” 

Politi­co has retained top-notch tal­ent in vet­er­an reporter and edi­tor Tim­o­thy Noah, author of The Great Diver­gence, and out­stand­ing labor reporter Mike Elk, who wrote for In These Times from 2010 to 2014. (Elk was involved in a suc­cess­ful union­iz­ing effort at In These Times with the Com­mu­ni­ca­tions Work­ers of Amer­i­ca and fought the lay­offs of staff writ­ers, includ­ing him­self, whose year­long posi­tions were fund­ed by a one-year grant that was not renewed.)

How­ev­er, the Politi­co labor ver­ti­cal made a curi­ous deci­sion in its first week. Its newslet­ter, Morn­ing Shift,” debuted Octo­ber 7 with the tagline, Your dai­ly speed read on labor and employ­ment pol­i­cy” and a spon­sor­ship from the Inter­na­tion­al Fran­chise Asso­ci­a­tion—a trade group rep­re­sent­ing fran­chised busi­ness­es like McDonald’s and Domino’s Piz­za, as well as their fran­chise own­ers . Two days lat­er, Morn­ing Shift cov­ered a labor issue of enor­mous impor­tance to the IFA— whether McDonald’s has a legal respon­si­bil­i­ty for work­ing con­di­tions in fran­chis­es — but nev­er men­tioned the sponsor’s stake in the sto­ry, and edi­to­ri­al­ized in a way that could give the appear­ance of favor­ing the IFA’s position.

The sub­ject line of the Octo­ber 9 email edi­tion began, Morn­ing Shift, pre­sent­ed by The Inter­na­tion­al Fran­chise Asso­ci­a­tion.” After an exclu­sive about a pos­si­ble new pres­i­dent of the Com­mu­ni­ca­tions Work­ers of Amer­i­ca and a dig at Grover Norquist about plans for his next union-bust­ing ground game,” an ad appeared in the mid­dle of the text, as is com­mon­place for IFA ver­ti­cals. This one read:

A mes­sage from The Inter­na­tion­al Fran­chise Asso­ci­a­tion. The fran­chis­ing indus­try includes more than 770,000 estab­lish­ments and employ 8.5 mil­lion work­ers in the Unit­ed States. Learn how the fran­chise busi­ness mod­el works and the pos­i­tive impact fran­chis­ing has on America’s econ­o­my by vis­it­ing www​.fran​chise​facts​.org.

I clicked on the IFA link. The web­site says, Small fran­chise busi­ness­es are the key to the Amer­i­can econ­o­my.” After a video tout­ing the ben­e­fits of fran­chis­ing like pick­ing your staff and choos­ing which ben­e­fits to pro­vide at your loca­tion” as health, vision and den­tal icons pop up, the site unleash­es a thin­ly veiled attack on the effort by the Ser­vice Employ­ees Inter­na­tion­al Union (SEIU) to orga­nize low-wage fast-food workers. 

Amer­i­ca’s 770,000 fran­chise small busi­ness­es are under attack by labor spe­cial inter­est groups — hurt­ing work­ers, small busi­ness own­ers, com­mu­ni­ties, and our nation’s economy.

FIGHT FOR WORK­ERS AND SMALL FRAN­CHISE BUSINESSES 

That a labor report would be spon­sored by a trade asso­ci­a­tion for a sec­tor where unions and work­place rights are vir­tu­al­ly nonex­is­tent and wage theft and pover­ty is ram­pant gave me pause. The Morn­ing Shift is sup­posed to be non­par­ti­san, accord­ing to the Huff­in­g­ton Post. That’s pos­si­ble, giv­en that law firms, unions, lob­by­ists and For­tune 500 com­pa­nies will be among the like­ly sub­scribers, and they might see a par­ti­san bias as com­pro­mis­ing the accu­ra­cy of the infor­ma­tion and analysis.

Still, a spon­sor with a vest­ed inter­est in how infor­ma­tion is report­ed can cre­ate seri­ous con­flicts of inter­est. Politi­co could be more trans­par­ent about the pos­si­bil­i­ty of such a con­flict if it not­ed IFA’s involve­ment in the McDonald’s sto­ry — which it nev­er does. Fur­ther, at times, the Morn­ing Shift appears to slant its report­ing toward IFA in the Octo­ber 9 Morn­ing Shift report.

The item in ques­tion is a three-para­graph NLRB Update.” Since Novem­ber 2012, when SEIU unveiled its fast-food orga­niz­ing cam­paign, 181 com­plaints by work­ers involv­ing unfair labor prac­tice charges such as wage theft have been filed with the NLRB Office of the Gen­er­al Coun­sel against McDonald’s. Anoth­er sev­en class-action suits cov­er­ing tens of thou­sands of work­ers have been filed in fed­er­al courts claim­ing McDonald’s Cor­po­ra­tion con­spires with its fran­chisees to engage in sys­tem­at­ic wage theft. SEIU wants the NLRB to rule McDonald’s and its fran­chis­es have joint respon­si­bil­i­ty” for employees.

As I’ve report­ed, 90 per­cent of McDonald’s 14,000 U.S. restau­rants are fran­chis­es. Fran­chisees usu­al­ly sign a mas­ter con­tract” with the cor­po­rate par­ent, which, as I wrote, micro­man­ages key aspects of the busi­ness — menus, pro­mo­tions, insur­ance, soft­ware, adver­tis­ing, clean­ing and so on. At the same time, McDonald’s takes pains to spell out in con­tracts that it has no implied employ­ment rela­tion­ship’ with a fran­chisee or their work­ers. SEIU aims to hold cor­po­ra­tions liable for their fran­chis­es’ actions.” A joint-employ­er rul­ing could allow SEIU to union­ize work­ers or improve wages, ben­e­fits and con­di­tions across thou­sands of stores at once instead of fight­ing one fran­chisee at a time.

SEIU scored a major vic­to­ry in July when the NLRB gen­er­al coun­sel ruled in favor of McDonald’s work­ers in 43 cas­es and autho­rized com­plaints on alleged vio­la­tions of the Nation­al Labor Rela­tions Act.” The gen­er­al coun­sel explained that if the par­ties can­not reach a set­tle­ment, com­plaints will issue and McDonald’s, USA, LLC will be named as a joint employ­er respondent.”

The Inter­na­tion­al Fran­chise Asso­ci­a­tion makes no bones about the fact that this is a dooms­day sce­nario. At an IFA-spon­sored con­fer­ence, Aziz Hashim, Pres­i­dent and CEO of NRD Hold­ings, which owns numer­ous fran­chis­es such as Popeye’s and Domi­nos, said the rul­ing threat­ens the basic foun­da­tion of fran­chis­ing.” If a joint-employ­er rul­ing forces McDonald’s to assume legal respon­si­bil­i­ty for employ­ees in fran­chis­es, it could negate the ratio­nale for fran­chis­ing and become a water­shed in low-wage work­er orga­niz­ing. The par­ent com­pa­ny would have noth­ing to gain from out­sourc­ing its workforce.

Morn­ing Shift men­tioned McDonald’s lia­bil­i­ty if it lost a joint-employ­er rul­ing, but it failed to men­tion this down­side for franchises.

The Morn­ing Shift account also con­tained word­ing that seems slant­ed toward the IFA. Morn­ing Shift stat­ed, If the NLRB rules against McDonald’s, the cor­po­ra­tion could be on the hook for infrac­tions com­mit­ted by its (sel­dom deep-pock­et­ed) franchisees.” 

Why tell the read­er fran­chisees are sel­dom deep-pock­et­ed”? That’s in line with IFA talk­ing points imply­ing fran­chisees are strug­gling small busi­ness­es. I’m sure if I asked the IFA to speak to a fran­chisee, it could quick­ly trot out a scrap­py immi­grant fam­i­ly who’s saved every tar­nished pen­ny to buy a strug­gling fran­chise they devote every wak­ing hour to for their slice of the Amer­i­can Dream, but that’s arguably not the norm.

It’s true that 64 per­cent of fran­chise own­ers are sin­gle-out­let oper­a­tors, but they do not make up the bulk of the busi­ness: Of some 60,000 fast-food fran­chise out­lets, 75 per­cent are owned by the big play­ers,” as the the Wall Street Jour­nal puts it. The Jour­nal adds that the aver­age McDon­ald’s fran­chise owns more than six loca­tions.” In the fast-food indus­try, the biggest fran­chisees are hold­ing com­pa­nies with hun­dreds of out­lets and half-a-bil­lion dol­lars a year in rev­enue — and it’s these mega fran­chis­ers who stand to gain the most if the NLRB even­tu­al­ly decides against the work­ers. As the Jour­nal fur­ther explains, cor­po­rate par­ents tend to pass over unknown entre­pre­neurs — even those that can pony up the $750,000 min­i­mum” gen­er­al­ly required for a McDonald’s fran­chise. The par­ent prefers mam­moth fran­chisees because, They often have read­ier access to cap­i­tal and can prop up under­per­form­ing restau­rants with stronger sales else­where in the chain. They’re also seen as less risky by fran­chis­ers, because they have a track record with a brand.” 

Thus, for many fast food fran­chis­es, own­ers’ pock­ets are plen­ty deep. It’s spin for the IFA to por­tray itself as the defend­er of work­ers and small busi­ness own­ers. It’s a ques­tion­able asser­tion for Morn­ing Shift to make, and one that indi­cates a cer­tain slant. 

Politi­co also edi­to­ri­al­izes by describ­ing the NLRB’s rul­ing as con­tro­ver­sial,” writ­ing, NLRB gen­er­al coun­sel Richard F. Grif­fin issued a con­tro­ver­sial find­ing in July nam­ing McDonald’s a joint employ­er in 43 cas­es before the NLRB.” But legal cas­es are, by def­i­n­i­tion, con­tro­ver­sial — one side dis­agrees with the oth­er. For whom was the NLRB rul­ing con­tro­ver­sial? Cer­tain­ly for par­ties with a stake, such as McDonald’s, the IFA, the fran­chisees, and their allies in Con­gress. But it would be a stretch to say it was a top­ic of sig­nif­i­cant nation­al debate. 

In addi­tion to slant, a major ques­tion here is dis­clo­sure. Typ­i­cal­ly spon­sor­ship dis­clo­sures are nec­es­sary when a spon­sor is men­tioned in a sto­ry. In this case, since the IFA’s spon­sor­ship is already promi­nent­ly high­light­ed, the ques­tion is reversed: Is the sponsor’s role in the sto­ry sig­nif­i­cant enough that it deserves a mention? 

The IFA has emerged as a major play­er in the NLRB fight over fran­chis­ing. An Asso­ci­at­ed Press report from July 30 pub­lished on Politi­co sin­gled out the IFA as an oppo­nent of the NLRB rul­ing: The Inter­na­tion­al Fran­chise Asso­ci­a­tion, which rep­re­sents fran­chisees, has opposed the iden­ti­fi­ca­tion of McDonald’s as a joint employ­er.” On Sep­tem­ber 16, The Hill report­ed the IFA was spear­head­ing the strat­e­gy to over­turn a pre­lim­i­nary NLRB deci­sion that cor­po­ra­tions like McDonald’s share joint employ­er sta­tus with their fran­chisees.” The indus­try group’s plan includ­ed dis­patch­ing hun­dreds of fran­chisees and fran­chisors to flood law­mak­ers’ offices, press­ing them to oppose the NLRB’s find­ing.” In mid-Sep­tem­ber, IFA held its annu­al con­fer­ence in Wash­ing­ton, D.C., attend­ed by some 360 fran­chise indus­try rep­re­sen­ta­tives, to make sure the mod­el stays intact,” accord­ing to Entre­pre­neur mag­a­zine. One con­fer­ence attendee said, This joint employ­ee-employ­er thing, if that goes through, that’s a hand grenade in the mid­dle of the [fran­chis­ing] busi­ness model.” 

There is no inkling of this orga­nized cam­paign in the Octo­ber 9 report. What makes the omis­sion even more puz­zling is that the same Morn­ing Shift men­tions the IFA in rela­tion to its law­suit try­ing to over­turn Seattle’s $15-an-hour min­i­mum wage law that was approved by the City Coun­cil in June.

It’s impor­tant to point out there is no evi­dence the news was inten­tion­al­ly slant­ed. Politico’s labor desk is best able to say if there was any coer­cion or sig­nals from high­er ups at Politi­co to favor the IFA. At the very least, it rais­es a num­ber of ques­tions about Politico’s spon­sor­ship and dis­clo­sure policies.

Politi­co is not alone in fac­ing these ques­tions. Jour­nal­ists have long been wary of being pres­sured into writ­ing adver­tis­er-friend­ly” copy; to pro­tect the integri­ty and inde­pen­dence of their report­ing, many out­lets, such as the New York Times, have an ethics pol­i­cy that keeps the adver­tis­ing and news depart­ments strict­ly sep­a­rate.” But the decline of print-media busi­ness mod­els com­bined with the explo­sion of data-rich dig­i­tal media is eras­ing those lines. Last year, The Atlantic was lam­bast­ed for stick­ing spon­sor con­tent” from the Church of Sci­en­tol­ogy in its cen­ter news col­umn. More recent­ly, for­mer Vice Media edi­tor Charles Davis went pub­lic with evi­dence that the wild­ly suc­cess­ful web­site has killed sto­ries out of fear it may poten­tial­ly affect a busi­ness deal” with a pow­er­ful brand, the NFL.

Hav­ing run sev­er­al media out­lets with dif­fer­ent fund­ing mod­els, I know well the pres­sure and con­flicts involved with tak­ing adver­tis­ing mon­ey. That’s why even the appear­ance of favoritism needs to be guard­ed against. Ulti­mate­ly, the most valu­able asset any rep­utable media out­let ulti­mate­ly has is not its mar­ket val­ue, but the trust with its read­er­ship. As a read­er of In These Times, I know it receives spon­sor­ship for its labor cov­er­age from unions, includ­ing the Inter­na­tion­al Asso­ci­a­tion of Machin­ists and the Unit­ed Auto Work­ers How­ev­er, In These Times has pub­lished numer­ous crit­i­cal reports by Elk on the UAW’s failed attempt to union­ize a Volk­swa­gen plant in Ten­nessee ear­li­er this year, as well as a recent piece by David Moberg crit­i­cal of the union’s claims to have elim­i­nat­ed two-tier con­tracts at an Indi­ana auto plant. 

In this sec­ond Gild­ed Age, when cor­po­rate influ­ence is every­where, includ­ing jour­nal­ism, much rides on pro­vid­ing prop­er con­text and analy­sis, and nowhere more than the fight over who con­trols the economy. 

The CWA, UAW and IAM are spon­sors of In These Times. Spon­sors have no role in edi­to­r­i­al content.

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