The Majority Report with Sam Seder - 3641 - Labor, Anti-Trust and the History of Corporate Franchises w/ Brian Callaci

Episode Date: May 11, 2026

Welcome back to The Majority Report On today's program: National Economic Council Director Kevin Hassett claims on CNBC that consumer confidence being at record lows is a result of the consumer becoming stressed out by Donald Trump fixing "all of the world's problems". As the economy continues to head straight towards a recession, Bloomberg shares a chart that shows the world's oil inventories are falling at record pace. Chief economist at Open Markets, Brian Callaci joins the program for a conversation about his new book "Chains of Command: The Rise and Cruel Reign of the Franchise Economy". In the Fun Half: Donald Trump gives a $6.9M no-bid contract to his personal pool guy to paint the Lincoln Memorial Reflecting Pool. Rep. Alexandria Ocasio-Cortez explains why she is not willing to align herself with someone like Marjorie Taylor-Greene.  We take a look back at MTG's record on Palestine and what could've possibly led to her changing her position on Israel. Tom Steyer talking with Hasan Piker about how he went from being a billionaire hedge fund manager to a progressive candidate for Governor of Georgia Joe Rogan really wants to believe that the government has proof of aliens. Bill Maher and John Fetterman laugh about trump calling a woman a piggie. PDB and Terrence Howard have an interesting conversation about Game of Thrones. All that and more. To connect and organize with your local ICE rapid response team visit ICERRT.com The Congress switchboard number is [phone]. You can use this number to connect with either the U.S. Senate or the House of Representatives. Follow us on TikTok here: https://www.tiktok.com/@majorityreportfm Check us out on Twitch here: https://www.twitch.tv/themajorityreport Find our Rumble stream here: https://rumble.com/user/majorityreport Check out our alt YouTube channel here: https://www.youtube.com/majorityreportlive Gift a Majority Report subscription here: https://fans.fm/majority/gift Subscribe to the AMQuickie newsletter here: https://am-quickie.ghost.io/ Join the Majority Report Discord! https://majoritydiscord.com/ Get all your MR merch at our store: https://shop.majorityreportradio.com/ Get the free Majority Report App!: https://majority.fm/app Go to https://JustCoffee.coop and use coupon code majority to get 10% off your purchase Check out today's sponsors: SMALLS: Get 60% off your cat's first order, plus free shipping and free treats for life, when you go to Smalls.com/MAJORITY RIDGE WALLET: Get up to 40% off @Ridge with code MAJORITYREPORT at https://www.Ridge.com/MAJORITYREPORT FACTOR: Go to FactorMeals.com/majority50off and use code majority50off to get 50% off and free daily greens per box SUNSET LAKE CBD: Use coupon code "Left Is Best" (all one word) for 20% off of your entire order at SunsetLakeCBD.com Follow the Majority Report crew on Twitter: @SamSeder @EmmaVigeland @MattLech On Instagram: @MrBryanVokey Check out Matt's show, Left Reckoning, on YouTube, and subscribe on Patreon! https://www.patreon.com/leftreckoning Check out Matt Binder's YouTube channel: https://www.youtube.com/mattbinder Subscribe to Brandon's show The Discourse on Patreon! https://www.patreon.com/ExpandTheDiscourse Check out Ava Raiza's music here! https://avaraiza.bandcamp.

Hey, folks. How's it going? Oh, all right. You know, I got up at 5.30 this morning, and it was not my plan, but I did because my cat decided it's time for you to wake up, Sam. And this is like the double-edged sword of finding a cat food that your cat absolutely loves. is that they'll wake you up at 5.30 in the morning to go do it, to go get fed. I think part of the reason, actually, he seems to have adjusted to, what do you call it, spring forward, the daylight savings time. For like a week in there, I think he was confused as to like what time he was supposed to eat. But I'm very happy that I found a cat food for my cat that my cat loves and is incredibly healthy. And what am I talking about? I'm talking about smalls.

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My name is Sam Cedar. This is the five-time award-winning majority report. We are broadcasting live steps from the industrially ravaged Gowanus Canal in the heartland of America, downtown, Brooklyn, USA. On the program today, Ryan Kalachi, chief economist at Open Markets, author of the new book Chain of Command, The Rise and Cruel Rain of the Franchise Economy. Also on the program today, Trump and Netanyahu say the Iran war is not over, after Iran basically says the Iran war is not over. Also, we should leave.

We've lost. Israel, meanwhile, continues to bomb Lebanon, despite the supposed ceasefire there. And oil prices surge on the Iranians clearly ready to continue this war. In wake of the Republican-appointed Virginia Supreme Court's ruling, which negated redistricting referendum, Democrats consider following the Republican packed the court playbook. Meanwhile, Alabama

next up to ask the Supreme Court to disenfranchise more black voters. Kirstarmic in a panic across the pond, as they say. This in wake of a ton of labor, local labor losses,

vows to sort of brenter get closer to the EU. I don't know. I came up with that. It's Monday. The Department of Education. What's it? Brejoin. Rejoinish. It's not totally. The Department of Education now on a hiring spree

after firing over half its staff over the past year and a half. Because competence is job one. Thousand. Tennessee signs law. forcing doctors to provide data on the transcare they provide all this and more on today's majority report welcome ladies and gentlemen it is monday thanks so much for joining us emma viglin out today supposedly sick but i mean i'm sort of she looked i mean somebody i'm not gonna i'm not gonna cast dispersions but Thursday night

it sounds like there's a lot of partying going on was there a big win for her team yesterday oh that's weird I'm sure that had nothing to do with it I don't what was that the football game or I forget what sport is it forget what those animals call it I can't remember

sports I was reading yeah sorry I was writing poetry and I decided I didn't follow the sports games of the weekend. Thanks for joining us, folks. You know, the big story you keep seeing over and over again, at least I do, is there is a certain percentage of economists and oil traders and financial types who are coming out and saying we're headed to a global recession. And then there's a, like I would say, 50% of what I note on that are stories about,

why isn't the stock market responding to the fact that it looks like there's going to be a global recession? But maybe there isn't. And then there's, I would say, another 20%, which brings us to about 95%, And those 20 remaining 20% are like, well, I've figured out how to find opportunities in this. And then there's 5% really closer to 1% who are like Kevin Hassett. And he is the National Economic Council Director. And I don't know, maybe he thinks he's going to get fired by Trump and desperately wants to keep his job. You understand.

That's all it is now. they're all just coming out and figuring out what will keep them in their jobs and more often than not it's because they've got some type of side scam going whether it was christie gnome or uh shan duffy who was able to find time in his very busy as schedule as transportation director of the country you remember all the planes crashing Remember, the fuel shortages? And he's been in that job for, I would say, probably 12 months now, maybe less. I mean, he was confirmed.

I don't know when, but it couldn't have been too much earlier than in May of 2025. And this is important. He was able to find seven months time to shoot a TV show. But with his family, that's the point. Family is first. But Kevin Hassett, getting back to him, here he is on CNBC. and you could call this boot licking, but I actually think the licking is more comprehensive. In between the toes.

You've seen over time is that earnings surprises are positively correlated. So if you have a couple of quarters of a row of earning surprises, that people tend to not jack up their earnings forecast as much, and you get another one. And so I think that Ed's forecast, while the White House doesn't have an official S&P forecast, it seems consistent with the trajectory of earnings, I can say, at the very least. And that's all happening because of AI and because the Trump tax cuts and so on. I think that one of the things that's happening is that the world is changing so fast right now. The President Trump has sort of taken every problem on earth and got 100% at fixing it.

And I think that that can be stressful for people to see so much change going on. But the bottom line is that in the end, when we look at what happens for elections, that people look for one second. I want to go back because I didn't set this up exactly. He's explaining why, despite the fact that he's out here smiling so hard, why consumer confidence is at its lowest ebb in like decades? And we have rising credit card debt. People are starting to stress out about work.

And of course, oil prices are through the roof. fill up a gas tank I don't like a my Subaru is like it's like a small investment in it's like a semester of college at this point fill up your gas tank he's explaining why consumer sentiment is down

and his aside from saying like we've had somebody surprise earnings bumps that like people are factoring in and that's why we see earnings expectations lower but go back and you you'll hear him explain why consumer sentiment is down.

It's because they're so, like, agitated by all the winning. What's happening is that the world is changing so fast right now, that President Trump has sort of taken every problem on earth and got 100% at fixing it. And I think that that can be stressful for people to see so much change going on. But the bottom line is that in the end, when we look at what happens for elections, that people look at their wallets,

they see how they're doing. You know, the economy is growing very strong. Incomes are growing. You and I have talked about Rayfair for 20 years. Rayfair of Yale says GDP in the second quarter is the thing that tells you what's going to happen in the election. And so I think that right now Republicans should feel very, very good about the trajectory of the economy. You know what they say? More money, more problems.

Yeah. Yeah, well, I mean, that's the thing. It's that your folks are so, they're head spinning with so many, so many, so many, world problems being solved that they're making them nervous about the economy. The problem is when a guy like Hassett says people vote with their pocketbooks, they think of their pocketbooks as like what their investments are doing. And normal people look at actually, this is what I have to do to pay my rent and actual expenses for this month.

Wages are up by something like three and a half percent. The problem is inflation's up by four percent. And so you don't have to be a. math whiz, I off the top of my head can say, I mean, I can, because I am a math whiz, that it's a hot, you're losing a half a percentage of, uh, of your real spending power in that scenario. But you don't even have to be a math wizz like myself. You don't have to know specifically. You just have to know you're losing. To the extent that your wages are going up, you're paying for stuff. It buys less anyways. And,

it is quite clear that an increasing number of economists and just sort of world observers think that we are headed into something that is going to be far more problematic. Put up this oil reserves. You recall last week,

Rory Robertson, was that his name? Johnson. Johnson was on the program talking about oil reserves. This is the first one. And he said, once the oil reserves runs out that's when we're going to start to see

prices rise exponentially and perhaps shortages and here's the world oil reserves you will notice that now we only have data here for the past five

years but it seems rather dramatic. Operational floor level is the minimum level required to keep pipelines functioning in refineries operating. And it's suggested by September we're going to reach that. By June of 2026, we're going to be at operational

stress level. This is according to those hippies over J.P. Morgan commodities. So, is Trump doing degrowth? Exactly. But the amazing thing is, is that while he's doing this, he's also effectively unilaterally banned wind energy in the country. Like literally not, we're not going to have any more growth in wind power, rolling back existing wind power and wind power that was in, forgive the pun, the pipeline. lines. I'm just going to pick a, I don't know.

You're hurting ourselves. Yeah. Well, here's the problem with that formulation. It's like it's unclear who's on team ourselves. Yeah. Like this is a mistake that I think like many people still operate under is that they're judging success.

or failure based upon an assumption as to what the agenda is. And it's quite clear the Trump administration has a very different agenda than we're going to make our country great again. In whatever means, you know, there may be some positives that you see in there. I'm not sure what they would be. But we'll talk more about agendas and intent and the very. value of that later in the program was to start to talk about Marjorie Taylor Green.

In a moment, we're going to be talking to Brian Kalichi, chief economist at Open Markets and author of a new book, Chain of Command, The Rise and Cruel Rain of the Franchise Economy. First, a word from our sponsors.

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Check it out. We'll put the link in the podcast in YouTube description. And then be a quick break and be right back with Brian Kalichi. We are back, Sam Cedar on the Majority Report. Emma Viglin is out today. Want to welcome to the program, Brian Kalachi, chief economist at Open Markets, author of the new book, Chain of Command, Chains of Command, I should say, The Rise and Cruel Rain of the Franchise Economy. Brian, welcome to the program.

You came to this topic of franchises and their relationship between, corporations, franchisees, and their employers from organizing what was 10, 15 years ago, the fight for 15. Let's start there and then work sort of swing back around to this history

of the franchise and what it was developed for. Sure thing. Yeah. So, you know, I wouldn't exaggerate my role on the fight for 15. I was, you know, a mid-level staff person. was assigned to do some research, you know, at that time, just to sort of figure out, you know, the franchising structure, which, you know, is not that far afield from other, you know, low-wage industries. Now, the economist, David Weil has this wonderful term that Fisher's Workplace to describe these kinds

of industries, you know, whether it's temp agencies or whether it's, you know, the way Uber misclassifies, you know, drivers as independent contractors. You just have these layers, you know, where workers cannot access, you know, cannot exercise any power or hold accountable. corporation that really controls their working conditions. And then so franchising is an example of us, but also sort of the extreme version, beyond anything any of us had encountered before, because it's not, you know, like a hospital outsourcing, you know, its janitorial services. I mean, franchising is the whole thing is outsourced. So, you know, McDonald's franchises almost all of their

restaurants, and they're run by these nominally, you know, independent franchisees who really have no discretion over pretty much anything in the business. prices are controls, supplies are controlled, the precise way the cashier has to greet the customers control centrally. But yet, you know, they declare that these workers are not their own employees. They belong to these independent franchisees. And so, yeah, when I became an economist, I went to grad school, I had no intention of working on franchising. But, you know, once I saw what the economics literature said about franchising, yeah, they most, oh, no, this is just efficient to do it this way. And it seemed to me, and kind of obvious, and it seems obvious to anyone who's worked in fast food and other franchise industries that a big part of this is the legal, the advantages of that legal structure to sort of deny both franchisees of small business, you know, employers and workers from having any access to recourse accountability or their rights that are supposed to be guaranteed under other bodies of law.

Yeah, you know, what occurred to me as I was reading through your stuff was that what you were saying earlier that there is this sort of broader, dynamic where the capitalist class, and it works both from like an employment standpoint, where like you say with like Uber and in employing temp agencies, this dynamic of control but no accountability, you also see that in the context of like landlords. Like they want to distance themselves as much as possible from everything except for where the check goes. and so there are layers and layers and that there is you know controlling things from far afield and creating legal obstacles to that and we see this across the board whether it's you know like

frankly the supreme court cutting off access to to workers and consumers and citizens to um uh get some type of redress against corporations that that dynamic per permeates all this stuff. And that's what I, one of the things I found most fascinating about this. But let's talk about the history of the development of franchises because they, um, they start. It seems like it, the idea sort of like,

uh, is developed as a way of control and then the lack of liability comes in as a, as a, as an innovation, uh, so let's start with that, um, uh,

the early franchise is it was a Dunkin' Donuts, which I was all so excited to see. Yeah, yeah, fellow New England are there. Yeah, so, yeah, the way that I was surprised to see as I started researching the book, none of this happened. It was something a secret conspiracy to the benefit of the book, the actors involved who were trying to create this business model with, again, all the control and none of the liability, we're pretty open about what they were trying to do.

They said that that was the goal. We want the control. We don't want the liability. So, you know, the time period that we're talking about when this really takes off is, you know, post-World War II, really starting in the early 1950s, people like, you know, the famous Ray Crocka McDonald's, William Rosenberg of Dunkin' Donuts and other entrepreneurs, Glenn Bell of Taco Bell creating these business models. And at that time, you know, we had just gotten to the new deal. So we had, you know, this whole body of regulatory structures that, oh, we know how to hold people accountable. We know how to hold corporations accountable for their actions. It's because we know what a corporation is. They own assets and they employ workers. They have big factories like GM, U.S. Steel. That's how you get a union. You go against this big corporation that owns things and employs people.

And so what the franchisors started talking about at that time, so this early version of what we would now call, you know, move fast and break things is, well, we don't want that. How can we get the same kind of, you know, corporate empire but without all that liability? And they figured out they could do it by licensing their trademark, you know, so you want, rather than expanding by building a bunch of McDonald's restaurants and having them, you know, have employees, they decide, well, we're going to do this by licensing independent business owners to operate the McDonald's, and then we'll just tell them exactly everything

they have to do. But if anything goes wrong, if their employees, you know, try to get a wage increase, or, you know, if they try to form a union, or if there's, you know, some kind of product safety issue or what have you, well, that'll be their problem. But the problem was, and they were, again, very open about this as well, is that that wasn't really legal. And what surprised me to learn initially is that this was not, this was actually an antitrust issue, not. not so much a labor issue. Now, antitrust, this is the mid-20th century. It's the Warren Court.

Antitrust courts and legislators look very, they frown upon this idea of a large corporation dominating and controlling an independent entrepreneur as if they are an employee. Now this seems very commonplace to us. This is how Uber and Lyft and DoorDash do it. But Uber and Lyft are built on this sort of legal architecture that the franchising community developed in the 1960s and 1970s by filing a bunch of antitrust cases. by doing sort of public propaganda to basically overturn the idea that there's any meaning to this idea of being an independent business owner, that all we should care about when it comes to these kinds of contractual controls that substitute, you know, for ownership and owning things,

will treat that as a, will liberalize their treatment of that under the UNRRS laws. And they want that. There was no legislation passed. They didn't have to persuade any Congress to do anything, just the judiciary, you know, as part of, as part of this lobbying effort and considered part of, you know, the so-called Chicago School Revolutionary Antitrust, just did it for him. Yeah, I want to talk about, I want to talk about that because it is,

it's, it's almost as if like just one side showed up to a fight. And they were able to, um, you know, the official is there going like, you're the only one punching. So,

um, you win. Um, and that's basically what has. happened there. I want, just before we get to that, because I want to talk about, um, uh, uh, continental, uh, Slovenia, uh, a case, which, which is like sort of like a one of the turning points. But what, what was it? Was there something in particular or maybe did each sort of like franchisor or have their own, um, thing they wanted to avoid? But was it, I mean,

was it unions? Was it labor costs? Was there increasing liability? Because it feels like liability wasn't quite like product liability wasn't then what it was going to be starting in like the 70s, 80s, maybe 90s. Was it just like labor costs or was it also just sort of the headaches of because the franchisor is doing most of the sourcing and negotiating of inputs? right? Like McDonald's says we're going to need as much hamburgers you have and, you know, we're going to farm it out to a logistics company to say like the burgers go there, the burgers go there, but we buy it all and we just resell it to you. So it's not like that's

what they're trying to avoid. Was it labor specifically? Yeah. So labor was a big one. And I was to say because it's particularly because in the early decades of franchising, a lot of these were, you know, single unit, you know, owner operators. And some chains, particularly subway, still operate very much this way. It really is a genuine mom and pop. So they were concerned particularly about their franchisees, the small business operators, being considered employees under a variety of different kinds of laws. Franchises, for example, tried to form, you know, franchisee associations. They still do. But they don't have collective bargaining rights, I mean, as a union would because they're not, they're not employees in the same sense. So I'll just say,

you know, one of the parts of the book I've basically memorized is this moment of congressional hearing before the Senate Antitrust Antimonopoly Committee, where the franchisor association basically tells Congress, look, we should be able to control our franchisees to the same extent as if they were our employees. And the general counsel, guy named Jerry S. Cohen for the subcommittee responds, he's sort of incredulous. Well, how can that be? You know, the argument you're giving us is that franchising is this way to save the small business, save the small entrepreneur. But if these franchisees are told exactly what product they have to buy, what price they have to charge, you know, exactly how they have to operate, well, they're not really an independent

business person at all. They're really part of your operation. So that's sort of the legal structure, that legal struggle that's going on. And that seems obvious. Right. Like I mean, if I own a McDonald's and I can't say, you know what, I want to do Shamrock Shagher all the time. And so I'm putting green dye in my in my vanilla shakes. And McDonald's corporate says you can't do that. Yeah, you can only have Shamrock shakes until March 23rd. And that's it. No more after that. Like what how can you say I'm an independent businessman? I can't even decide to slightly change my shakes. You tell me the price I got to pay. You tell my employees what they have to say when somebody walks up to the account.

I mean, like, there's no independence whatsoever. So that takes us to the Savannah case because this is where franchisors start to, franchisors start to get their cake and eat it too. Yeah. Absolutely. So, yeah. And that's, this is also a fascinating aspect. What I found researching the book is that so that if, you know, in like antitrust land for

antitrust lawyers, for economists, this is the case that transatlanticase. that transforms, you know, antitrust law in sort of a more pro-corporate, you know, defendant-friendly direction. And it's, yeah, it's a Supreme Court case. Basically, it's a franchisor of TVs, and they try to restrict the territories in which, you know, the dealers, the franchisees can sell the TVs. It was very similar to a case 10 years before that where the court had ruled that the independent business owner had just a fundamental right to dispose of, you know,

of their products as they saw fit. And the content on TV versus G2, Slovenia, was decided by Lewis Powell, the author of the famous Powell memo. That's okay. We should say this is 1977. Lewis Powell wrote a memo before he became Supreme Court Justice appointed by Nixon,

which was basically used as the blueprint to build the Heritage Foundation. It was largely in response to sort of like fears of what was happening in the 60s, particularly around the environmental stuff. And they're like corporate America has to reengage in this, has to unify and fight back against what's happening, you know, all these takings that are happening. And Nixon was so impressed. He put him on the Supreme Court. And so 1977, we get this, uh, Sylvania case. Yeah. And the cases, uh, the franchisors win. They overturned the previous, uh, precedents that are protected small business owners.

And it's interesting. So yeah, considered the most important. case in antitrust. They were the birth of this so-called Chicago school that we're still grappling with in antitrust. But there was a concurring opinion from Justice White, who just pointed out to the justice. Oh, and the key thing about the case is that it completely removed all of these concerns with, you know, the autonomy or independence of an independent business person of an entrepreneur. And instead, all we care about is efficiency. And I'm going to bracket for a second, I don't think when they say efficiency, they mean real efficiency. But that's a whole another conversation, but basically the economic, if the price goes down, the output goes up,

that's all we care about. We don't care about this, you know, sentimental stuff about independent business owners. But what that allowed the franchisors to do subsequently, that creates the loophole where you can get all of your, they legalize these kinds of controlling contracts. But then, so right after Slovenia, you start to see some of the smarter people in the franchising community to say, wait a minute, we just won this pretty profound right to control these, you know, independent, independent contractors. Sooner or later, some judges are going to look at that control and say, you look like an employer. Or, you know, for example, remember a few years ago, Domino's had that 30

minutes or less or your pizza's free. Guess what the delivery drivers are going to do when you make that a requirement? They're going to go through red lights. They're going to speed. So the franchise they start, oh, we might be on the hook for, you know, if they hit and kill someone, that might, because it's our rule that's causing the accident. So then there's, so now they spend the next, you know, what is it now, 40 years after Slavit. or Savania, trying to, well, we don't want that control to come with any consequences. And that's where we are today. They sort of am enabled to have it both ways. And other companies like DoorDash and all these gig, you know, so-called gig employers have done

the same thing. But it all comes back to this legal effort of very smart lawyers, very smart lobbyists, building this business model in the 1960s and 1970s. Okay. And so, and I want to get to the sort of the second part where it's like, oh, we succeeded in getting control. And now how do we shed that? the liability that's often that that's almost always associated with that type of control. But let's talk about Bork because we have on this program for years in interviewing people about antitrust talked about how without any laws changing, the Borkian view of antitrust became, ascendant, particularly in the Reagan era, but was obviously percolating out of the University

of Chicago in particular. And largely, again, because there was no, I'm sure legal scholars would have a better sense of this, but at least once you cross a threshold of what a layperson knows, there was no movement in the law to push back on this. insurgent sort of University of Chicago legal movement to make antitrust less about the questions of democracy, less about the questions of concentrated wealth and power, both economic and political, and more just about what will presumably benefit the consumer in a very narrow, narrow sense very often doesn't but that's just a question of like you know a fact as opposed to

principle um there was no legal pushback there so how does like that insurgent legal movement influence the supreme court is it just simply because there's no real cohesive legal movement to push back and retain what we had already and and and express it in i guess like that era's modern perspective on democracy. I mean, once you have democracy is very easy, or at least that type of antitrust, probably pretty easy at one point to start to take it for granted and not appreciate what it was like before. Yeah, absolutely.

So, yeah, the Borky and view, I mean, so partly, yeah, the U.S. Chicago, they were very well-funded, very well-organized, and it did take them, you know, several decades. This stuff intellectually sort of gets started in the late 1950s, 1960s. Scott coming on, Milton Friedman, and that type of stuff. Yeah, exactly. And Aaron Director and Posner, so they're all working on this stuff. And they have a plan and they have a lot of money behind them. But I think one thing that they had an easier task in the sense that by the 1960s, 1970s,

unfortunately, antitrust is already becoming very technocratic. I'm an economist. I love being an economist. I think we have a lot to add to society. But, you know, economists came much more, became much more prominent in antitrust cases. It became much more technical and removed from these fundamental questions of democracy, power, citizenship, those kinds of things. And it became this narrow game of, you know, did the price wiggle up or down by, you know, so much percent or did output go up? And they're very slippery, by the way, these consumer welfare folks about what they really mean when they say consumer welfare. It doesn't mean, as we would in common sense consider the welfare of the consumer as a person. But, yeah, I think people, other groups just didn't, weren't focused on antitrust as an issue of political economy. You know, the labor movement was focused on the National Labor Relations Board and the Department of Labor. I don't think they foresaw that this loophole being opened by Slovenia would, decades later, not just encompass franchising, but a lot of other industries, you know, that have low-wage workers. So I think that, yeah, a lot of the groups you would have expected to be

pushing back. The franchisees themselves sometimes have been very well organized at other times, not so much. So that was, that was also, you know, they were never able to mount the same kind of effective opposition or they were, but only in certain places and times. So yeah, it was just, you know, you have a very concerted, disciplined, organized group of powerful and wealthy people pushing, especially when you do it through the courts, as opposed to having to actually persuade people through the latest state of action. Yeah, and also about, yeah, the best thing I'll say about Chicago doctrine is that it's very administrable. It's very simple. A judge, you know, who has no training in economics or, you know, can just sort of, or antitrust, it just sort of low. I think I know what

I don't what to do here. You know, this isn't that complicated. Yeah. So it gives, it's a very, it was a very powerful set of, set of tools. Okay. So, uh, they established control over their franchise, uh, ease. Um, and when are they able to really shed their loss? liability. Like what, just, what's the, is there a Sylvania moment when it comes to shedding liability in the courts, or does that just sort of come administer, you know, bit by bit? That comes sort of bit by bit. And again, in a way that people don't necessarily, people who should be paying attention or, you know, in retrospect, though, no one knew how this is going to shake out, you know, in the 1960s. I would say as early as 1965, so here's the example, I think the first time that

franchisors are sort of able to get this, we can have a both ways issue, is actually not with labor or liability at all, it's with the small business administration. So the SBA, you know, is formed in the 1950s to support small business. And they initially, you know, through the mid-1960s, they do not give loans to franchisers. And the logic is that this is, I have, you know, the SBA administrator, Eugene Foley saying this, this looks like not financing or, you know, extending credit to a small business, a small independent business. This looks like we're financing the distribution outlets of McDonald's or, you know, or or or our Dunkin' Donuts. We don't want to finance stuff in donuts. We want to finance independent small business owners.

And these contracts, a franchise who used to have to submit their contracts. And they're, they're so full of these controls that there's no way that we can, we can within our mission as SBA, extend the, extend this credit. The franchisors mounted a lobbying effort. And they were able to persuade the SBA. And by the SBA never talked to franchisees. They only talked to franchisers. And they revised their lending stand. So now McDonald's can access these loans. And the guy who ran these hearings for the SBA shortly thereafter became the Washington Council for the International Franchise Association for the next 40 years.

All right. Well, he landed softly for a lifetime landing of softness. I mean, it is sort of ironic that the Small Business Association ends up. meeting only with these massive corporations to determine whether they're going to give their small business loans to these massive corporations, essentially, or to their benefit anyways. Okay. And so then let's jump ahead to the fight for 15 because that's when the Obama National Labor Relations Board makes a determination.

that really flips stuff. Yeah. So, yeah, by that time, the control has gotten so intense, and particularly, you know, in the 1990s, you know, with the Internet. So even in the 1970s, 1980s, you know, franchisements who want to control their franchisees, you're still relying on in-person store visits, phone, fax, you know, like postal mailed computer reports. But once you get the Internet, the surveillance gets really intense.

I mean, you know, the McDonald's corporate is able to monitor individual employees at a McDonald's restaurant, you know, how long does it take you to move some... In real time, practically, probably, right? Through those cash registers. I mean, it, yeah, it is an intense level of control. So now it, there, even the, you know, the sort of, the fiction, which was already pretty ludicrous in the 1970s about these being independent businesses is now, I mean, come on. You know, it just looks a little bit like a joke. So, yeah, by the 2010s, but also it hasn't been 10s. at all in any kind of court. So in the 2010s, with the, with the Pfe 15, that was the big union

effort, is the big union effort to organize fast food. They finally called the question. And immediately, you know, the workers and the union and allied organizations don't bother with this franchise or franchisee distinction. They say right away, no, no, no, no, only McDonald's can finance these wage increases. Only McDonald's has the ability to alter, you know, the working conditions at the franchise restaurant. The franchisee has no power to do any of this. Yeah. So that was when, that was, that was, that was, when it finally, I mean, it would help some with some people like, particularly at the Department of Labor, David Weil, you know, who spearheaded a lot of the drawing attention to franchising these similar business

models. That's, that's probably the first time. It seems like people really woke up, like, wow, this is, we've really unleashed this Pandora's box of how can we let companies have these control without responsibility business models? And so, wait, so was it the labor department? I guess, yes. I'm sorry. It was the labor department who then rules essentially that there is joint ownership or joint employment. And so just walk us through, like, at that point then were there was able to be pressure put upon the corporations.

and then of course Trump is in office, but then Biden's back in office, and then of course Trump is back in office. Well, that saga ends in February of 2026, essentially, or at least for the time being. But just walk us through those different points as it goes back and forth. Yeah, sure. Yeah, so for the first time in the 20 teens, the workers in the 515 presented, you know, sort of new facts to both the Department of Labor, which does wage and hour laws and overtime. kind of thing, and the National Labor Relations Board, which is divided that governs union rights. And so they're moving sort of in parallel tracks. The Department of Labor makes a new rule that finds this idea of joint employer where it's not just the franchisee who's on the hook

for overtime violations under the Department of Labor, and it's not just the franchisee who has to bargain with workers under the National Labor Relations Act. McDonald's has to come to the table, too. So that's what joint employment sort of, that's what that doctrine, and it's a little more complicated, but in a nutshell, that's what it means. So, yeah, the first time that question really been called was with the fight for 15 in the 20 teens. So there's two things that happened, particularly at the National Labor Relations Board, is a case called Brown and Ferris that is not franchising, but establish just this new

doctrine for when, you know, when employers are joint employers, which is rather than, you know, direct and immediate control over, you know, I'm going to fire this guy, I'm going to cut this one's hours, more indirect means of control. like, you know, a recommendation to a franchisee, you know, so-and-so, you know, is not moving the customers through the drive-thru fast enough. You should do something about that. And then the franchisee does the firing, right? It's a similar thing. It's the same thing, but there's different mechanisms. So that's Brown and Ferris. And then the National Labor Relations Board files a suit against McDonald's holding not just the franchisees for numerous labor law violations, but also McDonald's.

And that stuff is still sort of working its way, you know, through the NLRB process. When Trump selected the first time. They abandoned the case. They settle it without any finding of joint employer. Things that, you know, so then, so things are just kind of dead, you know, through the Trump years. Then Biden comes in, a new NLRB, new DOL. I get things just go back to the way they were under the Obama years. And guess what? Now we have another problem with Trump for the second time. So it's been sort of frustrating back and forth since, since the initial Obama era ruling of joint employment. All right. So wrapping up here. Yeah.

In the event that Democrats, and it's not a guarantee with Democrats, but it's certainly a guarantee that it's not going to happen with Republicans, get back into office and control. It sounds like we need legislation that defines this. Yeah, we do. So, yeah, that's the tough environment to pass legislation in. But, yeah, we certainly need a statutory fix. at some point soon.

So we don't have this swinging back. Also, employers need some certainty about what is an employee. It can't just keep swinging back and forth, you know, administration to administration. But the second thing is, you know, the other area where the Biden administration made a lot of progress was they also started to revisit some of these Chicago school antitrust doctrines. So they were doing things like under, under Lena Kahn's FTC, Commissioner Alvarovedoya gave a fantastic speech where he just laid out like,

well, if you're using these kinds of contractual controls under antitrust, they're called vertical restraints and technical terms to misclassify independent contractors as employee, or sorry, to misclassify employees as independent contractors, that's also an antitrust issue. That should be addressed by the FTC Section 5 authority, which is unfair methods of competition. They did some similar things to sort of, you know, maybe not pass new rules, but to address this idea of control without responsibility. So I think, you know, to wrap it up, you know, the way franchisors have been able to have their cake and either two, if we come out and from both sides on the antitrust and the labor side and the liability side, I guess three sides,

that sort of narrows there, then they won't have to make a choice. Do you want the control or do you want to be accountable? But you can't have it both ways. This may be a little bit outside your portfolio, but on that antitrust side, it really felt over the past couple of years. I mean, the antitrust movement has been percolating, I would say, for over a decade now. Well, probably 14, 15 years. I mean, in earnest. And there's a lot more sensitivity to the fact that we left our prior notion of antitrust

and the arguments to return. And again, this is a mirror image of what happened in the, 60s in the 70s with what was coming out of Chicago school in that, you know, sometimes with these legal movements, it's really just one player on the field. And is it your sense that like that that that that there again, this might be outside your portfolio as it coming more from the legal institution, but that there is still momentum in pushing that and what would it take from a statute, like, what would it take for this to sort of really turn in terms of the franchisees? Like, because I don't think antitrust is caught up to where we, the heights, if you were,

we reached on the labor side, but those heights were not as durable because Trump comes in, he reverses it. But if we get it within the legal institution, there's a certain amount of momentum that continues to go. What's your sense of that? Yeah, so I think, you know, just like the Chicago school, this stuff is going to percolate up, you know, with law students, you know, and, you know, the saying about science, if science progresses one funeral at a time, you know, you need to get, you know, new cohorts of lawyers and, you know, litigators and judges who have different understandings, you know, better understandings of how the economy really works. So I think that that's a big part of it. And again, a new legislation is essential. But in the meantime, you know, one thing that, that maybe is a cause for a little bit of optimism on the antitrust side of things is a lot of judges don't really have whether right or right wing or left wing, Republicans or Democrats, don't have super well-formed doctrinaire ideas about antitrust. So I think some of them can be moved, you know, by good arguments that are rooted, you know, in past cases. A lot of the

stuff I'm talking about, a lot of it is particularly under the Federal Trade Commission Act rather than the Sherman Act, you know, the major antitrust law, is still good law. We can still move forward on some of these things. But yeah, ultimately, federal legislation, whatever can be done. The other thing, a wonderful thing about antitrust is that there is no federal preemption. So states can make their own interest laws that are stronger on these issues of controlling small businesses. There's a lot that can be done there. And then on the labor side, yeah, I mean, pass the pro act or something better than the pro act. And in the meantime, you know, we need, yeah, we just need to reverse some of the, you know, win again and administratively reverse some of those bad joint

employer rulings. Brian Kalachi, the book is Chains of Command, the Rise and Cruel Rain of the Franchise Economy. Thanks so much for your time today. We'll put a link to that at majority.fm and in our podcast and YouTube descriptions. Really appreciate it. Thanks for having me. All right, folks.

That's it for this half of the program. It's Monday. and that means that we're headed into Monday's fun half. Emma Viglin will not be joining us today, but she'll be back tomorrow. I just anticipated something passive-aggressive coming from me.

No, no, it wasn't at all. Now it made me feel like it was passive-aggressive after you started laughing that. Matt, I wonder, do you ever have moments where you think about like somewhere in corporate McDonald's headquarters, there's a file that says Matt Lack and like assesses your friar work back from when you were a kid? I would like it if there was like a big file that was collecting all of the things that me

and the other people on headsets would say about the people coming through the drive-thew because we basically just made fun of them. It's that right? Yeah. Yeah, people, there's this thing people say about like, No one's really thinking about you, but when it comes to McDonald's, in my experience, when people come to the drive there, we'd make fun of them immediately after they were done making their order.

If they made a single flub of pronunciation or even if they had a funny voice, we would make fun of them immediately. So you would say like, oh my God, they called it a mitch chicken. Exactly. Or like if they ordered something in a stupid way, there's a simpler way to do it. Like what would that? Just like ordering like McDonald's. Oh, not organizing your drink or chicken.

with your food order. So like being inefficient. So yeah. So they're like, I'll have one cheeseburger and fries and a cook. Oh, and then another cheeseburger. Yeah. And we're just like, oh my God. God, this person is the first time you've ordered at McDonald's?

Get out more. Organize your burgers. No, we don't have whoppers here. I would love, love to hear a recording. that i would too i'd be worth the sort of like palanteered panopacom i would require keeping that stuff for 25 years ostentatious says i want to nominate that interview for best of that was fascinating i've never thought about the intersection between franchisees and antitrust um noted do you have that i'm on it boss okay you're like oh shoot i was supposed to start this list

uh three months ago Didn't we best of that one about the Nixon administration and McDonald's franchises? Do we best of that one? Do you remember that interview? I think so. Was that part of like, you know what? That came up in this book and I meant to ask him about it. Nixon had a like a black employment thing and he was like pushing franchises.

Sort of black capitalism. Yeah. Through like McDonald's franchisees type of thing. Folks, it's your support that makes this show possible. You can become a member at join the majority report.com. When you do, you not only get the free show free of commercials, but you also get the fun half and you can IAM us on the fun half. I just want to note, I already got six things in the best of list.

From this year? From this year. Damn. I need to do a mid-year best of. That's right. Uh-oh. Somebody's bucking for a day off. Take a June or Christmas in July.

Maybe we'll do that. Maybe we'll do an extended July 4th is on a Saturday this year. Actually, I know. I hate this country. This year's, the calendar has been so messed up this year. So messed up. Also, folks, just coffee.coop. Fair trade coffee, hot chocolate.

Use the coupon code majority. You get 10% off. Matt, what's happening in the Matt Leckian Media Universe? Yeah, a brand new Jacobin show for everyone who subscribes over at the Jacobin Meg YouTube channel. We talked with Bronco March Teach about his piece going into how Peter Thiel got a little bump back into politics from none other than Jeffrey Epstein, who said he needed to develop a world sense and start looking into doing deals with people like Ehud Barak. So check that out and talk about those emails and what. We're at now that Epstein is dead, and Peter Thiel is one of the primary government contractors in our surveillance state. Check that out at Jacobin YouTube channel.

Speaking of Peter Thiel, did you see that article that J.D. Vance, there was a lobbyist paying people a hundred bucks a pop to be, was in an Iowa? It was in Iowa, yeah. To fill the room in Iowa for him? Jeez. And then also, somebody else just, I am this. And, you know, it's worth mentioning on, we'll talk more about it probably in the fun half, but maybe we'll wait for Emma to come back to talk about this. But a week or two ago, we had Chris Rob on, and he is running in Pennsylvania's, is it fourth? I can't remember exactly which district it is in Pennsylvania.

And I had interviewed him. I didn't realize it like 20 years ago when he was a blogger. and he's since been a Pennsylvania state rep and he's running for Congress in the third and it's just been revealed that Josh Shapiro the governor of Pennsylvania has been playing in the background in that primary and apparently really worried about Chris Robb winning

and I mean, we had him on, obviously supportive of him, of him, great policies, Chris Rob. But that gives us, I think, you know, for me, that story tells me, A, Chris Robb is definitely the person I want to win that primary. And B, there's a lot more problems with Josh Piro than just his very. I don't think we actually covered on air, but we had on the sound sheet for a while. He was, was it the state treasurer of Pennsylvania that he went and got unions to back the Republican because the Democrat said something mean about him or something real pay. Exactly. Yeah.

She apparently has been sort of dish in the tea on Twitter, too. So, yeah, maybe we'll. Oh, AOCs to rally with Chris Rob this week in Pennsylvania. is third. That's good. All right, folks, look. We're going to head into the fun half. And we're going to do that. Now, three months from now, six months from now, nine months from now. And I don't think it's going to be the same as it looks like in six months from now. And I don't know if it's necessarily going to be better six months from now than it is three months from now. But I think around 18 months out, we're going to look back and go like, wow. What? What is that going on? It's nuts. Wait a second. Hold on for, hold on for a second. The majority. Emma, welcome to the program.

Hey. Fun hat. Matt. Who? Fun pack. What is up, everyone? Fun pack. No, McKee.

You did it. Fun hat. Let's go Brandon. Let's go Brandon. Fun hat. Bradley, you want to say hello? Sorry to disappointment. Everyone, I'm just a random guy.

It's all the boys today. Fundamentally false. No, I'm sorry. Sorry, women's... Stop talking for a second. And let me finish. Where is this coming from, dude? But dude, you want to smoke this?

7-8? Yes. Yes? It's you. Perfect. I think it is you. Who is you? No sound.

Every single freaking day. What's on your mind? We can discuss free markets and we can discuss capitalism. I'm going to go to life. Libertarians. They're so stupid though. Common sense says, of course. Gobbled e-gook.

We fucking nailed it. So what's 79 plus 21? Challenge met. I'm positively clovery. I believe 96, I want to say. 857. 210. 35.

501. 1 half. 3-8s. 911 for instance. $3,400, $1,900. $6.5,4, $3 trillion sold. It's a zero-sum game. Actually, you're making me think less.

But let me say this. Poop. You can call it satire. Sam goes to satire. On top of it all, my favorite part about it. You is just like every day, all day, like everything you do. Without a doubt. Hey, buddy, we see you.

Folks. Folks. The week being weeded out, obviously. Yeah. Suns out, guns out. Should know. People just don't like to entertain ideas anymore. I have a question.

Who cares? Is enabled, folks. I love it. I do love that. Got to jump. You got to be quick. I get a jump. I'm losing it, bro.

Two o'clock. We're already late. guy's being a dick. So scrum. Sent to a gulaw? Outrageous. What is wrong with you? Love you, bye. Love you. Bye-bye.