Advocates are hailing a B.C. Supreme Court ruling on a long-running union battle with grocery giant Sobeys as a victory for franchise workers across the province.
The decision last month upheld a BC Labour Relations Board ruling that Sobeys still controls the first five franchised FreshCo locations in B.C.
It means that United Food and Commercial Workers 1518 will deal with a single employer across all of Sobeys’ franchised and non-franchised locations and brings a six-year legal battle between Sobeys and its workers’ union to a head.
“Hopefully it continues to consolidate power for FreshCo workers, so they can bargain and deal with one true employer,” UFCW 1518 president Patrick Johnson told The Tyee.
Experts are split on how the case will affect organizing at franchise businesses. While Johnson said it’s too early to tell, employment and labour lawyer Chris Drinovz said the decision will likely set a precedent for how franchises conduct labour relations in B.C.
“It’s definitely a strong decision in favour of unions,” said Drinovz, a partner at KSW Lawyers.
“It gives a lot of comfort to employees that are unionized in larger organizations, to know that if there’s major restructuring done, they’re still going to maintain their bargain rights.”
Sobeys did not respond to repeated requests for comment.
The Canadian supermarket chain is owned by Empire Co., a conglomerate headquartered in Stellarton, Nova Scotia, with $31 billion in annual sales. Sobeys has several brands including Safeway, IGA and FreshCo.
While it owns and operates some of its stores, some are franchised — meaning the corporation gives an operator the right to run a business with Sobeys’ brands and support.
The labour conflict dates back to when Sobeys opened the first five FreshCo locations in B.C.
In 2018, United Food and Commercial Workers 1518 represented approximately 5,000 Sobeys workers at about 60 Safeway stores in B.C.
That year, Sobeys told the union it planned to close 10 of its B.C. Safeway stores and lay off the employees.
According to the decision, Sobeys added that five of the closed stores might later reopen as FreshCo locations.
The corporation wanted single-store bargaining units, meaning each franchised store would have to negotiate its own collective agreement with the “franchise operator.”
But Johnson said the union’s position was that the true owner of all the B.C. FreshCos is Sobeys, and workers at all the franchised and non-franchised locations should bargain as a single unit.
“There’s power in numbers,” Johnson said. “When you have 1,000 workers bargaining together compared to just 40, you can pull on the power of the entire organization of members to get collective wins.”
The union and the company went into arbitration and came out with a single collective agreement for workers at all of the Sobeys banners, including its Safeway stores and franchised FreshCo stores.
The next year, Sobeys told the union it would continue closing Safeway stores and convert some to FreshCos and other brands.
It told the union the stores would be franchised before reopening — meaning they would be individually run by a franchise operator — and the union would have to deal with the new franchise operators to continue labour relations.
UFCW 1518 went to the BC Labour Relations Board, asking for Sobeys and five new franchisees to count as a single, common employer — letting the union keep a single contract for all the workers at the different locations.
Labour lawyer Drinovz said common-employer declarations can be a “really powerful tool.”
“The whole point of it is, once the union is organized and certified and it’s negotiated a collective agreement for its members, the employer shouldn’t be able to do some restructuring and get out of being unionized or get out of the collective agreement,” he said.
“That’s the mischief that the common-employer declaration is trying to prevent.”
The labour board sided with the union. In its original ruling, the board declared that Sobeys had enough economic control over the franchisees to treat them all as one employer.
It relied on Section 38 of the B.C. Labour Relations Code, which allows the labour board to treat several businesses as a single employer if they are all under “common control or direction.”
According to the B.C. Supreme Court decision, the original panel found Sobeys has wide control of franchisees. The company creates and monitors store budgets, controls the suppliers they can use and oversees pricing policies.
But what made Sobeys’ control over franchisees most clear was that franchise operators can’t set their own pay, said the original panel.
That’s still the case. A Sobeys job posting to head a Foodland in Brampton, Ontario, says franchise operators are paid to run their own businesses, with the support of a corporate network. Operators’ compensation — not included in the posting — is set by the corporation.
But Sobeys and the franchisees said the original decision was flawed. Its argument, according to the court decision, was that there was not enough evidence that the franchisees exerted control “between” each other to make them a common employer.
A reconsideration panel ultimately found no error in the original decision and dismissed Sobeys’ and franchisees’ applications.
Sobeys and the five FreshCos took the case to the B.C. Supreme Court, arguing the labour board’s ruling was “patently unreasonable.”
But Justice Francesca Marzari rejected Sobeys’ arguments.
She said the evidence and the board’s review of it “is so deeply within the special expertise of the Board and entitled to a high degree of deference.”
Sobeys also suggested the board found a common-employer declaration would be better for labour relations under the B.C. Labour Relations Code and worked backwards to “reverse-engineer” an outcome.
Marzari rejected that argument.
Drinovz said he’s not surprised Sobeys and the franchisees put significant resources into fighting the decision at the B.C. Supreme Court.
UFCW 1518’s Johnson said the union is happy with the decision.
It’s too early to say whether the decision will set a precedent for how unions bargain with franchises in Canada, Johnson said. Sobeys has a unique franchise structure and each chain will have its own.
“I hope this lays the framework to declare a common employer on other franchise owners,” Johnson said. “That is certainly something UFCW is looking at.... There’s just so many different types of franchise models.”
But Drinovz said the decision helps better define a common employer before the courts, determining how already-unionized corporations can conduct labour relations.
“For any large corporate organization that has an existing collective agreement that covers a broad geographical area or a whole bunch of branches, it’s going to be almost impossible for them to get out of that through corporate manoeuvring,” he said.
Drinovz said he wouldn’t be surprised if Sobeys and the franchisees further appeal the decision.
“The union is going to stand up for their members, and given that [Sobeys] appealed at every step so far, I would suspect they’ll take it through to the final level.”
