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BREAKING: Congress Introduces Appropriations Rider to Block New Packers and Stockyards Rules
After a long fight, the Biden administration enacted several rules [[link removed]] designed to protect contract chicken farmers from abusive meatpacking corporations. The rules require poultry processors to more clearly disclose [[link removed]] the range of prices they pay contract farmers for their chickens while also prohibiting [[link removed]] retaliation against farmers and regulating [[link removed]] the controversial tournament system. But now the House Appropriations Committee has introduced a rider [[link removed]] on the Big Beautiful Bill that effectively repeals these rules by preventing the United States Department of Agriculture (USDA) from spending any money to enforce them.
We’ve seen Republican lawmakers use this tactic before: the Obama administration introduced similar rules which a Republican-controlled Congress blocked for several years [[link removed]] with an appropriations rider. Congress faces more bipartisan opposition this time around. Notably, the Republican-leaning Farm Bureau has urged [[link removed]] lawmakers to protect the Biden administration’s contract poultry rules. But it remains to be seen if farm advocates can get their way.
Photo by Gage Skidmore via Flickr
Roark Acquires Another Fast Food Chain, Dave’s Hot Chicken [[link removed]] [[link removed]]
If it’s a franchise, there’s a good chance one private equity firm, Roark Capital, owns it. Named after [[link removed]] the main character in Ayn Rand’s “The Fountainhead,” Roark Capital has made millions buying up franchise brands in many industries [[link removed]] from maid services to autobody shops. Roark specializes in restaurants and owns Dunkin’, Subway, Jimmy Johns, Arby’s, Sonic, Hardee’s, Cinnabon, Auntie Anne’s, Jamba Juice, and Buffalo Wild Wings, among other chains. Last week it added [[link removed]] the trendy Nashville-style spicy chicken chain, Dave’s Hot Chicken, to its portfolio for $1 billion.
This deal represents a broader [[link removed]] trend [[link removed]] of private equity firms buying up franchise businesses. Franchising generates steady royalty fees for private equity owners while shielding them from day-to-day management duties and labor liabilities. While private equity ownership can help new brands like Dave’s Hot Chicken expand, it can also exacerbate some of the most harmful features of the franchising model, namely, the pressure it puts on franchise operators to lower wages or cut hours for workers. Roark chains employ 1.4 million workers and the firm uses its dominance in the restaurant industry to lobby against labor protections and a higher minimum wage.
When a private equity firm like Roark buys a business like Dave’s Hot Chicken, it isn’t interested in owning physical restaurants, it’s interested in owning the brand. Franchisors make money by charging licensing fees to the independent franchisees that own and operate their many locations. Roark says it will help Dave’s Hot Chicken expand by streamlining backend systems such as ordering food and constructing new locations. Independent franchisees share in the expansion costs and every new location generates more franchising fees for Roark.
The private equity business model relies on taking out debt to buy companies, restructuring them, and reselling them at a profit. Steady franchise fees can help finance a new kind of debt called whole business securitization [[link removed]]. Basically, private equity firms put all their money from franchise royalties into a special legal entity designed to protect certain assets if the parent company goes bankrupt. Then they take out debt based on the revenue of this new entity to get a lower interest rate. Roark used nearly $5 billion [[link removed]] in whole business securitization debt to acquire its largest franchise, Subway, in 2024.
Roark’s acquisition of Dave’s Hot Chicken is smaller by comparison and the terms of the deal have not been disclosed [[link removed]], so we do not know how much if any debt financing was involved.
Private equity firms claim [[link removed]] that their restructuring helps the businesses they own. For instance, the CEO of Dave’s Hot Chicken says [[link removed]] Roark’s purchasing systems can lower franchisees’ cost of goods. But often private equity companies load franchises with new debt payments or pull out cash to pay investors, as Roark did with Arby’s in 2015 [[link removed]].
These financial pressures exacerbate the restraints that franchisees already face. Changes in antitrust law [[link removed]] have allowed franchisors to enact tighter contractual control over their franchisees. The franchisor sets rules for how their franchisees must operate, including the ingredients they must buy, the technology they must use, or when they must be open.
Research by Open Markets chief economist, Brian Callaci, finds [[link removed]] that all these restraints compel franchisees to compete by cutting labor costs because they don’t have many other choices to make. Studies [[link removed]] show [[link removed]] that franchised fast-food locations offer lower wages and have more labor violations than restaurants directly owned by the parent company.
Roark prides itself [[link removed]] in leveraging less debt than other private equity firms, yet it still has a particularly poor labor track record. An analysis [[link removed]] by the Private Equity Stakeholder Project found that Roark had the highest rate of wage and hour violations out of the top 11 private equity firms with the highest number of employees in the U.S.
Even though private equity firms create the conditions that push franchisees to cheat workers, they avoid liability for labor violations because franchisees are technically the employers. “Private equity firms really like the franchise model because it allows them to escape some accountability,” says Azani Creeks, senior researcher at the Private Equity Stakeholder Project.
The Biden administration passed a rule to expand the definition of a joint employer to make franchisors more liable for labor violations at their franchisees, however, the rule faces legal challenges [[link removed]] and threats [[link removed]] from the Trump administration.
Roark opposes [[link removed]] this joint employer rule and other labor standards. In a 2021 letter to its employees and franchisees, Roark bragged [[link removed]] about successfully lobbying to keep the Raise the Wage Act out of the Biden administration’s COVID-19 relief bill, which would have raised the federal minimum wage to $15 per hour. Roark also opposes the PRO Act, which would restore many union rights. Roark spent $480,000 [[link removed]] lobbying in 2024 and its industry dominance boosts its political influence.
“I do think their concentration in this industry, specifically gives, them a lot of power and a lot of say,” says Creeks.
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What We're Reading
In addition to the rider to block new Packers and Stockyards rules, the spending bill moving through Congress proposes to cut the budget for USDA’s Packers and Stockyards division from $33 million to $24 million. ( USDA [[link removed]])
Cargill plans to fully acquire the second-largest [[link removed]] beef processor in Australia, Teys. Cargill already owed half of the company and operated a joint venture with Teys for 14 years. ( Meat+Poultry [[link removed]])
DoorDash will take over its UK rival, Deliveroo, for $3.9 billion. ( Associated Press [[link removed]])
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Our team of reporters, lawyers, and economists works to revive competition policy to build stronger democracies, more just and equitable societies, more innovative and sustainable economies, and a more secure and peaceful world.
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Written by Claire Kelloway
Edited by Phil Longman and Anita Jain
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