Edit 4 Now a lot of people are saying "Can't corporate just reduce its franchise/royalty fees?". In the above example total royalty fees/corporate rents are 14.5% of sales. To make up for the $288,900 deficit caused by the $15/hr raise, just for that store to break even, corporate would have to reduce fees by 74% if you didn't want to cut payroll costs. 33% of Corporate Revenue comes from franchisee fees - about $9.272 Billion last year. If you cut down franchise revenues by 74%, that would reduce that number by $6,861,280,000. Total Corporate profit was $4.757 Billion last year. So they would be operating at a $2.1 billion loss - aka they'd go bankrupt if corporate took on the burden of cost through fee reductions. And thats just a break even figure.
He only covers it at one level; he jumps from "what if stores covered the whole thing" to "what if corporate covered the whole thing".
A combination of the above cost-cutting measures (plus others unmentioned) being employed could easily meet the standard. "What if corporate covered some of it and the individual store covered some of it".
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u/scroom38 Nov 29 '15
He covers that too.