Next time you’re basking in the steam off a pile of Asian Zing boneless chicken from Buffalo Wild Wings, spare a thought for Aaron Vance, standing dumbstruck in a woodworking factory.
In 2009, Vance arrived for the 7 a.m. shift at Wood Structures, Inc. in Saco, Maine. A sawyer with a decade’s experience, he had just punched in when everyone was called to a meeting. The company was shutting down, workers were told, and all employees were being placed on an “unpaid leave of absence.”
A few weeks later, those absences became permanent. No one bothered to tell the workers.
Vance was one of 180 employees who argued in a class-action suit that they should’ve received 60 days’ notice, severance pay, and payment for unused vacation hours. The suit targeted Roark Capital Group, an Atlanta private equity firm.
Roark’s response was astonishing: Workers couldn’t sue Roark, which owned more than 98 percent of the company, because it was merely a “parent company,” not their “employer,” and therefore not subject to employment law.
The woodworkers were technically employed by Wood Structures, and good luck collecting from that company, which was in bankruptcy. A judge saw through these arguments. The parties later settled on non-public terms.
Founded in 2001, Roark brought on investors in waves. By 2008 it was sitting on more than $1 billion. It waited, wisely, as overpriced companies collapsed that year.
Roark emerged from the crisis with an appetite to invest, and has developed a taste for restaurant chains, grabbing major holdings in Arby’s, Jimmy John’s, Hardee’s/Carl’s Jr., and Cinnabon, among others.
Last month, Roark made its biggest deal yet: a $2.9 billion purchase of Buffalo Wild Wings. When the purchase is complete next year, B-Dubs will once again be privately held. Very privately.
Despite its splashy purchases of well-known brand names, Roark, incorporated in Delaware and the Cayman Islands, keeps a low profile. This month, it declined even to address a report that it was raising another $7 billion for acquisitions. Its founder, Neal K. Aronson, does an in-depth interview about once a decade.
The firm is likely a mystery to the tens of thousands of lower-income employees of its restaurants, and the millions of low- to middle-income people who eat at them. It handles $7 billion in investments in more than 60 companies.
On its website, Roark explains the inspiration behind its name: Howard Roark, the fictional architect-hero of the Ayn Rand novel The Fountainhead. This comes with the assurance that the name “does not connote any political philosophy,” and is merely about admiration for the character’s “independence and integrity.”
In the book, Roark demonstrates this “integrity” by blowing up a low-income housing project because it wasn’t built to his designs, an act he defends in a monologue about the value of selfishness and ego. And the evil of charity. “I am a man who does not exist for others,” he declares.
The book is a favorite of Donald Trump’s, who has said it “relates to business, beauty, life... inner emotions,” and “everything.” Trump shares this philosophical appreciation—dark, if not exactly deep—with Andrew Puzder, his first choice for U.S. labor secretary, who later withdrew after spousal abuse allegations resurfaced.
Puzder started his career as a pro-life, anti-labor attorney, and was installed in 2000 as the CEO of CKE Restaurant Holdings, the corporation behind Hardee’s and Carl’s Jr. When Roark swooped to buy CKE in 2013, it kept Puzder in place, a reflection of its “partnering with management” strategy.
As CEO, Puzder opposed the Affordable Care Act and minimum wage increases of any kind, and once spoke highly of the idea of employing robots, which “never take a vacation” or file “an age, sex, or racial discrimination case.” Puzder was right to be bitter. His fast-food chains were sued often.
In June, Carl’s Jr. settled for $1.4 million with 37 employees whom it neglected to pay minimum wage. A survey of CKE employees found 28 percent were forced to work off-the-clock, and 76 percent had worked sick due to understaffing. Another class-action suit alleges CKE prohibits franchisees from hiring employees who work at another CKE business, which effectively suppresses employee wages. (Shift supervisors at a Carl’s Jr. make about $25,000 a year.)
Jimmy John’s is currently embroiled in a class-action suit alleging it refused to pay assistant managers who worked overtime. Arby’s has settled similar suits, with a new class-action filed in Florida this year.
In 2015, Buffalo Wild Wings settled for $1.8 million with employees in Illinois and Michigan, who claimed the company was forcing tipped employees to do regular labor, like cleaning bathrooms, while receiving less than the minimum wage. This year, two employees in Ohio sued Buffalo Wild Wings for doing the same thing.
This is the beauty of the franchise model: Franchisees are free to “innovate” at their restaurants as they see fit. Often enough, they do it in ways that screw their employees.
The case of the Maine woodworkers should be instructive for employees at Roark’s Buffalo Wild Wings. When the bourbon honey mustard hits the fan, don’t come asking your new “parent company” for charity. Heed their harsh lessons and, as soon as you can afford it, consider moving out from under their roof.
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