"Two remedial orders by the prefectural Labor Relations Commissions (Rodo Iinkai) in Japan1 that affirmed the worker status under the Labor Union Act (LUA) of “owners” of convenience stores who work in the stores they manage, have raised new interpretative issues in terms of franchisees being qualified as workers. Although the remedial orders of the Commissions seems basically reasonable, the unique characteristics of franchise agreements were not fully taken into account. In a franchise agreement, the “franchise package” entails the obligation to follow directions and orders from which worker status could be inferred. On the other hand, the franchisee increases opportunities to gain profits as a business trader. In overall judgment of worker status, the amount of income obtained ought to be a deciding factor, and thus it depends on respective convenience store “owners” as to whether they can be regarded as “workers” under the LUA. If labor unions organizing “owners” of convenience stores are recognized as legitimate labor unions meeting the requirements under the LUA, collective bargaining agreements concluded by such unions will be the content of franchise agreement by the effect of Article 16 of the LUA. In other words, franchise agreements will be recognized as “labor contracts.” However, even if the worker status of convenience store “owners” under the LUA is accepted, in the author's opinion, their worker status under the Labor Standards Act (LSA) is not affirmed because with respect to franchise agreements, “equivalent protections” under a unique set of occupational and work regulations are provided as judicial precedents contributing to the protection of franchisees are being accumulated. Nonetheless, the relative nature of the definition of “worker” causes confusion in practice. Greater consistency of the definition of “worker” will be needed in labor legislation regulating the content of contracts. In the future, a regulatory framework for exemption for convenience store “owners” from application of the LSA/LCA should be drawn up. Meanwhile, there are problems in that convenience store “owners” who has the worker status under the LUA, in the author's opinion, cannot be qualified as “enterprises” under the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (the Antimonopoly Act), and seemingly should be excluded from protections from abuse of superior bargaining position (the Antimonopoly Act, Article 19). But as collective agreements in Japan differ from those in Europe regulating working conditions for the industry as a whole, regulation of abuse of superior bargaining position will continue to be applied to the entire franchise system."

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