Recent studies document pervasive noncompliance with basic labor standards in industries with high concentrations of low-wage workers. The authors examine how franchising, a common form of business organization in low-wage industries, affects compliance. They estimate the effect of franchise ownership on compliance with federal minimum wage and overtime standards in the fast food industry using unique data on Top 20 branded restaurants. franchised outlets have far higher levels of noncompliance than comparable company-owned establishments. The authors argue that observed differences arise from internal incentives facing franchisees versus franchisors rather than from external enforcement pressures facing the parties.T he problems facing low-wage workers have drawn a great deal of academic and popular attention in the past decade (see, for example, bernhardt, boushey, Dresser, and Tilly 2008; greenhouse 2008; Kalleberg 2011; Osterman and shulman 2011; Luce, Luff, mccartin, and milkman 2014). One particularly troubling feature of low-wage work is pervasive noncompliance with basic labor standards such as violations of minimum wage requirements and overtime pay (bobo 2012;bernhardt, spiller, and Theodore 2013;weil 2014). A recent survey of low-wage workers in three major metropolitan cities in the United states estimated that 26% of workers were paid less than minimum wage; that 75% of workers eligible for overtime did not receive the compensation they were entitled; and that 71% of workers who