Businesses like Frida,Inc. have found using a worker co-op as the best fit for business succession of their substantial social enterprise. Frida Inc. is owned by two partners who have built up a very successful business over 30 years, with hundreds of employees. They run a highly participative workplace known for high standards for quality, customer service, and community involvement. Like many other successful social entrepreneurs, these partners want to:

  • get their investment out of the businesses, at least for their estates
  • ensure that the businesses continue to operate in their hometown
  • maintain their financial success, quality, customer and worker friendly atmosphere
  • enable all interested workers to buy into the company, and
  • maintain the company’s role as a model corporate citizen.

Read their full case study on the success of using a worker co-op.

Worker co-ops are just one example of the many types of co-ops. Here are a few that Deborah Groban Olson has worked with:

  • Housing co-ops: To get more affordable or more congenial housing co-ops. (See: Mustard Tree Co-op)01-Mustard-Tree-Housing-Co-op2_10321313715_l
  • Worker co-ops: To buy an existing business or build a new one in which the workers have democratic control and equity interests commensurate with their work. (See: Frida Inc.)
  • Worker co-op created within an ESOP employee stock ownership plan: A company that owns stock through an ESOP, enabling it to use the many tax ESOP tax savings and advantages for raising and borrowing money. However, it has one-vote-per-person voting on all shareholder issues and a highly participative decision making structure. Atty. Olson created co-op style ESOP companies at MBC Ventures and Republic Container.The key difference between ownership by an ESOP and co-op ownership is their ultimate ability to keep the company independent. In an ESOP, the workers are beneficiaries of a pension plan that is controlled by a trustee (who may be appointed or elected). The Trustee’s duty is to the beneficiaries as retirees, who may be legally forced to sell the business if s/he gets a good offer. Co-op members are actual equity owners of their co-op interests. They have the final decision on any possible sale which usually requires a super-majority vote.
  • Childcare co-ops: To get high quality, affordable childcare in which the parents have a voice
  • Farm and Purchasing co-ops: To give farmers more control over the prices paid for their goods, how their goods are marketed, and to get equipment, feed, etc. at discount prices.
  • Consumer co-ops and buying clubs: To get natural, fresh, local foods or other consumer goods which are hard to get locally or to get them at a lower cost;
  • Consumer and Worker co-ops: The consumers want a special or local product and want to include the workers in making decisions and sharing equity. (See: High Five Co-op Brewery)

Click here for more explanation on theseMorgue-Fresh-Produce co-op types:

  • Consumer owned
  • Producer owned
  • Worker Owned
  • Purchasing/ Shared Services
  • Multi-stakeholder (a combination of some of the above)

7 Globally Agreed Upon Cooperative Principles (Click here for more detail.)

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Members' Economic Participation
  4. Autonomy and Independence
  5. Education, Training and Information
  6. Cooperation among Cooperatives
  7. Concern for Community

5 Reasons to Consider an Eligible Worker Owned Co-op (EWOC)

An EWOC is an enterprise where the majority of co-op members are employees and a majority of voting stock is owned by co-op members. A majority of the board of directors is elected by members on a one-vote-per-person basis. Advantages include:

  1. Workers have more control over co-ops than ESOPs.
  2. The sellers can get a fair price for their stock with less regulation.
  3. The seller’s proceeds from a stock sale to a worker co-op may be tax-free.
  4. Co-ops are less expensive and less regulated than ESOPs.
  5. Sale to a co-op keeps the company independent and rewards the people who made it a success.

Click here for more detail on considering a worker co-op.

Support systems are important for start-up worker co-ops. To be sustainable, a start-up worker co-ops, (and especially those serving workers with limited education)  need a supporting joint business resource or community support organization.That is why the Mondragon, Emilia Romagna, Evergreen Cooperatives in Cleveland, WAGES and the Arizmendi Co-ops in Berkeley, CA have all created mutual support organizations for back office and business development functions. The Community Economy Group (CEG)  is building such a system in Metro Detroit. Through the CEG non-profit, Center for Community Based Enterprise, Olson connects start-up businesses with a co-op developer who can assist them with feasibility studies.The Southwest Detroit Construction Cooperative (SWDCC) example explains how a well-intentioned worker co-op ceased to survive when the back office support became unavailable.