Arguably, not enough attention has been given to the unique human resources challenges faced by the franchising business model. Data and research, tracking worker’s experience within this working environment which typically includes shift work and hourly paid across multiple sites is scant. Typically, the franchise model is associated with following types of business
- Fast food and restaurants such as McDonald’s, Starbucks and Pizza Hut
- Fitness Centres and gyms such as Fitness First and Any Time Fitness
- Retail such as Holland and Barrett, Tony and Guy, and Abercrombie and Fitch
- Manufacturing such as Coca Cola
- Product or service franchises such as accountants, cleaning businesses, plumbers, photographers and Care Homes and services
The franchise business model is a great way to expand and delivers proven operating models and systems for franchisees. However, there tends to be an emphasis on structural and operation processes, designed to maximise revenues and efficiencies. It often overlooks the HR complexity of the day to day dynamics. Specifically, the leadership skills and competence of front-line managers and the impact to staff. The reality is that poor HR systems and processes will significantly aggravate the performance of a franchise. That’s not good news for either the franchisor or the franchisee.
Human resources in franchise businesses
Often franchise business models are highly sophisticated in their documented processes, use of branding and operational procedures. There is a proven and successful business model that provides support for the franchisee and mitigates against risk of failure for all. However, they are often lacking in their approach to human resources. Good business leaders do not always appreciate what’s needed to be successful. And that includes an HR strategy along with defined HR processes, made easier with the right HR technology.
Organisations choosing the franchise path as a means of leapfrogging resources and growth restraints need to ensure their HR business systems and process eliminate unnecessary complications for both the franchisor and the franchisee. Many aspects of what you can and can’t do are highly regimented by the franchisor i.e. proven ways to operate as well as a consistent brand experience across the franchisors network. Whereas other elements are left to the franchisor to manage themselves.
Robust people processes across the entire employee life cycle
Staff are one of your most valuable assets and the heartbeat of a successful franchise business. That means having the right systems and processes in place that focus on your people, your people processes, employee engagement and employee experience.
In today’s competitive environment, attracting and retaining the right staff is a key success factor for any franchise business. If the right processes are not in place to attract, train and retain staff across the full employee life cycle, this will become a single point of failure for any, otherwise successful franchise business. Even some of the most prestigious franchise brands are innovating in this area, whether it’s offering a signing bonus, an interview bonuses or even a drive-thru interview.
Finding the right talent for your business is not unique to franchises. However franchises are often plagued with a poor reputation when it comes to employee management practices. Key issues include job satisfaction, training and performance, teamwork, rotas and scheduling, managing staff across multiple locations, and career progression. There is no reason why these issues should be obstacles to success with the use of flexible HR software and workforce management tools.
HR mobile-first technology is not price prohibitive within a franchise business model and can integrate seamlessly into payroll, training and other tools essential for a successful business. In fact, HR software will enable the business to be more efficient, increase staff retention and directly improve margins and profitability. It provides the ability to do more with less, and mitigate the cost of recruitment.
The absence of robust and streamlined people systems and processes will limit any growth and expansion plans and the resulting outcome will be increased staff turnover.
A lot of franchise businesses are spread across multiple locations, which adds a high degree of complexity to managing people. Whether you have five or twenty-five locations, you need to determine the best approach, which should include flexibility, scalability and security. There are a number of unique HR challenges for Franchises such as
- Hiring, training and onboarding staff who are able to work across different locations
- Processes that enable staff to paid for different roles, at a different pay scale during any one shift or any site
- Strong workforce management tools for easy scheduling across multiple locations and shifts
- Mobile first and employee self -service… all you need is a phone. Efficient and accessible processes that enables staff to check their rotas and locations in real time and get notifications of any changes
- Shift swap and shift requests are requiredin your employee self-service HR processes
- Clocking in and clocking out, utilising mobile apps or your HR software
- Training at the point of need, by which staff can easily access training modules immediately. This approach also aids a smoother and faster onboarding process
- Mobile first absence and holiday requests
- Employee mobility to work safely in different locations
- Qualification and capability built into the scheduling tools. Along with functionality that ensures staff are appropriately trained and qualified for the shift, role or location. This is where automation is
- WTD and employer rules are built into staff scheduling that ensures staff are not incorrectly scheduled e.g. 2 days off following a late shift, avoid finishing a late shift and on a rota for an early shift the next day, staff are not over scheduled
- Scheduling tools that ensure you don’t over or under schedule staff to accommodate business peaks and troughs
Payroll complexity for franchises
Payroll can make or break the relationship between employee and franchisor. Get it wrong and workers will become disengaged fast, which will hit staff retention rates. Generally, the employee is employed by the franchisor rather than the franchisee. It is however possible that there is a joint employment arrangement where both may be responsible for payroll.
Workers may be hourly paid, seasonal, or shift, therefore the system needs to work and provide flexibility and accuracy. Workers may work on numerous locations for the same Franchisee, which means accurate tracking, and automation that ensures the correct calculations for payroll. Make sure your system includes accounting for tips (sometimes known as TRONC), which may have been earned in multiple locations if that is the nature of your business.
Staff may also work for different franchisees, so flexibility is required for staff to be able to work in locations that are not run by the same franchisee. That means your processes and payroll need to accommodate this requirement. This also includes tracking holidays and other forms of absence rather than two employee records for each franchisee or location. This is an essential requirement if you want to give your staff flexibility to work across the full franchise network, which is a huge benefit for all franchisees.
Franchise businesses need to have a system that can accommodate different rates of pay, for different roles within the same shift, across a single location or multiple locations. This is a unique HR challenge for Franchises, who may have staff working for different franchisees.
Many franchises also use agency staff who they need to include within the same processes and manage the same scenarios mentioned earlier. Individual franchises may also have a different payroll provider and payroll schedule i.e. fortnightly, four-weekly, monthly etc
Regulations, compliance and security
In providing flexibility for staff to work and move between locations as well as franchisee organisations, it’s important to make sure employee records can be shared. This needs to ensure the right level of privacy. A manager from one franchise may wish to look at employee records of a worker from another franchise, which means protocols and permissions need to be in place to appropriately protect confidential information. For example, information regarding skills and training as well as performance may be available, but details on salary are not.
It goes without saying that everything must be GDPR compliant. Often as a franchisor, you don’t have the luxury of an HR department. However a lot of the heavy lifting to ensure, compliance, security and confidentiality can be achieved with a level of automation found within dynamic HR software.
Like any other business, a franchisor needs access to good people data, and insights to make adjustments and business decisions. Due to the complexity of some franchises, its important to fully capture and utilise your people data in real time and in a secure way… definitely no spreadsheets.
Franchise businesses also need a high degree of granularity, because of their complexity and nuances. However well documented and operated, each franchise is likely to operate in a slightly different way.