Hiring for your franchise

Opening your own franchise is an exciting opportunity that many aspiring business owners look into. With over 750,000 franchises in the United States alone, you’ll be in good company! However, one of the hurdles when researching how to start a franchise is staffing your business. In this short guide, we’ll cover how to hire for your franchise and make sure that you get the right people in place. First, let’s review the basics of a franchise.

What Is a Franchise?

In general, a franchise is when an established company (the franchisor) sells their business model to an individual (the franchisee) who opens up a location using this information. Typically the person who buys a franchise pays a percentage of the sales as a royalty fee to the franchisor. The two basic types of franchises are the product distribution and business format model:

  • Product Distribution Franchise - In this type of franchise, the franchisor provides the franchisee with only products to sell. You can use the product, logo, and trademark, but you will not receive a business model or help with setting up your company.
  • Business Format Franchise - The business format is what most people think of when it comes to franchises. This is where the franchisor gives you a standardized business model to follow with brand standards and training on how to operate your franchise. Once established, the franchisee is responsible for maintaining the standards of the parent company on a day-to-day basis.

For this guide, we’ll be focusing on the business format, although much of the advice will translate to a product distribution format as well.

What Do Franchise Owners Do?

The responsibilities of a franchise owner will vary depending on the industry, the type of franchise, and the specific franchise agreement. However, there are many job duties that are fairly universal when starting a franchise, like:

  • Choosing a Location - If your franchise requires a physical space, one of the first steps is to find that location. Some franchisors will help you find the perfect spot, but most of this work will be done by the franchisee. Check with the franchisor to see what you are responsible for. Many times, you are responsible for leasing and setting up the space and keeping up with maintenance.
  • Hiring and Training - There are some “owner-operator” franchises where the franchisee is actively involved with running the company, but most franchisees need managers and employees to keep things running smoothly. Depending on the franchisor, you may receive some training materials, but generally it’s the responsibility of the franchisee to hire and train employees.
  • Marketing - Some franchisors do assist with marketing, typically with national campaigns, but most franchisees still need to do marketing tasks to be successful. Budgeting for marketing, creating and implementing campaigns, and making sure these efforts are in line with the franchise agreement are all part of being a franchise owner.
  • Following the Franchise Agreement - Speaking of the franchise agreement, a major responsibility for the franchisee is to stick to this agreement exactly. This contract details all of the rights and responsibilities for franchisees and franchisors, as well as outlining standard practices for fee schedules, product and service delivery, pricing, and more.
  • Paying Franchise Fees and Royalties - The franchisee must make sure that all fees and royalties are paid promptly. There is usually an upfront fee, as well as ongoing franchise fees, which can be monthly, quarterly, or annual.
  • Business Tasks - Any small business owner has to handle these types of duties, including things like filling out paperwork, paying bills, bookkeeping, and running payroll.
  • Customer Service - A franchisee must ensure excellent customer service, whether that is hands-on with assisting customers directly or guiding employees to provide great support for your patrons. Customer service is vital since franchisees are representing the franchise brand.
  • Making a Profit - Simply put, the franchise owner is responsible for making sure their franchise is financially sound and turns a profit.

How Do Franchise Owners Make Money?

Franchise owners can make money through the profit from sales and transactions. This is the money that is left over after the franchise fees and overhead costs have been paid. Just like any other business, overhead costs include things like rent, equipment, inventory, payroll, utilities, etc. Sometimes franchise owners will pay themselves a salary rather than drawing money from the profit.

How Much Do Franchise Owners Make?

According to a survey of franchise owners by Franchise Business Review, the median annual income is around $70,000. If startup franchisees (those in business for less than two years) are included, the median falls to around $50,000. 34% percent of all food franchise owners earned more than $100,000 last year, meaning that 66% earned much less. Whenever you are considering purchasing a franchise, it is important to carefully review your franchise disclosure document to get an understanding of how much money you could make.

Who Is the Employer in a Franchise?

The typical setup in a franchise is that the franchisee is the employer. Most franchisors will provide recommended training materials and best practices for employees, but they won’t be directly involved with hiring, training, and managing employees at each franchise location.

However, this can be a little bit complicated depending on the franchise organizational structure. Some franchise agreements will include a joint employment arrangement. This is where both the franchisor and franchisee are responsible for the employees (and can both be held accountable for any workplace compliance violations). Joint employment may be included if the franchisor wants to oversee the hiring, training, work schedules, and employee records.

Even if you do not have a joint employment agreement, a court of law may consider the franchisor and franchisee as such if there are any lawsuits. When the franchisor dictates the employment relationship between the franchisee and the employees, this can be seen as joint employment, although it may not be on paper.

Do Franchisees Pay Employees?

Franchisees usually pay their own employees and run payroll for their franchise. However, if the franchisor and franchisee have a joint employment agreement, then the franchisor might take over those responsibilities. These details will be spelled out in the franchise disclosure document.

Is a Franchise Owner an Employee?

No, franchise owners (aka the franchisee) are not employees. They are typically considered to be independent contractors or self-employed entrepreneurs. However, if a franchisee violates the terms of the franchise agreement, they may lose their franchise status. This means they can no longer use the branding, trademarks, brand standards, or business practices that were provided by the franchisor.

Is a Franchise Owner the Manager?

The franchise owner can function as the manager but usually doesn’t. Some franchise owners enjoy being a part of the day-to-day operations of the franchise, filling the role of the manager. Most franchisees hire experienced managers so they can focus on the tasks of an owner, including long-term strategy for the growth of the business.

How Do I Hire an Employee for a Franchise Business?

The first step when hiring for your franchise is to figure out your needs and capacity. Ask yourself:

  • What jobs need to be covered?
  • How many positions will you create?
  • What number of employees do you need to adequately staff your business?
  • How many people can you afford to hire?
  • What pay rate and benefits can you provide?

Once you’ve answered those questions, you’re ready to start the hiring process. The steps you need to take are:

  1. Learn About Equal Employment Opportunity (EEO) Laws

    The U.S. Equal Employment Opportunity Commission (EEOC) enforces federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy, transgender status, and sexual orientation), national origin, age (40 or older), disability, or genetic information. Most employers with at least 15 employees are covered by EEO laws. The laws apply to hiring, firing, promotions, harassment, training, wages, and benefits. It’s important to know what the laws are so that you stay in compliance while hiring. Make sure everyone on your hiring team agrees to follow these laws. You can even include them in your employee handbook!

  2. Lean On Your Franchisor

    Most franchisors have hiring materials that you can use or adapt for your purposes. These may include ad templates, job descriptions, training materials, employee handbooks, and more. Most franchisors will have recommendations that you can learn from that will help you with this process.

  3. Leverage Recruiting Tools and Technology

    Hiring has never been easier! There are a plethora of tools available to help you find the right people—from job websites like Indeed.com to social media job postings to recruitment platforms that allow you to easily communicate with your prospective employees. You could even take advantage of video calls to save time while screening candidates rather than having them come in person.

  4. Check for Experience

    When looking at resumes, prioritize people who have franchise experience or who have been in customer service positions.

  5. Develop or Adapt an Interview Structure

    It’s important to have a consistent and repeatable interview process to make things as fair as possible. You don’t want to give one candidate opportunities that another doesn’t receive! Writing down your interview questions before interviewing begins helps ensure that everyone has the same chance. Plus, you can make sure that you don’t ask any questions that are prohibited by federal, state, or local laws. You might want to develop a checklist for hiring employees that will help you keep track of your process.

  6. Get Your Current Employees Involved

    Don’t forget that your new hires will have to work together! As your team grows, make sure that you involve the people who have already been hired to ensure that personalities don’t clash and everyone can work together peacefully and productively.

How Do I Hire the Right Employee for My Small Business?

You don’t want to hire just anyone! Bringing someone on board who isn’t the right fit can have devastating impacts on your business and your team. In general, here are a few tips for how to get the right people for your franchise:

  • The Right People Want the Right Workplace

    First and foremost, you need to make sure that your workplace is set up to attract motivated, hard working folks. You should have:

    • Competitive Pay Rates - Great people look for great pay, and they deserve it! Making the investment in paying your employees well will impact your bottom line positively. In fact, higher wages lead to increased worker productivity, reduced turnover, and less absenteeism.
    • Opportunities for Advancement and Pay Increases - The right employees want to stay with your company for years to come, so it’s important to give them a track for development.
    • Thorough Training - The quickest way to turn an enthusiastic employee into an unmotivated worker is to forgo proper training. People want to do their job well, so set them up for success with the skills and knowledge they need. You’ll find that people can develop into the right fit quickly when given the proper guidance.
    • A Culture of Teamwork - Working together is an important aspect to make sure your employees keep things running smoothly. Help your employees rely on each other and you by encouraging questions and treating every mistake as a learning opportunity, rather than doling out harsh words or repercussions.
    • Recognition of Good Work - Everyone likes to be appreciated! Recognizing and rewarding excellent work will help your employees feel motivated to continue doing a good job. You can do something as simple as writing a thank you note or having an “employee of the month” parking spot. Figure out what your team likes best and provide it for them!
  • Look for the Right Attitude

    When hiring, it’s important to look for people who have the right attitude. This includes those who are eager to work as a part of a team and people who are willing to learn and grow. A great hire might not be the person with the most experience, but someone who is adaptable and interested in improving their skillset.

  • Use Your Network!

    There are many other franchisees who you now have access to. You can ask them for their tips and tricks on how to hire the right fit because they understand exactly what you’re going through. Do you already have some outstanding employees? Ask them to spread the word that you’re hiring to their friends and family. Reaching out to the people you know for advice and to help you find the right people for your franchise will have you fully staffed in no time.

Franchise Opportunities: Find the Right Franchise Fit!

Here at FranchiseOpportunities.com, we have a wide selection of the best franchises to own. You can find the structure that works for you, and a brand that is appealing and exciting. From franchisors that will give you all the tools and resources you need to more hands-off franchises where you are in charge, you can find the perfect franchise for you. No matter where you are in your franchise journey, we can help. Visit FranchiseOpportunities.com to explore our available franchises, check out our resources page for more information about the franchising process, or reach out to us directly and we’ll help you create a customized franchising opportunity.

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