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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.
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:
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.
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:
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.
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.
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.
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.
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.
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.
The first step when hiring for your franchise is to figure out your needs and capacity. Ask yourself:
Once you’ve answered those questions, you’re ready to start the hiring process. The steps you need to take are:
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!
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.
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.
When looking at resumes, prioritize people who have franchise experience or who have been in customer service positions.
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.
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.
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:
First and foremost, you need to make sure that your workplace is set up to attract motivated, hard working folks. You should have:
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.
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.
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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