The Top 10 HR Challenges for Franchises

By Tracy Morley posted 08-20-2015 10:59


These days, it’s challenging to be part of a franchise arrangement. The franchise model, and the very definition of employer, has come under attack, specifically with regard to employee management and HR compliance issues. Small franchise owners, typically focused on running their business and putting out fires, often struggle with staying current with legal and workplace trends.

Even experienced franchise owners can be overwhelmed by the countless human resource demands and compliance challenges facing them. Some might even be tempted to let employment issues slide, which can lead to significant costs.

While the primary risk is to franchisors if they are held accountable for the mistakes of their franchisees, if there is damage to a franchisor’s brand, it could negatively impact a franchisee.

Franchises should ensure a thorough understanding of federal, state and municipal employment law, anticipate changes and proactively manage their workforce in an effort to reduce the potential for employer liability. Here are the top HR challenges franchises face. Keeping on top of them can help to prevent costly lawsuits.

Joint Employer Liability

Recent NLRB assertions of franchisors being “joint employers” call into question the fundamental nature of the franchisor-franchisee relationship. Franchisors might want to take a look at their franchise agreements and other materials to ensure they do not include statements giving the franchisor unnecessary control over the franchise owner’s operations. Franchisors must also be careful not to involve themselves in the daily operations of the franchisee.

Employee Leaves and Reasonable Accommodation Requests

Managing employee leaves and requests for reasonable accommodations can be particularly challenging. Be sure you have a complete understanding of federal, state and municipal leave laws and that you know what to do when an employee requests a reasonable accommodation.

Paid Sick Leave

One of the hottest trends at the state and municipal level is paid sick leave. If you operate in a state or a city that requires paid sick leave (registration required) make sure you know the rules and that supervisory personnel are properly trained.

Minimum Wage, Employee Classification and Overtime Requirements

Minimum wage, overtime and employee classification are at the heart of class action law suits, often filed against both the franchisee and the franchisor. The Wage and Hour Division of the Department of Labor considers low-wage workers to be extremely vulnerable to these types of wage and hour violations and seems to have the franchise industry in their cross hairs.

Hours Worked

As business owners, you want to develop schedules to support business operations, but keep in mind those schedules also have to comply with a variety of federal and state laws, including laws for meal breaks and rest breaks. With such complex regulations, there are always liability risks….just ask McDonald’s, Chili’s, or Pizza Hut.

Finding and Hiring the Right Employees

It’s hard to find quality workers with a strong work ethic. In addition to ensuring the right fit, it’s important to understand employment laws and trends that affect the recruitment and hiring process, such as ban the box (registration required).

Onboarding and Training

According to a survey conducted by BambooHR, “new employees care more about mentoring and on-the-job training than perks like free food during the onboarding process.” First impressions count, so be sure to welcome new employees and give them the information and tools they need to do their job. Having an onboarding procedure (registration required) for new employees helps them to succeed and can enhance a franchises brand.

Performance Management

While it is very tempting to forego performance appraisals, keep in mind that it is important to take the time to engage in effective performance management in order to meet your business goals. Engaging in effective performance management helps the franchise drive a high-performing workforce and fulfill customer expectations.

Changing Landscape of Protected Activities Under the National Labor Relations Act

The National Labor Relations Act (NLRA) gives employees the right to act together to try to improve their pay and working conditions. A franchise can easily violate the NLRA if it terminates, suspends or takes other actions that penalize employees for participating in protected activities.

Workplace Safety

A safe work environment can help a franchise save money. For example, a franchise with healthy employees might see savings related to lower workers’ compensation costs and reduced medical expenses. Additionally, creating a safety attitude (registration required) in the workplace can help reduce the number of workplace injuries at the worksite and can also help in terms of increased productivity and employee morale.