Franchisors, Your Expansion Plan Has a Staffing Problem

By Sean Goldsmith

Franchisors spend heavily finding new franchisees. The next recruitment problem starts as soon as those franchisees need people to run the business.

Selling another 100 locations is one thing. Finding the managers and employees needed to run them is another. Sean asks whether franchisors are giving enough thought to the people required to deliver their growth plans.

Franchisors like talking about pipelines. There are territories to sell, locations to open and targets for where the network should be in three or five years. A brand with 200 units today might be planning for 300, and considerable time and money will go into finding the franchisees required to get there.

There is another number worth calculating: how many people will those additional locations need? If each new business requires a manager and 12 employees, another 100 locations means finding 100 managers and roughly 1,200 other people. That is before replacing anybody who leaves the existing network.

Once the franchise agreement is signed, much of that problem lands with the franchisee. They advertise vacancies, pay recruitment websites, interview candidates and try to find managers while dealing with everything else involved in opening and running the business. Franchisees should choose the people they employ, but that does not mean every operator should have to build their own recruitment operation from scratch.

You Have 300 Stores. Recruit Like It.

Franchisors already use the size of their networks to do things an individual operator would struggle to do alone. They negotiate with suppliers, build technology, produce marketing and create training programmes that can be used across hundreds of locations. Recruitment can benefit from the same scale.

A franchisee with three locations has limited bargaining power with job boards, recruitment companies and training providers. A network representing 300 locations is potentially recruiting thousands of people over the course of a year, which gives head office an opportunity to make the process cheaper and easier for its operators.

A central careers website can send applicants to local franchisees, while recruitment advertising can be negotiated across the network. Head office can also provide job descriptions, interview materials and onboarding tools instead of asking every franchisee to produce their own.

None of that requires the franchisor to employ people working in franchised locations. Franchisees can continue to interview, select, employ and manage their own teams while benefiting from recruitment tools that make sense for a network of hundreds of businesses.

Labour Problems Do Not Stay With the Franchisee

It is easy to describe staffing as the franchisee's responsibility because the franchisee pays the wages and signs the employment contracts. The consequences of being understaffed soon travel beyond the individual business.

A restaurant without enough employees may shorten its opening hours or provide slower service, while a home-services franchise without enough technicians has to turn customers away. A retailer without a dependable manager can leave the owner spending most of the week covering the store instead of developing the business.

Eventually, those problems reach head office through lower sales, weaker royalties, poor customer experiences and slower expansion. A franchisee who cannot find somebody capable of managing their first location is unlikely to be enthusiastic about opening a second one.

Labour should therefore appear somewhere in the franchisor's expansion plan. If the network intends to add 100 units, head office should have a reasonable idea of the number and type of people those businesses will require and whether the markets being targeted can supply them.

Your Franchisees May Be Chasing the Same Manager

The problem becomes particularly obvious when several franchisees operate close together. One may need an assistant manager while another operator from the same brand, ten miles away, is looking for somebody with almost exactly the same experience. Both franchisees can end up paying separately to advertise to the same group of candidates and, in a difficult labour market, competing against each other on pay.

Head office has a view neither operator has. It can see which roles are difficult to fill across the network, where vacancies are concentrated and which recruitment channels are producing useful candidates. That information can help franchisors decide where recruitment campaigns are needed and which positions require a stronger training pipeline.

It can also help keep experienced people inside the network. A supervisor with nowhere to progress at one franchise may be exactly what another operator needs for a new location. There will always be movement between employers, but keeping experienced people within the brand can be preferable to watching them leave for a competitor and then paying to replace them.

The Second Store Needs More Than Another Cheque

Staffing becomes even more important when franchisors encourage successful franchisees to become multi-unit operators. A franchisee may have the capital for another location and still be nowhere near ready to open it if the first business only works because the owner spends most of the week there.

Somebody has to replace that involvement when location number two opens. Promoting the best employee from the first location is an obvious solution, but it can simply move the problem by giving the new business a manager while taking the strongest person out of the original location.

By four or five locations, the franchisee needs several managers capable of running businesses without constant supervision. Depending on the concept, they may also need somebody above those managers who can oversee several locations and deal with problems before they reach the owner.

Franchisors asking good operators to expand should therefore be looking at management depth alongside capital and territory availability. Delaying another opening because the right manager is not ready may be frustrating, but repairing several locations after an operator has expanded beyond their management capacity is considerably harder.

Growth Needs a People Plan

Franchisors have become very good at building systems for finding franchisees. They use brokers, exhibitions, lead-generation campaigns, recruitment websites and dedicated development teams because selling franchises is important enough to justify a proper process. The workforce required after the sale deserves similar attention because those people determine whether the new location can actually deliver the sales assumed in the growth plan.

Head office does not need to become a recruitment agency for its franchisees. It needs to recognise that a network hiring hundreds or thousands of people every year has opportunities to negotiate, organise and learn at a scale unavailable to individual operators.

There is a franchise sales benefit as well. Prospective franchisees already ask about training, marketing, technology and operational support, and in businesses where finding good employees is difficult, being able to explain how the network helps operators recruit and develop people can strengthen the proposition.

A franchisor can sell every territory on its expansion map and still miss its growth target if those businesses cannot find enough people to operate properly. Finding the franchisee gets another agreement signed and another location moving towards opening, but building the management and employee base required to run it is what gives that location a chance to perform.

What We Can Learn From This

Franchisors planning significant expansion should calculate the staffing requirement alongside their unit-growth target and identify where shortages could restrict openings or future multi-unit growth. Network scale can be used to negotiate recruitment advertising, improve careers websites, share successful hiring channels and develop managers before franchisees need them. Individual operators should remain responsible for selecting and employing their teams, but they should not have to solve every recruitment problem alone. Brands that build a stronger supply of managers and frontline employees will give their franchisees a better chance of opening successfully and expanding again.

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