Labour shortages are one of the greatest challenges facing most businesses today.
Franchisors and franchisees are not immune to this reality, whose consequences affect the revenues and profitability of franchised businesses as much as the growth potential of a network.
However, the characteristics of the franchise model offer franchisors and franchisees certain avenues for dealing with this shortage that are less accessible to independent businesses.
Some of these avenues include:
1. The systematization of tasks
The implementation of a franchise network requires the franchisor to systematize and document the business model it proposes to its franchisees.
This includes the description of the tasks of each category of employees in a franchised establishment.
In order to address the labour shortage, a franchisor may well take this exercise a step further to maximize the productivity of its franchisees' employees through better organization, systematization and coordination of employees' tasks, schedules and activities, which may reduce the number of employees required to operate a franchised business.
The fact that tasks are better organized, as well as the fact that this organization is well documented (notably by a clear description of roles and by a clear and complete procedure for the execution of each task) also makes it possible to integrate more quickly a new employee into a position.
This has been, and continues to be, one of the major strengths of large franchisors, including the McDonald's restaurants network.
2. Real-time training tools
Many franchise networks have training processes and programs for their franchisees and their employees.
It is now possible to design, develop and implement real-time training tools, including videos, training modules and online training programs.
By offering such real-time training programs (i.e., available at any time and place), a franchisor allows its franchisees to fill a vacant position more easily and quickly, both by an employee who already occupies another position (especially on a temporary basis) and by a new employee who is thus able to perform more quickly the duties of a position.
Training costs are also reduced for franchisees since such training can be completed at any time by an employee without the need to travel outside at a specific time to receive the training.
3. Technological tools
A franchisor can also develop or acquire various technological tools that reduce the need for manpower within the franchised businesses.
We have recently seen in the media robots capable of performing various tasks in restaurants or for decontamination of commercial spaces.
Beyond robots, there are many technological tools available today in most industries that can reduce the amount of human resources required to perform various tasks and functions within a business.
Since a franchise network allows the sometimes significant costs of developing, acquiring, selecting and implementing such tools to be shared among several businesses, a franchisor and its franchisees have a real advantage in this regard.
4. Network-wide recruitment
Another advantage of franchise networks in terms of manpower is the possibility of network-wide recruitment.
An independent business looks for new employees on a piecemeal basis when a position opens up.
This is a somewhat sporadic search that is only done when a need arises.
However, since a franchise network has several businesses offering similar positions, there are almost always several jobs to be filled within the network.
This makes it possible, on a network basis (or, for larger networks, on a regional basis), to put in place permanent tools for finding new employees, such as a recruitment website, recruitment pages on social media and various other tools and processes for finding new employees.
These tools can be used to fill vacancies as well as to build a pool of candidates that franchisees can draw from when a need arises.
5. Mobility
The fact that a franchise network is made up of several similar businesses also gives it the possibility of establishing a certain form of mobility within the network.
Thus, a franchisor, with the assistance of its franchisees, can develop various tools and procedures allowing for a certain mobility of employees, both temporarily (in order to help out a franchisee who is short-staffed) and permanently (for example, when an employee moves to a new municipality).
This often allows for the retention of good employees and, in some cases, the opportunity for employees to increase their work hours (by sharing their time with more than one franchisee).
6. A shared service center
In the same vein, it is also possible for a franchise network to set up a shared services center where certain tasks (notably clerical and administrative tasks) are performed by the same group of people for several franchisees.
Such a center can also provide franchisees with temporary staff to fill an immediate staffing gap.
In addition to clerical tasks (such as bookkeeping, order preparation, central billing, payment management, etc.), a shared service center may also take on certain non-core, but often important, activities, such as maintenance and security of the franchised businesses.
On a different level (and often under different names), a shared service center may handle, in a common location for several franchisees, certain activities such as, for example, the preparation of certain foods for restaurants (through a central kitchen or food preparation plant), the delivery of goods (from the franchisees' establishments or from a centralized warehouse for several franchisees, thus avoiding the need to each maintain large inventories), the taking of appointments and/or orders, the preparation of pillboxes for pharmacies, etc.
The existence of a network of several businesses operating according to the same business model offers several interesting possibilities for grouping and/or sharing various tasks, functions and activities, to the benefit of both the franchisor and its franchisees.
7. Searching for personnel abroad
Searching for personnel abroad is another way of overcoming the shortage of manpower in many sectors of activity.
However, the steps required to find personnel abroad and to bring employees recruited abroad to work in Canadian businesses are often long, costly and complex.
Here again, both because of the fact that it has several similar businesses and because it is run by a franchisor who manages the entire network, a franchise network is better placed than an independent SME to undertake an initiative to find, select, immigrate and integrate foreign employees.
Depending on the sector of activity in which the franchise network operates, various other avenues may also be available to address the labour shortage. Among those, we find the ability of a franchise network to offer employees of franchisees better and more uniform working conditions (including social benefits) than independent businesses by combining the employees of all of the franchised businesses for the purpose of contracting certain benefits (including, for example, a group insurance plan or a pension plan).
Obviously, the research, design, selection, evaluation and implementation of such tools in a network require efforts and expenses that, in most cases, must initially be made by the franchisor.
However, these are additional services which, in almost all cases, can be invoiced (obviously at a reasonable price) by the franchisor to its franchisees and, therefore, eventually become a source of additional revenue for the franchisor.
In a future bulletin, we will return to the subject of additional services that can be rendered and billed by a franchisor to its franchisees in addition to the royalty.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
