For employee matters, offer guidance not mandates
The area of human resources presents plenty of challenges for franchisors as they walk that fine joint employer line, but offering hiring help isn’t impossible for those with some know-how and a willingness to back up their commitment to franchisee success.
With their insights into everything from industry recruiting trends to the most effective hiring practices, franchisors possess a wealth of knowledge and can offer support to franchisees through optional resources such as a careers page portal or, in the case of one of our Living Large brands, an outside HR management service.
Knowing which employment issues your franchise owners are struggling with presents another opportunity to share expertise without crossing the line. Many ‘zees could use a hiring education, and directing them to experts in areas such as applicant screening and interviewing is another way franchisors can help.
The key for franchisors is to avoid mandates and ensure the relationship regarding employment policies is clearly defined.
This month, our Living Large subjects share how they incorporate their culture into overall employee relations, why a career path is crucial for retention and how franchisees can influence best practices.
DMK lets culture be guide
David Morton is fond of saying his DMK Restaurant Group is really a human resources company disguised as a restaurant company. That’s because, as he puts it, “If you look at every facet of the brand, it all looks back to some version of HR. And by that I mean culture building.”
Morton, who began franchising his DMK Burger Bar concept last year, says that culture of hospitality, community and respect is intertwined with everything the company does and makes its restaurants attractive to top candidates. And to protect and fuel that culture, Morton says the hiring process is rigorous.
“We have a reputation for being a difficult company to get a job at, and that to me is actually a good thing,” says Morton as he describes a “totally lateral hiring process” in which candidates interview with multiple people and everyone’s input is equally valued. “There’s no hierarchy in decision making. An assistant manager could love them but if another doesn’t, we eliminate them. We want full, 100 percent buy-in and engagement.”
Each of the 10 restaurant concepts within Chicago-based DMK Restaurant Group follows the same process, and as the burger bar brand expands through franchising, Morton says franchisees are strongly encouraged to follow the same best practices. He notes while hiring challenges are common elsewhere in the restaurant industry, DMK isn’t struggling in that area and, because of a focus on career growth, there’s “very good longevity, very low attrition.”
Various roles have a clear pathway for ongoing improvement and employees have one-on-one, informal sit-downs with managers as frequently as every week. “We have a fairly radical—for lack of a better term—system for reviewing so people know as often as possible how they’re doing,” explains Morton.
DMK’s recruitment, hiring, training and ongoing education systems are well documented and made available to franchisees. Carolyn Michael, the system’s first franchisee who has one Chicagoland restaurant open, didn’t immediately follow DMK’s suggested processes but, Morton says, “over time she’s realized the value of our philosophy—and her sales showed it.”
Another tool is something Morton calls the “moneyball of restaurants,” referring to the data-driven, analytical approach made famous by Major League Baseball’s Oakland Athletics.
“The most important technology tool we use is Avero,” says Morton of the restaurant management software that helps fine-tune scheduling and uses POS data to maximize labor. It also provides sales insights to improve server performance.
“We’re not telling them who or how to hire, but we’re giving them a framework.” — Josh Sevick, CPR Cell Phone Repair
Employee career path
Even with news that the National Labor Relations Board is moving forward with plans to address the joint employer issue through rule-making that would provide greater guidance for employers, Josh Sevick says he’s operating under the belief the issue won’t be solved anytime soon. That’s why Sevick, CEO of CPR Cell Phone Repair, maintains “hard, firm separation” between the franchisor and its franchisees’ employees.
“I think this is one of the most tricky areas of franchising,” says Sevick of providing human resources and employee relations support for ‘zees. “We think of it as, OK, the stuff we’re not going to do for you, we have to offer a really great option, give them a good system to manage that.”
Franchisees are able to get “steeply discounted rates” from payroll and HR software provider ADP and can elect to use the company’s other services for things such as payroll tax compliance or labor management. CPR also provides a place for franchisees to post job openings online.
When it comes to hiring, Sevick says they’ve focused on creating clear descriptions of the active roles of store employees and provide a technical proficiencies pathway for training technicians.
“We’re not telling them who or how to hire, but we’re giving them a framework,” says Sevick. Franchisees are encouraged to share their own hiring tips with one another and CPR offers a platform for online forums and email discussions via its company intranet. The company recently deployed a compensation survey from which it aims to give franchisees insight into the different pay scales and benefits packages being offered throughout the system.
When Cleveland-based Merrymeeting Group added CPR to its portfolio of service-based franchises in 2013, it also created a career path to store ownership for employees as a means for retaining top performers. As it folds original Living Large brand Digital Doc into the system, those franchisees and their employees will have the same opportunity.
“What we offer is, hey, if you have an employee that meets X criteria and they’ve taken all the training and they’ve hit the point where you’re going to lose them, we offer a free franchise license,” explains Sevick. “And what we encourage is the franchisee to go into partnership with the employee.”
“We’d love to continue hiring from within. Those who do want to make a career out of it, we love to see that.” — Andy Howard, Huey Magoo’s
Helping build best practices
Huey Magoo’s takes a more hands-off approach when it comes to its franchisees’ hiring methods, instead preferring to help its owners maximize labor efficiencies after employees are in place.
“We’ll help franchisees by directing them to some screening tests,” says CEO Andy Howard, but otherwise franchisees hold open interviews on their own and job openings are posted on a variety of websites. They’re encouraged to capitalize on what Howard calls “a pretty good name in our communities” and to always be looking for candidates. “We’re constantly interviewing. You can never have enough good employees,” says Howard.
Wages and benefits are determined by the franchisee, with Huey Magoo’s keeping tabs on best practices. “One of our franchisees just started offering insurance plans to their employees, which they felt they needed to do to be competitive,” says Howard. “It’s something we may recommend.”
There are bonus programs in place for managers who hit their performance goals and opportunities for advancement are growing as the system grows. “We’d love to continue hiring from within, those who do want to make a career out of it, we love to see that,” says Howard, who with four other former Wingstop executives bought the chicken tender chain from its founders in 2016. “With our new ownership, our background and experience, it’s definitely been reinvigorating and people see there’s growth and opportunity in front of us.”
A “labor matrix” helps franchisees schedule employees based on sales and cost of labor, though Howard says they have to be careful not to rely purely on the numbers at the risk of cutting hours too much that service is affected. He adds it’s important to be flexible with scheduling not only to ensure a great guest experience but also to accommodate employees.
“It’s always a balance on the HR side, you want quality people but you have to stay on budget.”
Laura Michaels, managing editor of Franchise Times, follows three emerging franchises through a year’s worth of challenges. Reach her at email@example.com.
What the experts say
Create a comprehensive hiring process. “The biggest mistake I see happening when it comes to employee relations is the hiring process in whole,” said Mark Young, CEO of myHRcounsel.“So many franchises, in their attempt to move fast and hire as quickly as possible, either skip steps—background checks, proper I-9 collection and verification, improper handbooks and policies that get handed out, or not handed out—which lead to huge problems down the line.” Insufficient front-end training on company policies, procedures and expectations is another problem area for emerging concepts, Young said.
Don’t skimp on advisory services. Young said his best advice for emerging franchises is to get help on issues of employment compliance. “So few clients of ours know or train managers or supervisors on hiring, Family & Medical Leave Act/Americans with Disabilities Act, termination, sexual discrimination and harassment. It’s no wonder million-dollar judgments are levied each week to franchises—even those that should have the resources or training and know better.”
Develop a clear feedback system. Creating a written process for providing feedback and for what steps a manager or franchisee should follow whenever dismissing an employee are important early steps for a young brand, said Trevor Shylock, a consultant at talent management company Caliper. Even for franchises operating in “at-will” employment states, employers should protect themselves by having clear documentation and records. “Far too many companies hold on to employees because they do not want to have an uncomfortable conversation about not meeting performance expectations,” said Shylock. “If there is a clear process or policy of how to deal with underperformance and performance expectations are shared with all employees, then it will create an environment to retain high performers and dismiss poor performers quickly.”
Have an interview guide. Franchisors can provide franchisees with a structured interview guide that addresses the key competencies required for a role and helps the interviewer get beyond surface level responses. “Discrimination is a hot topic so the hiring process should be fair to all applicants,” said Shylock. “The easiest way to do that is to ensure applicants are treated the same and that all of the questions and hurdles are based on job-relevant criteria and not subject to personal biases or anything irrelevant to one’s ability to perform the job-tasks for the role in which they are interviewing.”
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