Using HR to strengthen culture for employees and franchisees
Even with the U.S. Department of Labor’s issuance of a final rule earlier this year to provide clarity on joint-employer liability, the issue still hangs over franchising. A lawsuit filed by 18 states earlier this year seeking to block the rule that narrows the liability only adds to the uncertainty as litigation could stretch into next year.
As it stands, a four-factor test is used to determine if a franchisor is a joint employer under the Fair Labor Standards Act. The franchisor can be considered a joint employer if it: hires and fires the franchisee’s employees; supervises and controls work schedules or conditions of employment; sets pay rates; and maintains employment records.
While seemingly straightforward, the potential for a legal mess is keeping franchisors in direct but don’t dictate mode when it comes to human resources support. But for brands getting their franchise expansion efforts off the ground, that doesn’t mean they can’t provide useful resources—as long as they watch where they step.
Tim Vogel with his Goldendoodle, Lucy, the face of his Scenthound dog grooming brand.
Running a dog grooming business for 10 years before launching Scenthound in 2015 prepared Tim Vogel for many of the rigors of franchising, but structuring HR support with potential joint employment conflicts in mind has been its own unique challenge.
“There’s been a learning curve around that joint employer issue and we’re careful to not step on that landmine,” said Vogel, the founder and CEO who began franchising Scenthound (the first half of the name is an acronym for skin, coat, ears, nails and teeth) in 2019. Four corporate locations of the dog grooming and wellness business are open in South Florida, offering a useful proving ground for employee relations practices that can then be shared with franchisees who’ve signed on for 21 units so far. The first three franchises are opening later this year.
Scenthound provides franchisees with samples for just about everything. “Sample employee handbook, sample hiring descriptions, sample training,” said Vogel. “We provide best practices around finding candidates and onboarding. We have robust learning management software that’s a platform for onboarding and training.”
Central to those hiring best practices is something often considered a soft skill, but one that’s essential at Scenthound: empathy. “We work with dogs all day, so with the right person you can understand what the dog is telling you,” explained Vogel. A series of candidate questions help determine where someone lands on an empathy scale of 1 to 10.
“We want someone who’s a 7 or 8,” he continued, a person tuned in to a dog’s behavior but not in a way that prevents them from providing the necessary care. “At the same time, if the dog doesn’t want you to cut their nails and is yelling at you, you still have to be able to complete the service.”
In the years before creating Scenthound Vogel said he experienced the “highly fractured” nature of the dog grooming industry, with the majority of businesses having fewer than three employees. “There’s no national license. Anyone can call themselves a groomer, so we found a wide disparity in skillsets,” he said. With Scenthound, Vogel saw an opportunity to professionalize the role and develop a clear career path.
“We hire bathers, we call them Scent Techs,” he explained. “They can get a raise after their initial Scent training and slowly work up to being what we call a trimmer, that’s the groomer. And there’s marks for raises along the way.”
Employees who become trimmers can later be considered for management training and eventually run a store. Managers, pointed out Vogel, are incentivized on a weekly basis to hit revenue goals, and training emphasizes empowerment and problem solving.
“Culture, of course is super important. No. 1 is the employee feels safe. And No. 2, they can fail without retribution,” said Vogel. “It’s allowing people to have agency. We’re not going to micromanage.”
Dave Pesso and mom Janice Axelrod still run Hummus & Pita Co. as a family business.
Family feel, with correct support
Dave Pesso co-founded The Hummus & Pita Co. in 2011 as a family business with his mother, Janice Axelrod, and his siblings, Steve and Lana. Now at six locations, three company and three franchised, and growing, a tight-knit family feel permeates just about every aspect of the fast-casual concept, even HR.
“Our philosophy is that we’re partners through and through with our franchisees, and that includes human resources,” said Pesso. “Most problems with the franchisee-franchisor relationship is they don’t have that relationship. They’re just given a playbook and told, ‘here you go.’”
While he’s mindful of not crossing that joint employer line, Pesso said he doesn’t let fear dictate how he approaches employee relations and it doesn’t keep franchisees from asking for help. “My franchisees know they can literally call me 24/7,” he said, and later added employees of a franchise location have that same access to corporate leaders.
“Obviously we’re not going to overstep the franchisee,” said Pesso, but if a problem persists and the franchisee doesn’t address it, “we’ll step in.” Any worker can also send a direct, confidential message to the company via a communication portal on The Hummus Hub, Hummus & Pita Co.’s name for its learning management system, which is operated through cloud-based software platform Wisetail.
The Hummus Hub also serves as a constant training resource, with a variety of modules created specifically for different roles and covering everything from customer service to sexual harassment. Workers accumulate points as they progress through training stages, with points translating into incentives such as extra vacation days, bonuses and pay raises.
“The happier the employee, the happier our customers,” said Pesso of the company’s motivation to commit to such a system. “It’s been a great success for us.”
Though Hummus & Pita Co. relies heavily on communication and transparency in its dealings with workers, Pesso also emphasized the need for structure and thorough documentation, which he said comes as a function of working with an experienced law firm.
“Akerman LLP, Jeffrey Kimmel is our attorney there and he make sure we have everything we need,” said Pesso. “You can’t just wing it. Especially with human resources, you can’t have enough documentation and knowledge.”