Three biggest franchisee challenges

Date AddedMay 12, 2011 03:36:08 AM

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May 6, 2011 - Griffith University PhD candidate Ashlea Kellner, who is conducting the research, says recruiting staff, retaining good staff and industrial relations were found to be the greatest challenges.

“Industrial relations, and in particular the recent Fair Work changes, is the area franchisees who employ staff struggle with the most,” Ashlea said. “Often franchisees don’t investigate this type of support when assessing franchise opportunities and levels of franchisor support vary from franchise to franchise.

“It’s something franchisees don’t think will be a problem, and if they don’t have experience managing people, which many don’t, they underestimate how hard it is.”

Franchisor pros and cons of providing this support

Ashlea said she expected most franchises would be offering similar support, however the research revealed the opposite. “One of the franchises offered no support handing the responsibility back to the franchisee, whereas another provided a bit of support in franchisee staff training only,” Ashlea said.

“In franchises which provide low or no support franchisees are often initially shocked and disappointed, however many come to understand why. There are advantages and disadvantages to both.”

Some franchisors don’t offer support with managing a franchisee’s staff because if the franchisor provides a franchisee with the wrong advice the franchisor is liable.

However if a franchisor doesn’t provide advice and a franchisee makes a mistake, such as accidentally underpaying staff, the franchise brand may be damaged, potentially adversely affecting the entire franchise network.

Alternatively some franchisors employ an in-house specialist to provide advice to franchisees, increasing on-going costs for the franchise head office.

Other franchisors contract a specialist advisor although franchisees are generally still required to pay for any of the specialist’s services they use.

Where can franchisees get support?

Franchisees can join their industry professional body at an additional expense, which can provide information and resources, or alternatively franchisees may form strong internal networks with other franchisees and call each other for advice, Ashlea said.

The research is based on 50 interviews from across four franchise businesses in the retail and hospitality industries. Final research findings are expected in early 2012.