Stop Being Friends with Your Franchisees

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You're a franchisor. You don't want to be a Joint Employer of your franchisees' employees. Your franchise agreement goes into detail on how your franchisees and their employees are not on your payroll. And you do not have any employer responsibility.

Well that was easy. Your law firm has made it clear in your contract. You are in no danger.

Not so fast.

Some people in federal and state government think otherwise.  And they don't seem to be reading your franchise agreement the way you want them to.

So what can a franchisor do?

Stop doing things that make you an employer. Even the nice things your franchisees like.

Here are a couple of true stories about kind franchisors helping out their franchise owners.

One -Train Your Franchise Business Consultants 

There once was a long time franchise owner whose only daughter was getting married. This franchisee was Greek, very religious and his daughter was having a destination wedding in Greece. The whole family was going and all the relatives from around the globe were attending. 

The franchise owner had a problem. He was going to Greece for two weeks and his family members who worked in their franchises were going too. 

He told his Franchise Business Consultant that he was concerned about being short-handed while he was away and asked him to watch over his busineses in his absence. 

The franchise business consultant knew the family well and had watched his franchisee's daughter grow up in the business.

Franchise Business Consultant agreed to oversee the businesses. 

The Franchise Business Consultant checked in with the managers daily on the phone or in person. He even used his weekend time-off to ensure things were being managed correctly. Reviewed their schedules to ensure crew labor was under control. Made certain the daily deposits made it to the bank. Reviewed the incoming mail. Took care of supplier payments. And gave direction to the managers and employees as needed. 

He solved his franchise owner's temporary management problem.

The wedding went off without a hitch the franchises were managed by the Franchise Business Consultant.

Two - Stop "Helping" with HR

Franchisor had very conscientous Vice President of Human Resources along with a great Director of Operations. Franchise owners were asking for help. 

They wanted employee handbooks for their businesses and employees. Franchisees knew that the franchisor had very good HR systems for its company owned units and thought why not use what the franchisor was using.

The franchisor's employee handbook had been developed by pros, regularly updated and had been in use for some time. No reason to reinvent the wheel.

So the Vice President of Human Resources slapped a little disclaimer on the franchisor's document saying that the franchisees should get the template reviewed by the franchisees' respective employment attorneys before using it. And that the franchisees' would hold the franchisor harmless if something went wrong.

Franchise owners were very happy they didn't have to go through the time and expense of developing their own employee handbook and their problem was solved by the conscientious Vice President of Human Resources and great Director of Operations.

Franchising is full of people who care deeply about franchise owners and would do most anything they could to help out in a pinch. 

What could possibly go wrong for the franchisor in either of these situations?

Seems harmless enough and the franchisor was just helping out franchise owners, right?Stop 

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About this Entry

This page contains a single entry by Joe Caruso published on September 10, 2014 5:31 PM.

Why do Franchisors Use Inexperienced Legal Counsel? was the previous entry in this blog.

Do the Tim Horton's Franchisees Get a Franchise Association courtesy of Burger King? is the next entry in this blog.

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