Franchise Leaders Are Optimistic About 2015, However Concerns Still Exist
As the International Franchise Association’s (IFA) Franchise Business Economic Outlook for 2015 reported, the franchise industry is predicted to thrive in 2015 - growing and creating more jobs quicker than the rest of the economy.
Although the IFA shares these insights, franchisors, franchisees and suppliers are not always convinced. This year the IFA’s Franchise Business Leader Survey found that these individuals’’ faith in the economy is recovering. When presented with the question, “do you believe the economy will be ‘better’ in 2015,” more than 50 percent of franchisees and franchisors and 67 percent of suppliers responded “yes.” Compared to last year, only 15 percent of franchisees and 35 percent of suppliers replied in the same manner.
This increased optimism from franchise systems and their suppliers could lead to higher growth rates than predicted in terms of output, number of establishments an employment rates.
Franchisors, Franchisees and Suppliers Worried about NLRB Ruling
One factor that may impact just how much optimism exists is the looming joint-employer ruling by the National Labor Relations Board (NLRB.) The ruling has the potential to redefine the franchisor-franchisee relationship, which has most franchise systems worried. Regardless of which way the NLRB rules, the franchise sector and its 18 million employees will be impacted.
In the Franchise Business Survey, 97 percent of respondents reported that they believe if the joint employer ruling were it to take effect, then it would negatively influence on their establishment, with an overwhelming 82 percent stating that it would cause a “significant” impact on their business.
“The entire business model of franchise is endangered by this ill-conceived complaint,” said Steve Caldeira, President and CEO of the IFA. “Hundreds of thousands of franchisees must now operate not knowing whether they should believe what their contracts clearly state – that they are in charge of their own work place practices, including setting wages and hours, or that the corporations from which they license their trademarks are also responsible for those things. The ruling could put the brake son what looks like a banner year of accelerated growth and job creation in the franchise sector.”
What Could this Mean For Franchising?
What exactly could this ruling mean for the franchise model? For franchisors, this would mean them being named responsible and liable for each franchise location’s hiring process - making them more susceptible to lawsuits. For franchisees, this could translate to standardization in hiring and firing practices at their location and the necessity to pay their employees a higher wage, in addition to losing substantial control of their franchise in the process.
However, this isn’t the only issue expected to facing the franchise industry in 2015. The majority of franchisors and franchisees alike agree that among the joint employer decision, other growing areas of concern are increased government regulations, the Affordable Care Act, franchise legislation, tax reform, franchise sales and development, competition and labor shortages.
Once the joint employer decision and these other areas of concern roll out, franchisees and franchisors will need to respond accordingly. As for now, all we can do is sit back and wait to see how these issues will impact the industry through the entirety of the year.
How Can Hireology Be of Assistance?
It’s always better to be safe than sorry. For franchise systems that are looking to get ahead of the game before the issues unravel, consider utilizing the Hireology platform. Hireology is a systematic hiring platform that makes the hiring process easy and seamless for franchisees. The platform uses a scientific algorithm to help to match the best candidates with each job opening.
Regardless of which way the decision unfolds, franchisors and franchisees that utilize Hireology will be better prepared to handle it because Hireology can be used as a consistent hiring solution for franchisors or franchisees. If the ruling is not passed, then franchisees can continue to use the platform to hire the best people using the platform and increase profits due to having better people on the ground floor. However, if the ruling does pass, then the franchisee can pass control of the Hireology account to the franchisor while transferring control of the hiring process.