Franchisors spend significant time, money, and effort identifying a market opportunity, devising a concept, and developing a business plan that will be attractive not only to customers but investors as well. When a franchise brand is created, it enters a critical phase of the lifecycle during which it lays the foundation for the future success of the company—hiring.
What's at Stake for Emerging Franchise Brands?
It’s important to recognize the factors influencing emerging franchise brands’ chances of success. According to the Kauffman Foundation’s “2015 Kauffman Index: Startup Activity,” the rate of expansion in the number of new entrepreneurs in the U.S. jumped 10 percent between 2014 and 2015. This is significant for a couple of reasons: First, it’s the first time this figure has risen during the past five years. Second, it’s the largest growth in the past 20 years. As a result, there’s increased competition for market share and consumer traffic in a wide range of industries.
Finally, the failure rate for startup businesses is depressingly high—Fortune placed the figure as high as 90 percent. Obviously, the margins for success are pretty tight. Among the top reasons cited by more than 100 entrepreneurs for their companies going under were:
- Lack of market demand
- Cash flow went dry
- Wrong team
Why Hiring Is Such an Important Step
If you think about your franchise recruitment strategy, you’ll need successful franchisees to develop a track record of proven results that future investors can look to as references. Certainly, each franchisee – and his or her passion, experience and ability to execute – will have a huge influence on how well he or she performs. But, another critical piece of the puzzle is the team that each franchisee is able to assemble.
In an interview with We Sell Restaurants, the nation’s largest brokerage firm dedicated to the restaurant segment, 20-year veteran of the franchise industry Brad Fishman explained that the first 5 to 10 franchisees that emerging brands add to their system will really dictate the direction the organization takes in the future. The way your operators run the franchise will establish a standard for your customers’ experiences. If franchisees in your system are able to bring together the right talent capable of consistently delivering the standards of service established in your business model, you’re in a strong position to generate positive brand perceptions and build awareness.
At the same time, the manner by which your operators run the franchise will influence employee perceptions of the brand as well. Your staff must become ambassadors of your franchise system to attract the target consumer market and demonstrate how well the model works for other investors interested in becoming a franchisee.
Finally, you have to consider your cash flow. According to a CareerBuilder survey, 42 percent of companies indicated that a bad hire cost them a minimum of $25,000. What contributes to this dollar figure?
- Low productivity
- Time lost and costs of recruiting and training new workers
- Decreased employee morale
- Negative impact on customer and/or client experiences
Cash flow has a huge impact on the success rate of emerging brands, so even a single low-performing employee – especially those in management positions – can have a huge influence on the trajectory of your business.
For emerging franchise brands, having the right hiring practices in place is a critical component of developing a scalable, successful system.
5 Best Hiring Practices for Emerging Brands
1. Devise a Hiring Strategy Before Making Your First Hire
Understandably, creating or joining an emerging franchise system is an exciting prospect. You’re starting out on the ground floor with the goal of growing the brand into a network of thriving businesses. However, it’s critical to impose a strategy before jumping into the process. To figure out the right strategy, begin by considering:
What positions are immediately necessary to the successful operation of each of your franchise locations?
This question will help you understand which roles you need to fill and how quickly you need to hire them. Emerging brands are in a unique position where they’re still trying to work out the kinks of their franchise system and determine what the most efficient structure is.
It’s the critical moment when you’re finding out what management structure and styles are most effective. At the same time, you’ll need to develop a compensation policy that aligns with the level of importance and impact your top new hires will have on your franchise system. Salaries need to be competitive enough to attract top talent but won’t undercut profits.
The Local Labor Market
A major part of figuring out which position to prioritize is looking at the timeframe for recruitment. According to the most recent data from management advisory firm CEB, the average time needed to hire a new employee is 68 days. Just five years ago, that number was as low as 26 days. In some cases, the time is necessary because employers need to thoroughly vet candidates and perform more in-depth background checks. However, it takes excess time to find the right talent for a given position. For emerging franchise brands trying to build the best team from the get-go, it’s important to get a head start on attracting, recruiting and interviewing the most critical employees.
Skills and Culture
You’re not only building a team of talented individuals; you’re also cultivating a brand culture. The employees that make up your first few franchises will have a massive influence over the direction that your company takes further down the road. The culture, mission and goals laid out in your operations manuals and training documents have to be taken to heart. While you can train for certain skills and capabilities, it’s difficult to train for culture. Make certain you have developed clear, concrete character identifiers that align with the ideal people and roles to fulfill your franchise brand’s mission.
2. Prioritize Efficiency
Taking into account the fact that the average hiring timeline is between two and three months, efficiency should be a top priority. Consider the many steps that the average recruiter goes through to thoroughly vet each candidate:
- Validating the candidate’s skills and proficiencies
- Performing reference checks
- Conducting background checks
- Checking social profiles
- Aptitude tests
- Pre-screening surveys
- In-person and telephone interviews
Hiring can be a labor and time-intensive process if you don’t have the right systems in place. An article for ERE Media explained that the average number of resumes submitted for a corporate posting is roughly 250. Meanwhile, it only takes about 200 seconds after the first job is posted for a candidate to submit his or her resume. From that point, the number of applicants quickly adds up—and it takes time and money to discover which ones are best fit for the position.
To ensure there’s sustained progress in developing your emerging franchise brand, you need to eliminate redundant or ineffective workflows from your hiring strategy, including manually screening a huge number of applicants.
As an emerging franchise brand, you fortunately don’t have to deal with the same operational issues that larger organizations face in terms of centralizing systems and maintaining transparency in hiring practices. However, the challenge that emerging brands face is identifying the most efficient processes that will suit their system.
3. Leverage the Right Systems
Technology has shaped the way businesses locate and hire talent. From applicant tracking software to social networks to online job boards, there are numerous ways that candidates and business owners can connect. Emerging franchise brands now have the opportunity to develop hiring processes that maintain a consistent brand image and recruitment workflows across multiple locations. However, it’s important to consider the following attributes when appraising different platforms:
Find a Solution that Fits the Franchise Model
It will quickly become apparent that not all technology, especially hiring software, was developed with franchising in mind. A solution needs to be able to fit the needs of the corporate headquarters, as well as provide the franchisees with the same level of functionality and integration across the board.
Because franchise systems are made up of semi-autonomous owners and operators, each franchisee will have distinct hiring needs as they build up their business. So, you need a platform that adapts to the needs of each franchisee, giving them a wide range of tools that build hiring practices that produce better results.
Implement a Solution that Has System-Wide Application
While each franchisee will have his or her individual influence on their franchise location, hiring is a business operation that runs best when there’s a consistent, standardized format for recruiting talent. One of the most important functions of a franchise system is the ability to develop processes that can successfully be applied in each location. This promotes a consistent brand appeal for customers and alleviates risk from business development.
Going further, franchise brands that leverage intuitive, franchise-focused software can eliminate the expense of rolling out new software. In fact, the right technology can help emerging brands reduce costs with a turnkey solution that each franchisee can easily use from the very start.
4. Ensure Your Strategy and Solution Are Scalable
As an emerging brand, you may only have 10 – or even fewer – franchisees in your system. Your goal is strategic growth, so your hiring policies and technologies need to be able to fit the needs of your system regardless of size. Here are a few important considerations that you should be thinking about when looking for a scalable hiring solution:
- Cost per hire
- Time to hire
- Applicant experience
A scalable solution must be able to maintain a consistent level of quality for each of these factors.
Looking to the future of your brand, emerging franchise concepts need to stay keenly aware of their existing and target markets. In existing markets, you need to understand how many units you can add before the area is saturated. This includes taking a holistic view of the market alongside competitors, knowing how your system compares and whether you can attract top talent in face of strong competition.
In future markets, the three main factors you have to look at must be: location, location and location. In other words, you need to consider the real estate market, job market and, again, understand the competition. Conducting thorough due diligence of these factors is central to creating a scalable hiring plan.
Meanwhile, the platform you use to locate, screen and hire talent has to be scalable, meaning each new location is integrated, and each operator get access to the same tools.
5. Build Strong Training Practices into Your System
A clearly-defined, established training system is a critical component to hiring, especially for emerging brands. Research from IBM found that 90 percent of businesses find the skillsets of their workforce are incomplete, including a shortage in the areas of talent and leadership. For emerging franchise brands, a talent deficit can deal a devastating blow to the ongoing success of the system.
At the same time, development is a major issue for top talent-keeping them engaged with their work. According to a recent report from Accenture Strategy, more than three quarters – 77 percent – of recent graduates expect training at their jobs. It’s not simply a matter of making sure that your employees understand what’s expected of them; a credible, impactful training program helps guide new hires through a career journey and deepens their connection with your brand. They also have a better view of their pathways for upward mobility.
Emerging brands are focused on making each of their early locations as successful as possible, which happens through strong, ongoing training. Additionally, prospective franchisees want to know the franchisor has put in the time to develop a proven system that can be successfully replicated. New business owners may not have the experience or ingenuity to develop a training system for their employees, which is why emerging brands can’t neglect to develop this and make it a key component of the franchise opportunity.
As part of your franchise system, training and support structures are key considerations for all your stakeholders. Training and support are no different. By showing job seekers that you have carefully considered their career development when you established your emerging brand, you have a better chance of attracting candidates who are invested in making the brand successful.
It’s difficult to understate the importance of getting your hiring strategy off the ground – on the right foot – for emerging franchise brands. The early stages will influence the later stages as a brand reaches a more mature level. Use these five best practices as guidance to ensure your emerging franchise system is set up for future success.
Get Your Franchise Brand Ahead of the Game
Don’t let your franchise business start-off on the wrong foot with the wrong employees. To get your franchise on the right path to building the best team, talk to a Hireologist today by clicking the link here.
To get a printable version of the best hiring practices for emerging franchisors, simply click on the link below.