The Human Dimension of Successful Franchising

Mhairi Holway | Director | The HR Dept

The Human Dimension of Successful Franchising

There are two major headaches for the majority of small business owners. Cash flow is the obvious one; ‘people woe’ is usually the other.

When it comes to the latter, fixing the fundamentals first is vital. Workplace compliance is a complex and constantly changing beast, and this can be a huge challenge for franchisees.

While there are always exceptions to the rule, in my experience franchisees absolutely want to meet – and usually exceed – minimum statutory compliance requirements. Unfortunately, many lack the know-how or structure to do it properly. Coupled with the focus on running the sales and operations of the business to ensure cash is coming in, this means that their people strategy is often neglected. Until recently, such an approach would have simply stagnated opportunities for growth. Now, it risks crippling a business.

However, good people strategies are about more than legal compliance. For a franchising company, a consistent, positive employment culture throughout the business can be beneficial for both franchisor and franchisees, and vital to their prosperity.

The risks of not of getting the basics right

Until the end of last year, I was the HR Vice President of Pandora Jewellery for Australia and New Zealand. I joined the business when it was a small, family-owned operation which was embarking on an ambitious franchising journey. By the time I left, the franchise network had grown to more than 100 stores, complemented by 40 owner-operated stores and successful wholesale and eCommerce channels.

Before Pandora, I was the HR Manager at Freedom Furniture, another well-loved Australian and New Zealand franchised business. I recently decided to make the bold move of leaving corporate life to fulfil a lifelong ambition of starting my own HR consultancy business.

So I have a lot of empathy with the challenges that franchisees face when it comes to managing people and, in particular, workplace laws. My perspective has been further endorsed by four years’ standing as a council member of the Australian Retailers Association, whose membership is made up of thousands of small businesses – many of whom are franchisees.

With my former franchisor hat on, I can say that the value of franchisees getting access to professional HR expertise cannot be underestimated. The Vulnerable Workers Act has changed the rules of the game for franchisors and franchisees alike. Organisations now face potential penalties of up to $126,000 per contravention for individuals and $630,000 for corporations. The risks are now too great to procrastinate, to leave people strategy down the priority list or to brush it under the carpet altogether.

I often compare good HR support to a pair of noise-cancelling headphones. Providing sound advice on workplace compliance – such as employment contracts, policies and procedures as well as practical telephone and face-to-face support – offers franchisees peace of mind and a more enjoyable and relaxing journey to success. An HR partner can help franchisors and franchisees alike to deal with challenging situations that arise during the whole employment life cycle.

The rewards of a good franchisor/franchisee relationship

Gone are the days when a franchisor can simply leave a partner to muddle through the people stuff themselves and hope they get it right. The relationship has changed completely.

These days, a good franchisor will proactively rise to the responsibility of educating and auditing their network and do everything reasonably possible to help their partners when it comes to workplace compliance.

At the same time, franchisees need to accept that the franchisor needs to poke their nose into their business, not least their HR practices, in ways they have never done before.

While this intervention might seem onerous and expensive for the franchisor and unnecessarily intrusive for the franchisee, when both parties understand the ‘why’ it makes perfect sense.

At the end of the day, everyone wins when the network is working together to protect the business model. Unfortunately, the reverse is also true. A rogue franchisee can have disastrous consequences for the whole network.

The benefits of a consistent employment culture

Even when franchisors and franchisees have a robust compliance framework in place, they can often stumble on the more strategic hurdle: how to optimise their workforce by providing staff with an employment experience that is so irresistible, they never want to leave. Businesses of all kinds can reap the rewards of this investment in their people.

Being a great employer does not come from providing fancy perks and gimmicks. The key is establishing a healthy and supportive workplace culture that recognises and values the contribution of individuals in a range of meaningful and unique ways relevant to aspirations of the business and its staff. And it doesn’t have to be expensive or complex. Partnering with business owners to put in place proactive HR initiatives to help them find, develop, reward, engage and retain the best people is where the magic happens.

As a small business owner myself, I fully appreciate how impossible it is to be expert at everything, and time is a precious and scarce commodity. Due to the size or nature of the business, a lot of franchisees do not need or cannot afford the luxury of in-house professional HR expertise to assist them. So there is great benefit in seeking local, outsourced support from a provider that really ‘gets’ their business and feels like a part of it, without actually being a part of it.

Values are at the heart of the franchising marriage

I have experienced first-hand the difference a genuinely supportive and values-based franchise network can make. During my time at Pandora, the business won accolades including International Franchisor of the Year (FCA) and Retailer of the Year (ARA), where the culture and values of the business were a key component of the award assessment criteria.

The overriding consideration for me when exploring the franchise path was the franchisor’s values. This might sound like a fluffy HR thing to say, but I see buying a franchise as a long-term commitment, not dissimilar to entering a marriage.

Franchisees should bear this in mind when they are exploring where to put their resources for their new venture. And franchisors should recognise that the culture of any business comes from the upper levels and filters down, in this case to franchisees and their interactions with end users or customers of their products and services.

Ideally there needs to be a strong compatibility across the board in terms of values, with trust being at the heart of the relationship. A strong relationship between franchisor and franchisee will help create a brand that can be trusted.

In my case, I found that The HR Dept had a clearly articulated set of values which mirrored my own. Other essential ingredients I was looking for in a franchisor were their ability to adapt to change, a commitment to transparency, and evidence of how highly they valued the support and success of their franchisees.

As a former employee of a franchisor, I can see the world of franchising and the joys and tribulations of this ‘business marriage’ from both sides of the aisle. It’s all about mutual interdependence based on appreciation and respect. As the old song goes, ‘Love and marriage go together like a horse and carriage…You can’t have one without the other’. When both franchisee and franchisor truly understand this, it bodes well for a happy future.

Mhairi Holway is the director and owner of The HR Dept Northern Beaches, based in Sydney. The HR Dept is a franchise network providing small and medium-sized businesses with local, tailored and personal HR services at the fraction of the cost of having an in-house team. To learn more about the HR Dept visit www.hrdept.com.au.