Selecting the Right Kind of Employee When Buying a Franchise
Employees- who do you want working for you?
Intro
Choosing the right kind of employee is just as important as any other part of the franchise matching process- be it customer type, sales type, or anything else. These are the people you will hire, train, manage, and lead on a day to day basis. They are the front line, the tip of the spear, and they will represent you. There is no right or wrong answer for the “perfect” kind of employee, there is only a good match for you.
You don’t need experience managing these kinds of employees, but it helps. And the more specialized the skill, the more it helps to have tangential experience managing a similar kind of employee. There are tons of success stories of corporate managers owning blue collar businesses, but there are just as many of corporate managers leaving the business very quickly because they didn’t like the kind of employee they had or they just couldn’t manage them.
You need to take an objective look at your experiences, personality, and desire and decide which of the below employees you could best train and manage.
Types of Employees
White Collar
These are office workers handling computer and thought work. They typically want to work regular business hours, they want direction, and they are easier to manage.
Examples:
Personal Tax filing
Payroll
Business consulting
A person who has worked in an office their entire life, likes control (easy to check employee’s work), and has a gentler managerial style would fit well here.
There are also “white collar” employee franchises that are almost 100% cold calling based. Examples would be staffing and some digital marketing franchises. If you are a sales leader that does mostly cold calling, this would be a good fit and is quite different than non-cold calling based franchises.
Blue Collar
These are people with a skill in some trade. They are paid well but can be hard to find. These workers want their expertise to be respected, want minimal oversight, and can be a little rough around the edges.
Example:
Plumbers
Electricians
HVAC techs
CDL drivers
A person who has worked with blue collar workers or who has experience in a trade themselves is an obvious fit. If you don’t have these traits, you need a more direct personality, you need to be comfortable with trusting employees to go off and do a job without much oversight, and you need to be able to connect personally with these employees and keep them satisfied beyond just salary so they don’t hop to another company paying an extra 50 cents an hour.
Veterans often do well with these employees but it doesn’t guarantee success. If you are a veteran, think of the people you led and ask if they had a job in the military that matched this personality and if you enjoyed leading them.
Medical or other Specialties
There are some franchises that require some sort of specialized training besides the trades. They include nurses, doctors, trainers, accountants, and more. You need to pay them well to pull them from other companies, you need to build a great culture to keep them, and you need to ensure you have the marketing to bring in enough customers to justify their expense. They can also be part-time, but you need to ensure they are getting enough hours to justify staying.
Examples:
Medi-spa
Massage
Chiropractor
IV Drips
Business taxes and fractional CFO services
Personal training
Hair cuts
General population
This is anyone who has the right personality for your business and maybe has a few, low-barrier requirements. There may be minimal requirements that the franchisee will pay for as long as they have the right personality. You may hire them part-time or full-time and you may need just a few or you may need several.
Examples:
Food
Child related
Senior related
Pets
Retail
Simple home services (pest control, pool cleaning, maids)
Contractor based home services (you hire sales people and contractors do the skilled labor)
This is a broad category and is often more about general managerial experience than any single type of experience or personality. It can also be passion based- the people who work in a doggie day care probably love dogs and are excited coming to work. While the people working at a fast food restaurant are either young and just need to make some easy cash or they can’t find any other type of work.
The benefits of having “general population” employees is they can be easier to find than the more specialized types of employees and they don’t command as high a wage. The downside is that there is a lot of competition for these kinds of workers, they can be unreliable, and there will be higher turnover since this isn’t a career.
Number of Employees
Once you narrow down what kind of employees you want, you need to decide on if you want a business with just a few employees vs many and if you want part-time vs full-time employees.
High Employee Count
These kinds of businesses either have a large real estate footprint or they are mobile. These workers are typically part time so you will spend more of your time hiring, training, and managing these employees.
If it’s a large real estate footprint, you have a large store or center and you are required to have some number of employees regardless of how many customers you have coming each day. Your labor is largely a fixed cost and you increase your profit margin by driving more customers to the store and increasing your employee’s efficiency. Once it is maxed out, you open another location.
Examples:
Large restaurants
Large retail locations
If it’s a mobile business, the number of employees scale with the number of customers you have, turning labor into more of a variable cost than a fixed cost. This is because you only hire employees as the number of customers exceed the current employee’s ability to handle. You scale by doing more jobs in your territory and hiring labor to match those jobs.
Examples:
Children’s sports
In home senior care
Home services that are not contractor based
Few Employees
There is typically lower turnover because they feel part of a team and/or they are full time. As the owner, your job is hiring a great team and ensuring they are well trained since each one has a large impact. The franchise could be a smaller real estate footprint or a contractor based home services model and you only need a few high quality salesmen and a project manager.
Examples:
Weight loss clinic
Windows and doors replacement
Blinds
Hair cuts
Since you will likely be able to find enough employees easily, the main focus of the owner will be in overseeing marketing and generating leads for their employees to sell to and/or service.
Full vs Part Time Employees
Full time
You have a dedicated staff getting paid independently of the work you can provide them or you guarantee them 40 hours of work a week. You either need to come to the table with the capital to pay them until you ramp up or you will do this job as long as you can in order to hand them enough work to justify their employment. They will be more dedicated and reliable than part time employees and usually will have lower turnover. They work full time and produce enough revenue to justify their salaries and whatever bonuses you pay or you have to ensure they will get the hours promised by keeping a full pipeline.
Examples:
Skilled trades
High commission sales with a contractor doing the work
Other highly skilled workers like nurses
Part time
Your labor costs become closer to variable than fixed in a part time worker based business. You only hire as you need employees and only give them the hours where they are being productive. This creates a leaner business model but you will have high turnover and may end up paying just as much as a regular employee in your hiring, training, and managing costs. You tend to find more reliable staff in the passion driven businesses ie working with kids, pets, or fitness. Sometimes you will have a full-time manager leading the part-time staff as you grow. Hiring reliable part-time managers can be difficult so if the franchise says you can step away and utilize a part-time manager, you are never truly stepping away and you aren’t hiring a manager that is paying for themselves until you have reached a pretty large scale.
Examples:
Expect a franchise to rely on part-time workers unless they explicitly say they are using full-time employees.
Conclusion
Since you will be spending most of your time running the business through your employees in the long run, the kind and number of employees is extremely important to the selection process. You must consider all aspects of an employee and what the best fit for you is.
Let your ego go, many men like to say they have a tough side and can handle blue collar workers and are steam rolled by a 15 year plumber. The best predictor of the future is success in your past. If you have managed a type of employee successfully before, you should stick to something similar for your first business. If you have run a business before, then you have the experience and perspective to decide you if you want to go with an employee type different than past experience.
Have a blunt conversation with your spouse, friends, relatives, and coworkers to get a more objective perspective on the type of employee that you would likely find success with.
Hiring can be highly regional dependent so you need to do local research if there aren’t local franchisees to speak with. Once you select a franchise to research, mystery shop other businesses doing the same thing in your area and ask them what’s stopping their growth, if they all say “hiring employees” then you need to have a hard talk with the franchise about how they can hire when no one else can. You can even visit locations to speak to employees and get a feel for their general personality, drivers, desires, etc.
Questions to ask during the discovery process:
What is the churn rate of employees?
How much does it cost to find and train new employees?
What is stopping franchisees from growing quicker?
What software do you have to manage employees?
What kind of culture do these kinds of employees like?
How do you compensate your employees and are there perks outside of just wages?
How much revenue is made per employee?
How many employees does a franchisee have who don’t generate revenue?
