Juggling Joint Employer: Drawing distinct lines between the duties of franchisees and franchisors

For multi-unit franchisees, the challenge of managing human resources is magnified. Maintaining a strong and consistent culture, even across multiple locations, is crucial to the continued growth of the business, and doing this while navigating an evolving labor market can be tricky. While a franchisor can provide robust, incredibly valuable human resources support, the guidance must not cross the line into joint employment, something that carries significant legal weight.

With a carefully balanced partnership that focuses on guidance, data, and best practices rather than control (direct or indirect), franchisors can empower their franchisees to become exceptional employers and build strong teams as they scale their portfolios.

Guidance vs. control

Legally, franchisees must maintain direct and immediate control over key aspects of their businesses, specifically as it pertains to terms of employment. However, this does not mean that they cannot receive support from the franchisor.

For example, understanding the employee journey and experience can provide valuable insight and help a franchisee implement a well-thought-out hiring, onboarding, and ongoing employment pathway. Teams at the franchisor level act as the business coach or consultant. They provide support and feedback in this area, sharing best practices and previous learnings from the system’s past.

The franchisor can also provide helpful tools and benchmarking data, like system-wide surveys and evaluations that can help franchisees measure their own locations and teams against the performance of the system at large and overall industry benchmarks. This can help owners identify strengths and areas of opportunity in their portfolios.

Crucially, the franchisor may also provide education and information regarding market trends for compensation and benefits. This information may be presented as a best practice or guideline, but the franchisor cannot make the final call. Decisions like this cross the boundary into control, which can violate joint-employer standards.

Franchisee duties

Other key responsibilities franchisees must manage independently include:

• Day-to-day human resources functions, like hiring, firing, scheduling, and disciplinary action
• Setting official pay rates and creating the larger compensation strategy
• Setting and maintaining safety standards in the workplace

Once franchisees understand what they must control and where they can seek support from the franchisor, they can begin to solidify and scale practices. Many franchisors will choose to be involved in these processes. Proactive support will help multi-unit owners succeed, and as they grow, the entire system benefits.

Franchisor support

Franchisees should leverage the franchisor’s feedback and support in a few key ways as they grow:

• Leverage aggregate data. Many franchisors facilitate system-wide programs or complete case studies. A multi-unit franchisee can use brand-level data compared to their portfolio data to either celebrate wins or identify areas for opportunity and potential solutions to replicate in their own units. This type of loop means the franchisor can provide information, franchisees can use that data to manage and improve their specific units, and the franchisor can later reevaluate to drive continued improvement throughout the system.
• Standardize hiring and onboarding. Things like easy applications, responsive communication, and clear-cut onboarding can make a huge difference in the success and longevity of a team member. Learning from franchisor-outlined systems and other insights from existing franchisees helps multi-unit owners gain new perspectives and continue evolving.
• Align with brand standards. The franchisee is responsible for the pay, benefits, and working conditions of their teams, but it’s important to remember that each owner is part of a larger system (brand). Franchises come with brand standards and, typically, a brand identity. Careful human resources decisions that maintain or improve this image across a few units in a single market benefit the specific owner and can have a positive ripple effect on others in the system.

Empowerment

A primary function of the franchisor, in this equation, is to train the trainer. Serving as a vital information source, the franchisor can equip the franchisee with the information and coaching they need to make appropriate decisions when directly managing their teams and businesses.

The larger franchise network can function in a similar capacity, creating a network for peer-to-peer discussions and the development of recruitment and retention strategies based on common experiences from other multi-unit franchisees.

The joint-employer standard doesn’t have to feel like a barrier. For franchisees, it can serve as a framework for healthy collaboration. By keeping the reins on day-to-day management while leaning on the franchisor for data, best practices, and training, owners can grow strong teams and cultures across their locations. The result is a system where franchisees lead with confidence, franchisors provide meaningful support, and everyone benefits from a clear, sustainable partnership.

Nichole Holles, PHR/SHRM, is the senior vice president of people strategy and governance at Right at Home. She has a deep passion for transforming HR departments into strategic business partners and enhancing employee experiences.