A variety of services are offered within the personnel services industry. The primary focus is within the areas of flexible staffing, temporary/contract staffing, career placement, and professional search. Franchises in this industry list employment vacancies, refer job applicants to potential employers and assist companies with employee recruitment and placement. Some franchises also provide payroll and training assistance.
The Current State of the Personnel Services Franchise Industry
“It’s booming,” says David Lewis, vice president of Express Employment Professionals, the largest fully franchised staffing company in America. “The good news is franchisees are walking with a tailwind of sorts.”
In the United States, office staffing, employment, recruiting and temp agencies bring in over a combined $173 billion annually with a growth rate of just over 5% yearly through 2015, per market researcher IBISWorld.
It is a market that is mature and competitive. In fact, it’s estimated that there’s over 150,000 staffing firms in the world. Not only does the market competition for personnel services franchises include other franchised and non-franchised service providers in the area, but it also includes any employer who decides to hire directly. Fortunately, however, the market for personnel services is vast. It includes virtually all individuals looking for a job, and those who are employed but looking for a better job.
Factors for Growth
“If we look at the macro picture, things like the Affordable Care Act in the U.S. are creating a lot of uncertainty for small and medium sized businesses,” David tells us. “That’s our primary customer, so they’re offloading employees to our payroll as a way to comply with the law and cope with some of the uncertainty. Other networks and companies in general are realizing that labor, which for pretty much all time has been a fixed expense, now can be made a variable expense by partnering with Express or another staffing company.”
Another factor in the growth of the industry is workers, in general, are moving away from long-term employment with one company. According to data from Forbes and the Bureau of Labor Statistics, the average worker today stays at each of his or her jobs for 4.4 years. The economic instability of the past several years has erased the stigma that used to accompany moving jobs every few years. Nowadays, a significant number of workers are using staffing and employment agencies to design the work schedule that is best for them. According to the American Staffing Association, 2 out of 3 workers using staffing services say flexible work time is “important to them.”
The expansion of the industry has led to the development of specialty areas.
Specializing in one area allows the franchisee and his or her employees to develop the expertise to match applicants for certain jobs to companies quicker than in a franchise than one more general in scope. It also helps companies seeking applicants be at ease when searching for candidates to fill positions. They feel more secure in feeling that the franchise knows how to address their specific need – a big factor in drawing repeat business. The following is information on a few franchises that specialize in a certain area:
- NexGoal caters to former Olympic, professional and college athletes, helping them transition into business roles that take advantage of the skills they gained through high-level athletics.
- Link Staffing distinguishes itself from competitors by offering services in the crafts and trades, since “few employment placement services businesses offer services [in this area],” according to their franchise disclosure document.
- When home care, hospice and healthcare companies need nurses, therapists, aides, companions and other healthcare professionals, they can turn to a specialty staffing franchise like Interim Healthcare.
Does the Recent Browning-Ferris Decision Impact Personnel Franchises?
A lot of people know about the Browning-Ferris case because of McDonald’s involvement, but the August 2015 National Labor Relations Board ruling has potential implications for staffing agencies as well. The case dealt with a staffing agency that supplied workers to the company Browning-Ferris Industries, and centered on who was responsible for maintaining adequate working conditions for employees.
With its decision, the Board asserted that two or more companies can be “joint employers” of a worker if they both possess the ability to govern the worker's terms and conditions of employment. For example, if a staffing agency (or franchisor) shows significant power in deciding or has the ability to influence items, such as salary and working conditions, they are considered that worker's employer, even if another company also qualifies as an employer of that same worker. As a result, those businesses are now subject to the responsibilities that authority entails.
The board is trying to stem the occurrence of employers skirting responsibility through outsourcing. In the release for the decision, the Board stated, “With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.”
However, in the case of individual franchises the chance of culpability is diminished. According to Jeanne Mirer, a lawyer who authored a brief in the case on behalf of the Communication Workers of America, the ruling also means that franchises and smaller companies will not be liable for labor violations resulting from parent company policies.
Furthermore, because of the nature of many personnel service franchises, franchisees rarely will have any influence on the salary or employment terms the applicant and hiring company agree upon. The ruling is focused on agencies where the worker is technically an employee of the staffing or employment agency while also doing work for another outside entity at the same time.