Franchise Ownership: Should You Have Employees or Not?

🕒 Estimated Reading Time: ~4 minutes

You have a lot of decisions to make as a prospective franchise owner.

One of them, and it’s a big one, is whether you should own a franchise that requires employees. Have you put some thought into that?

Prospective Franchise Owners Need to Do These Things Early On

Before you start searching for a franchise to own, there are a few things you need to do first. For starters, you need to look at your financials to insure you have the capital needed to buy a franchise.

Then, once you’ve done that, you need to come up with a specific budget for your potential investment in a franchise business. As in, how much of your own money are you willing to put in? What’s the maximum loan amount you’re comfortable with?

Next, you need to determine what types of franchises you want to look into. So far so good. But do the franchises you’re thinking about looking into require employees? And if so, are you ready for that responsibility?

What Would Be Required of Me as a Employer?

If you come from a management background, you already have a good idea of the things you’ll need to do as an employer. But if you’ve never managed employees, here’s a partial list of things you’ll be responsible for.

1. Registrations. You’ll need to register for licenses, permits, and fill out forms for any other state/local business requirements.
2. Insurance. As an employer, you’ll need to purchase worker’s compensation insurance. In addition, some states require that you have disability insurance. And let’s not forget unemployment insurance.
3. Taxes. You’ll need to withhold taxes on employee paychecks for local, state, and federal. Plus, there’s a payroll tax you’ll be responsible for.
4. Payroll. Whether you hire an accountant or purchase payroll software, you (or a manager you hire) will be in charge of payroll. That said, in most cases, franchisee training includes an entire section on all things payroll.
5. Hiring. You’ll place employment ads and help recruit new employees (when able). Plus, (with the help of a company that specializes in it) you’ll run background checks. In addition, you’ll make the hiring decisions. And before I forget, you’ll eventually (and unfortunately) need to let go of some of your employees from time-to-time.
6. Training. You, or someone on your growing team will be in charge of new employee training. In almost every case, your franchisor will supply training manuals along with instruction on how to train.

It's a lot, I know. But it may be worth it.

Fact: Most Franchises Do Require Employees

It’s fair to say that unless you’re focused solely on home-based franchises that generally won’t ever require employees, your franchise business will have them. And there are lots of benefits in that.

First off, having employees means you won’t have to do everything. As a result, you’ll be able to focus on activities that will bring more profit to your franchise. Like attending local networking events. You do that to create relationships. And those can turn into business, because other like-minded small business owners in your community will mention your business and refer customers to it.

Secondly, you’ll (eventually) be able to have some flexibility. For example, maybe you won’t need to open the doors to your franchise business every morning. Or close your business every night. Wouldn’t that be nice?

Finally, good employees drive revenue. Case in point: have you ever gone into a place of business unsure if you were going to buy something, and the person taking care of you was so good at her job you felt like you had to buy their product?

How Many Employees Would You Like to Have?

Now that you know you’re likely going to have employees, you need to consider how many you’d like to have.

When I’ve posed that question to my clients, some of them know the answer right away. “If I’m going to have employees, I only want a handful of them. It’s easier to manage a small team.”

On the other end of the spectrum, I’ve had clients tell me they’d “have no problem having 30-40 employees.”

Bottom line? Everyone’s different. How many employees would you be comfortable having in your franchise business?

The Franchise King®, Joel Libava, is a top franchise expert. He’s written over 2,000 different articles on franchise ownership and personally consults with people who are looking to buy a profitable franchise. Go here to find out how The Franchise King® can help you become your own boss.