Wage fraud hurting franchise industry despite most investing in staff

Trusted franchise brands are constantly monitoring franchisee performance and compliance with legal requirements, like wages.

A leading franchise expert believes the industry is getting a bad reputation despite only a minority of franchisees guilty of wage fraud.

Caltex, Muffin Break and 7–Eleven stores have been making headlines in the media for allegedly under-paying staff and it’s given the impression it’s rife in the franchise industry when it’s not.

It’s quite the opposite as many franchisees are investing in their existing staff with training over and above their standard operational requirements, like leadership, team building, communication and succession plans.

As a result of a few big name franchises doing the wrong thing by staff, the Federal Government is calling for submissions from the franchise sector to help decide on further regulations within the industry that could penalise those already doing the right thing by their workers.

It is rare that new regulations don’t have an impact and add more costs, eat up time and create more paperwork.

McDonald’s has been a compliance partner with the Fair Work Ombudsman since early 2014 and has been acknowledged just last month, as continuing to demonstrate its commitment to meet work place practices. Other partners include brands like JB HiFi, The Coffee Club, Retail Zoo, Domino’s and Red Rooster.

Trusted franchise brands are constantly monitoring franchisee performance and compliance with legal requirements, like wages, and do double check their processes and policies to mitigate risks when issues are brought to light.

Successful franchisees understand it’s not only the operating systems in place that bring customers through their doors but it is also the staff, and they value them.

Franchisee Mr Terry Creasey, who owns five McDonald’s outlets in WA, over the past two years has invested significantly in his teams’ development and training, over and above what is recommended and provided by McDonald’s, to retain loyal staff and grow their business. And it’s the franchisees doing this that stand out and are more successful.

Here are a few ways to invest in franchisees and staff to return bigger profits.

  1. Franchisee learning networks. With the rate and speed of change, franchisors can’t be expected to provide the level of individual franchisee development over and above the operational and business training for their franchise system. Special franchise learning networks provide opportunity for individualised franchise development for more consistent and faster success.
  2. Staff training and development programs. The “human system” is undercapitalized in franchises. Programs supporting the future of work like progressive leadership, leading change, culture and teamwork, keep staff enthusiastic and provide an edge that maximizes capability, performance and profits.
  3. Career and Succession Plans. Franchisees like to know where their business is headed and staff their careers. One size doesn’t fit all! If they can’t see themselves progressing in line with their personal goals and ambitions, they will leave or become disengaged – potentially affecting your success and brand negatively.
  4. Franchise Mentor. Hire a franchise culture and leadership expert to develop an “I want to work there” culture and brand that attracts the right people, and ensures franchisees and staff thrive and so does the business.

Franchisees not doing the right thing are getting caught and now franchisors can be penalised just as much – a recent Federal Court ruling penalised the master franchisor for being an accessory to the exploitative practices of one of its associated companies after four exploited workers were paid as little as $8 an hour while working at a Yogurberry outlet at World Square Shopping Centre in the CBD – the first time the Fair Work Ombudsman has secured penalties against a master franchisor for being an accessory to the exploitative steps to ensure future compliance.

Tracy Eaton, Co-Founder, Remarkable Franchises

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