Franchise staffing: what to assess before you buy

Buying a franchise does not mean acquiring a ready-made team or passing your responsibilities as an employer to the franchisor. Before choosing a brand, prospective franchisees need to understand how many people the operation requires, which skills are needed and who will manage the workforce. Shared methods within a franchise network can help organise the outlet, but they are no substitute for this assessment.

1. Understand who takes on the employment obligations

Brazil’s Law No. 13,966/2019, known as the Franchise Law, states that a franchise relationship does not create an employment relationship between the franchisor and the franchisee or the franchisee’s employees, including during training. Receiving guidance from the brand or attending training therefore does not make the franchisor the employer of the outlet’s staff.

In a typical operation, the franchisee’s company hires employees and takes responsibility for wages, statutory employment contributions, holiday entitlements, working-time records and other applicable obligations. Brazilian employment legislation, including the Consolidation of Labour Laws (CLT), continues to apply, as do relevant collective agreements and workplace health and safety requirements.

This rule should not be interpreted as absolute immunity where breaches occur: individual circumstances may require their own legal assessment. The starting point, however, is clear: prospective buyers should assess the purchase as the future party responsible for the team, not as someone who will simply follow the brand’s instructions.

Ask for a breakdown of responsibilities: who recruits, selects, hires, trains and supervises staff, and who decides on dismissals? Help with recruitment does not mean taking responsibility for the employment contract or its costs.

2. Check whether the proposed team can run the outlet

A claim such as “operates with a small team” is not enough to base a decision on. Request the recommended staffing plan for the franchise format you intend to buy, including roles, opening hours and the owner’s expected involvement.

Then draw up a preliminary rota. This should show staffing for opening, closing, breaks, rest periods and busy times. Also check who covers holidays, unexpected absences and other leave. A plan that only works when nobody is absent is vulnerable.

Use these questions in your assessment:

• How many people need to be present at the same time during each part of the day?
• Which tasks require specific qualifications or training?
• Does any activity depend on a single employee?
• Has the owner been counted as part of the daily workforce without any allowance for their pay?
• Does the recommended headcount reflect expected customer demand, or just the minimum needed to open the doors?

Review the plan with an accountant and, where necessary, an employment law specialist. Do not automatically copy a rota from another city: opening hours, the availability of suitable staff and collective agreement provisions may differ.

If the figures only work with excessive working hours or hiring arrangements that do not reflect the actual working relationship, the problem needs to be resolved before you buy.

3. Calculate staffing costs beyond wages

The salary advertised for a vacancy does not represent the full cost of keeping that position filled. Ask your accountant for a monthly cost projection that takes account of the employment arrangements, the company’s legal and tax status, and the rules applicable in the area.

The assessment should cover wages, statutory employment contributions, benefits required by law or collective agreement, provisions for holiday pay and Brazil’s mandatory 13th-month salary, and any additional payments due. Also include recruitment costs, occupational health examinations, uniforms and training, where applicable.

Separate two stages: building the team before opening and maintaining the team once the business is operating. Employees hired for training before launch may already generate costs while the outlet is not yet making sales.

Prepare scenarios for staff replacement and turnover. If someone leaves shortly after being trained, you will need to recruit again, train their replacement and arrange cover for the role. Do not assume a generic percentage will give an accurate figure: calculate the actual cost components for your intended outlet.

Finally, test whether the budget remains viable when the owner needs to be away. Unpaid work and the owner’s constant availability can conceal inadequate staffing.

4. Compare the brand’s requirements with the documents

Brazil’s Franchise Law requires the Franchise Disclosure Document, known locally as the Circular de Oferta de Franquia (COF), to describe the training offered to the franchisee and their employees, specifying its duration, content and costs. Compare this information with the staff qualification requirements and the proposed contract.

Check who pays for travel, accommodation and any further training. Also ask how employees hired after opening are trained and whether staff must meet approval criteria before performing particular roles.

The COF must be provided at least ten days before the signing of a contract or preliminary agreement, or the payment of fees to the franchisor or a person or company connected with it. This is a minimum waiting period, not a requirement to complete your assessment within ten days.

In practice: before taking on the franchise, make sure you have a workable rota, a comprehensive staffing budget and a clear division of responsibilities. If any of these three elements remains undefined, clarify it before committing your investment.