Buying a franchise: assess staffing and employer responsibilities

A well-known brand may attract customers, but it will not staff your business. When buying a franchise, you need to understand how the franchise model’s requirements for opening hours, service and skills affect your responsibilities as an employer. Franchising brings together independent business owners: shared working practices do not mean the franchisor automatically takes responsibility for your staff. Assess staffing as a separate part of your pre-purchase checks.

1. Translate the franchise model’s requirements into staffing needs

Start by asking for a detailed description of how the outlet is expected to operate during a typical week. Opening hours alone are not enough. Preparation, closing procedures, deliveries, cleaning, administration and staff meetings also take working time.

Ask the franchisor to distinguish between binding requirements and recommended working practices. A suggestion that two people should be on duty is different from a contractual requirement for double staffing. Also ask whether certain tasks require specific training or a designated person in charge to be on site.

Then draw up a simple weekly rota showing:

• which tasks need to be carried out and when,
• how many people are needed at the same time,
• which skills each shift requires,
• when staff can take breaks and rest,
• which hours you are expected to work yourself.

Test the rota for both quiet and busy periods. A franchise model can be difficult to staff cost-effectively if opening hours are long but sales are concentrated into just a few hours. Ask for examples from comparable outlets, but check that their customer traffic and allocation of work genuinely reflect your circumstances.

2. Clarify who makes decisions and who is responsible

If your company hires the staff, it will normally be their employer. The franchisor’s instructions on service, clothing or working methods do not automatically change this. You need to be able to reconcile the franchise model’s requirements with your obligations towards your employees.

Sweden has specific franchise legislation: the Act (2006:484) on Franchisors’ Duty to Provide Information. It requires franchisors to provide clear, understandable written information about the implications of the agreement and relevant circumstances well before it is signed. This information must include a description of the business and the financial terms. Ask for any staffing requirements that materially affect operations and costs to be explained in the disclosure documents.

The Act does not replace employment law or provide comprehensive protection throughout the contract term. Relevant Swedish legislation includes the Employment Protection Act, the Work Environment Act, the Working Hours Act, the Annual Leave Act and the Co-Determination Act. Collective agreements may also affect employment terms. Do not assume that the franchisor’s collective agreement automatically covers your company; check what applies to your company as the employer.

In particular, ask who has the authority to make decisions about recruitment, rotas and day-to-day staff management. If the franchisor must approve a manager, the agreement needs to explain the process. Refusal to approve someone does not, in itself, invalidate an employment contract your company has already entered into.

3. Calculate the full cost of staffing

A staffing budget that includes only hourly pay will be misleading. Ask an adviser with payroll expertise to calculate costs based on the employment terms that will actually apply.

As well as pay and employer social security contributions, the calculation should, where applicable, cover holiday pay, pensions, insurance, unsocial-hours premiums and overtime pay. Also include recruitment, induction, workwear and time spent on compulsory training. Check which costs arise from legislation, collective agreements and individual employment contracts respectively.

Your own work must be shown separately. If the calculation assumes that you work every evening without reasonable remuneration, it does not show what it costs to run the business with sustainable staffing levels.

Prepare three practical calculations:

• Normal operations: the staffing needed to meet the franchise model’s requirements.
• Lower sales: the same mandatory opening hours, but fewer customers.
• Additional staffing: extra staff during busy periods or induction.

The question is not simply whether you can pay wages. You also need to know which costs can be adjusted when revenue changes. Ask for a clear answer on whether opening hours or the allocation of work can be changed, rather than assuming this will be possible later.

4. Check what employer support actually covers

Shared recruitment templates and staff handbooks can be valuable. But a template is not the same as tailored advice, and a payroll system does not take over your responsibilities as an employer.

Ask the franchisor to specify what support is included: recruitment adverts, employment contracts, payroll administration, workplace health and safety procedures, or advice on staff matters. Check who updates the materials, which issues the support covers and when you will need to engage your own specialist. Also find out whether the support costs extra.

Before committing, have an employment law adviser review any potential conflicts between the franchise model’s staffing rules and your obligations as an employer. It is particularly important that you can take the necessary practical steps to protect workplace health and safety, even where working methods are set centrally.

Practical conclusion: Do not sign until you have a workable staffing rota, a complete staffing cost calculation and a clear allocation of responsibilities. The franchise model must remain viable once staff time and your responsibilities as an employer are taken into account.