Dear Mark - I have to take issue with your comments, having worked for a franchisee for 6 years.
: 1.There is only one owner so he/she will take care of it.
: They will take care of their staff,
Franchisees are ambitious business people who see an opportunity to make large sums of money from trading under the golden arch. In fact, it is my experience that many of the potential franchisees - or "registered applicants" see their McD's franchise as a licence to print money. The whole concept is certainly soldl to potential applicants as such - and all the potential pitfalls are obscured by the dollar signs !
Some franchisees probbly do take care of their staff - but that can mean many things. It might mean always being available to listen, showing an interest in them as individuals and knowing their names - but how about paying them a decent living wage ? Or paying managers a fixed salary, but demanding 60+ hours a week (often wrongly called "showin commitment")
: 2.They don't have a 'company budget' to adhere to.
Not true. When the monthly store accounts are processed, franchisees must achieve at least a profit-after-controllables of around 37% of net sales. It is only after the PAC is calculated that McD's start taking their slice. So, the bigger the PAC, the bigger the percentage McD's will reel in. There is actually immense pressure upon the franchisee from the company to achieve increased year on year sales and higher PAC.
: 3.They don't have to control the labour costs to work the ass off people.
Labour control is a big issue for franchisees, and is closely linked to the productivity of individual workers. More experienced staff work their stations more efficiently, but the art is persuading them to stay! The pressure of the labour cost ( the second highest cost in any store after the buy-in cost of the raw product) is huge, and McD's will certainly take to task a franchisee who has excessive costs in this area. After all, that reduces the PAC, which reduces McD's profit from the store.
The problems arise in stores that are not constantly busy - with maybe just a lunch and dinner rush. What often happens is the store is understaffed for those few hours, and the staff pushed hard, to balance out the high cost of the labour in the quiet times. McD's use a formula to calculate Sales Per Man Hour to look at the productivity of the staff.
More productive staff achieve a higher SPMH.
From one who knows !
None.
