More franchises seek to reward managers to boost profits

Running a franchise can be a great way for business owners to expand their companies and increase the awareness of their brands. Running multiple store locations can take a lot of time and effort, so franchising helps alleviate some of those operating stresses.

That's not to say there isn't any work left for owners once they find the right candidates to buy into their franchises, however. The right management teams have to be hired and they need to have the right support to keep the businesses thriving. For many businesses, one of the ways to help keep morale high and employees motivated is to reward successful managers and offer incentives for increasing profits.

"The company aims to reward profitable managers."

The Chick-fil-A model
According to Workforce, most restaurants have a store employee turnover rate of 35 percent. Fast-food chicken chain Chick-fil-A, however, only has a turnover rate of about 5 percent. Reducing employee turnover helps keep operating costs down and stores running more efficiently – managers don't need to waste time constantly recruiting and training new employees. Instead, staff members are able to focus more on running the business, boosting profits and building a happier customer base. More efficient and highly trained staff is less likely to make frequent mistakes, which decreases waste. Overall, happy employees and management teams mean better-run franchises.

The company aims to reward profitable managers by offering higher salaries than others in the industry. Combined with low franchising fees, it helps to attract more interest in running a part of the business. Franchisers have a larger pool of talent to select from to ensure they find the right managers to run their restaurants.

It's not just management, either. Entry-level workers are eligible for rewards for good work, too. High schools students working part-time jobs after their classes can earn scholarships. In doing so, the company also helps to open the door to future administrators. Part-time counter staff can afford to go to business school and other educational programs to help them advance within the company that gave them their start. 

Fast food franchises increase profits by retaining good staff with incentives and reward programs. Fast food franchises increase profits by retaining good staff with incentives and reward programs.

Incentive models gaining in popularity
Following the success of Chick-fil-A and other companies that reward quality staff, more restaurants are looking to branch out and offer incentives to their management teams. Nation's Restaurant News reports that the Boston-based sandwich company Cosi is taking steps to follow this Chick-fil-A pattern to help it build up its profits. The company was losing money rapidly, and owners decided that rather than cutting operations costs, they could improve profits by changing the company culture. 

Employee incentives now include restricted stock rewards, in the hopes that it will inspire workers to strive for increasing the company's stock prices. 

"The team is coming up with tremendous ideas for making Cosi profitable and keeping our aspiration of becoming the best restaurant company in America," said R.J. Dourney, Cosi CEO. 

The company was also able to cut some labor costs while increasing wages for many workers by streamlining and improving their work processes. 

More franchisers are going to continue finding ways to reward their staff to help build employee loyalty. It's important to make sure that franchisees have the tools they need to keep the businesses thriving, and helping them maintain their workforce is a critical component of a successful store. How exactly an owner will choose to incentivize staff will depend on the business and the market it's in. The important part is that franchisors are seeking out ways to genuinely reward good work to keep successful staff interested in the growth of the business. Even if rewards cost more up front, the savings that come from a long-term and dedicated staff will more than pay for themselves. 

Equipment and franchise industry piece brought to you by Marlin Equipment Finance, a nationwide provider of commercial lending solutions for small and mid-size businesses. Marlin's equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which include manufacturers, distributors, independent dealers and brokers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.