Market
TRENDS BY DARRELL JOHNSON
Are You Paying Your
Employees Properly?
Franchise salary survey reveals more than just the numbers
I made a presentation to a national
law firm’s franchise practice group
a few years ago with the title, “You
Won’t Believe What You Can Learn from
a UFOC.” The presentation was made
to people who were responsible for putting UFOCs (now FDDs) together. They
were surprised to learn all the things that
could be analyzed and extracted from
the documents they prepared.
I was reminded of their response last
fall as we completed a compensation survey of jobs specific to
franchises. We collected
and analyzed data from
contributing franchisors. Equally important,
we overlaid additional
data from other sources,
most notably our own
databases of information
about every franchise
system. The whole is
definitely more than the
sum of the parts.
We undertook the study because
many franchisors approached us with
the same dilemma: they could get comparable salary information about common corporate functions for C-suite and
for technical jobs such as accounting.
There was no information, however,
about job functions uniquely designed
in a franchising framework, including
development, field staff, site selection/
pre-opening, compliance, training,
marketing, and legal. In the process of
analyzing the obvious salary data, we
learned so much more.
I’ll start with the obvious: job descriptions, salary ranges, and salary composition. As every hiring consultant will tell
you, the most important part of hiring
is to know exactly what it is you want
the person to do. If you are clear about
your job description, it is a lot easier to
find candidates, decide among them, and
judge their performance after they are
hired. We got lots of input from survey
participants about job functions that led
to some common descriptions.
Less
Responsibility
15%
Position descriptions vs. actual
responsibilities
The study included a description of 14
job functions. More than half of the
respondents, 54 percent, found the actual
job responsibilities in
their organizations were
about the same as those
provided in the survey
job descriptions.
As we looked at the
life cycle stage of each
contributing franchisor,
the significance of such
information became
obvious, especially for
early stage and growth stage franchisors.
Franchisor executives typically start out
wearing multiple hats. As the system
grows, executives start shedding hats
and bring in manager specialists. For
strategic planning and budgeting purposes, it might be helpful to know approximately when that starts happening
for franchisors in specific sectors.
Actual Job Responsibilities
Managers vs. professionals
The basic purpose of the study was to
identify actual salary ranges for various job
functions. Salary ranges are also helpful
to understand in the context of industry,
concept age and size, and geographic area.
In today’s franchising community, experienced people are much more inclined
to work in several industries and many
sectors during their careers.
We were also able to understand the
differential between manager compensation and staff compensation. Benchmarking that difference can have a significant
impact on budgeting, team relationships,
and performance.
Managers, on average, are paid 1.61
times more than their professional staffs.
The table below shows the average base
salaries, irrespective of industry or other
groupings, of each role across the seven
functional groups.
What more can we learn from this
data? Lots. We are repeating the survey
this year and hope to be able to bring
you organizational conclusions besides
simple position information. For example,
in the area of company organizational
structure:
• What should my organizational
chart look like as we grow?
• When do I create separate positions
for franchise job functions?
• Am I under- or over-staffed relative
to my peer group?
• Am I providing enough, not enough,
or too much support for my franchisees?
• Are there outcomes over time that
will help me determine the return I’m
getting from a particular job function?
• How do I determine whether a
continued on page 47
Franchise development
Site selection, pre-opening activities
Franchisee training
Field operations
Compliance
Legal services
Marketing
Average
Manager Prof’l
$109,523 66,821
$130,690 70,483
$ 79,300 52,432
$111,407 62,162
$ 72,968 41,975
$131,222 $102,822
$106,308 64,917
$105,917 65,945
Mgr/Prof’l Differential
1.63
1.85
1.51
1.79
1.74
1. 28
1.64
1.61
