Revisiting Whether and How to Train Franchisee Employees

The NLRB’s recent reexaminations of co-employment issues in franchising have required franchisors to revisit their practices around the support they provide to franchisees, and how they manage that relationship in order to avoid vicarious liability. Potential issues around how a franchisor provides training to the franchisee’s management and staff relates primarily to the content of the training, and whether the franchisor requires compliance in areas that would trigger joint-employer issues.

• For example, while it’s perfectly acceptable to provide guidance to franchisees on staff recruitment and retention policies during training, stepping over the line and trying to enforce those recommendations as brand standards would likely result in both joint-employer and vicarious liability concerns.

It’s always good practice to discuss these matters with legal counsel and consultants familiar with the law and your unique franchise system. As a general rule, however, providing training to a franchisee’s management and staff, directly through classroom or local market training, or indirectly through online programs that are related to your brand standards, is unlikely to trigger any significant concerns.

• Again, while legal counsel is advised, even providing training or advice on recommended human resource practices the franchisee may consider is not out of bounds. What will trigger concerns is whether the franchisor requires vs. recommends such practices.

Training for Franchisee Management and Staff

Let’s begin with the basics.

A franchisor’s disclosure document (FDD) and its attached franchise agreements discuss the type and level of initial and continuing support provided to the franchisee, including training and certification programs. Franchise attorneys and consultants will generally prepare and review what is being promised and, most importantly, will want to review the underlying materials that will be used in training, including manuals, training materials, scripts, online material, etc. Also, wise franchisors will regularly (at least annually) review their training and support materials, including those used by their field and other support personnel in communicating with franchisees, to determine if changes have inadvertently created any risks.

There are many ways franchisees obtain the necessary information to operate their businesses successfully. Most often, much of the information comes from the franchisor. But franchisees that rely on franchisors as their sole source of business advice and information are limited in number. There are a host of online, local courses and other sources of information that franchisees should, and do, routinely tap into to improve their own businesses.

When training is provided by franchisors, however, two broad and often interrelated strategies are generally used to address the needs of training the franchisee’s employee – direct and indirect.

Direct Training - by the Franchisor

While initial training for the franchisee’s management-level staff may often be provided by the franchisor at its headquarters or some other training facility, initial and continuing training is generally delivered directly to the franchisee’s employees either through local market or distance learning methods. Franchisor-provided training has many advantages, because franchisees juggle many competing demands on their time and may not have the capability to provide quality one-on-one training to their personnel.

The franchisor may deliver training in markets using field staff who provide the training programs directly and have themselves been through a train-the-trainer program. While direct local training by franchisors’ personnel is often beneficial, and in some skill areas can be argued as even essential, any live training program can suffer from common problems including uneven articulation, oversights, and potential dilution of the intended message. After all, the training is being conducted by mere humans, and local conditions can often create challenges in delivering the consistent and complete message that was intended. Live training can also involve substantive training budgets that most emerging and many growing franchisors lack.

For this reason, and to ensure consistency, many franchisors use eLearning (or mLearning, accessed on mobile devices) as part of their training support to franchisees. ELearning is unsurpassed in ensuring that every employee, whether working for a company-owned or franchisee-owned and operated location, can receive the benefit of the system’s training. The training generally is engagingly articulated, graphically enhanced and potentially aided by video, and does not suffer from some of the inevitable pitfalls of live training.

Formal eLearning, housed on a Learning Management System (LMS), affords the ability to monitor and track the training performance of staff on a store-by-store level. It allows staff members to set their own pace and repeat areas as needed. It gives the franchisees tools to assess whether their personnel have met their own certification standards. It enables the franchisee to use the eLearning material as part of larger training programs that they develop. It allows the accumulation of knowledge in determining how long it took for staff to complete the courses and whether they required multiple attempts to pass any of the tests. In doing so, it gives the franchisor the ability to assess how the eLearning platform is working and whether or not any of the material provided needs to be modified or augmented.

Another advantage of eLearning is that the message is consistent. The content should be reviewed by legal counsel and consultants to ensure that it does not trigger any joint-employment or vicarious liability concerns; if claims are made, the eLearning material can also be reviewed at a later date should it be needed in defense of the franchisor in court or in a regulatory hearing.

Indirect Training - by the Franchisee

Franchisors and franchisees both want the best-trained and capable staff serving their customers. Often, even when training is available directly from the franchisor at its headquarters or in the field, this training may not be the most convenient or cost-effective method for franchisees. When training requires travel there are costs involved for the franchisee, including time, travel, and often a fee paid to the franchisor. Enabling the franchisee and/or their trainers or managers to conduct training programs directly with their employees ensures that the franchisee’s staff remains consistently well trained.

Many franchise systems today rely on this approach. However, the success of franchisee-conducted training rests on the material put in the franchisee’s or their designated trainer or manager’s hands, and whether or not the franchisee’s trainer is qualified to train. For franchisors using this strategy, and to ensure that franchisees have the necessary tools to properly train their own personnel, MSA Worldwide builds train-the-trainer modules into the training programs provided to clients. These training programs are provided to franchisees and their management team both as initial and ongoing training programs.

Franchisee-delivered training may not have the dazzle or flawless consistency that direct, franchisor-provided eLearning provides. However, it is of critical value, and generally the most affordable option for the new and growing franchise system. Even before eLearning was available as a component of local training, franchisee-provided training was used to foster the growth and success of many national brands, and was typically the approach used in some format by most start-up franchise systems.

The most common training conducted by franchisee training personnel is one-on-one new employee training; it is not frequently designed as a “classroom” experience with multiple learners, although classroom training may be part of the mix when addressing management-level employees for multi-unit operators. Franchisors also provide material to their franchisees for training personnel, to allow them to address new products and services and other changes to the brand.

While the depth and sophistication of the training material provided will vary, materials provided to franchisees for training their staff include handouts, checklists of training activities, videos, and written material. Often, when well designed, that material is geared to the staff that the franchisor expects to be trained, and comprehension and even languages used can factor into how that material is developed for the franchise system. Also, to avoid claims of vicarious liability and joint-employer, franchisors will encourage the franchisee’s trainer to modify the material provided by the franchisor for delivery to the franchisee’s staff.

The goal of any good franchisee-conducted training program is the achievement of brand standards by those who are trained. Franchisors should avoid focusing too much on process steps that are unneeded in meeting that system’s brand standards.

• For example, providing process steps for window cleaning at a restaurant would be unnecessary, although the standard “Windows must be free of dirt and fingerprints at all times” would likely be fine.

• In contrast, process steps for cleaning windows would be essential if the franchise were in the business of cleaning windows and the procedures produced the desired results.

Certification Programs in Franchisee-Delivered Training

Whether via online learning or in-store training, franchisors often include programs that enable franchisees to certify their own employees. These certification programs offer a built-in level of quality control, and function to elevate a franchisee-owned business above other players in the same market niche. While certification may be a component of many learning programs, and tests at the end of training modules are frequently required of the learner, certification by field staff of the franchisee’s staff needs to be carefully planned and, to be effective, executed in a disciplined manner. Most often, franchisees are given the tools to certify their own staff directly, and the franchisor can use those certifications as part of a well-designed field-support system.

In planning your certification process, consider the following:

1. If the franchisee is responsible for certifying their own employees, does monitoring of staff certification by the franchisor serve any real purpose? Would requiring the franchisee to send documentation of employee certification records to the franchisor’s office summarizing new staff and their certification completion serve any purpose?

Likely not, and it would create unnecessary risk. The franchisor is concerned with how well the franchisee is delivering on its brand promise to consumers. Tracking whether a franchisee’s employees have been sufficiently trained does not guarantee that goal’s achievement. Observing the franchisee’s business will achieve that goal. Providing the franchisee with tools to make it easier for them to train their staff, and being able to withdraw that ability should conditions at the local operation make that necessary, are parts of a well defined brand compliance program, when properly designed.

2. Should field staff be accountable for employee certification?

There is a difference between ensuring that franchisees and their management teams have completed initial training to the franchisor’s satisfaction, and the franchisor taking accountability for the franchisee’s employee training. The former has a primary purpose in franchising and is a necessity of the franchisor and franchisee relationship. On the other hand, the primary purpose for field staff to provide support to franchisees is to improve their businesses and to monitor, through direct and indirect observation, the franchisee’s operations, including how well their employees perform to brand standards. Examples include noting whether recipes are being utilized precisely by kitchen staff, whether service delivery or product assembly is accomplished to standards by franchisees through their designated employees, etc.

An important benefit to franchisees is that the field staff is presumably highly trained and has broader experience in observing and understanding system standards. Field staff are supposed to bring a fresh and well-trained eye to location visits and assist franchisees by observing business operations. In conducting their review of the franchisee’s business for both brand standards and efficient operations, one of the tools field staff brings is their ability to observe if those brand standards are achieved. Where training is conducted by franchisees, it should be their accountability to certify their own employees as being sufficiently competent to do their jobs to achieve brand standard performance at the local operation. When employees are not sufficiently competent, and if the franchisee is incapable of correcting the deficiencies on their own, removing the franchisee’s ability to provide direct training, and requiring its personnel to be trained at a fee by the franchisor, is often a better alternative than issuing a default letter. In this way, franchisors can influence better performance by franchisees by requiring the franchisee’s training personnel to attend a refresher train-the-training program – creating a win-win out of what could alternatively become a significant dispute.

3. Should field staff sign off on a franchisee’s certification of its employees?

While you should consult with your own lawyers, our advice would be no. Field staff monitoring signed certification documents during location visits may create risks for vicarious liability and joint-employer, because it may be used as evidence of control by the franchisor over day-to-day management of the business. It also does not serve any useful purpose in achieving brand standards by the franchisor. If a review of the franchisee’s staff certifications is used, review your procedures with your lawyers and consultants. Your interest as a franchisor is not in a franchisee meeting certain procedural steps and paperwork (the form), but in the achievement of brand standards (the substance). Understanding that a franchisor is in the practice of setting and enforcing standards, not day-to-day procedures that are not brand requirements, should always be a forward part of how a franchisor constructs and delivers training throughout its system.

Go the Distance to Create a Meaningful Training Program

New franchisors, in particular, may not be clear on what is involved in creating a meaningful training program that will cascade down to the employee level at both the company-owned and franchisee-owned locations in their system. Substantive time and planning will be essential to first consider the approach you will use, and then to develop the appropriate materials and tools. This is one of the tools we deliver to our clients at MSA Worldwide.

Developing materials that franchisees can use in their businesses to train employees involves reflecting on the steps you take to train your own employees. Ask yourself: “What are the steps that I or my managers take to train the receptionist, servers, installers, caregivers?” and “What checklists and material do I need to create for franchisees to adapt, so that they can accomplish the same goals?” You should assess the need to provide the franchisee with training materials in a user-friendly format tied to the position being trained. Manuals, workbooks, position guides, videos, and other material provided should be in a format that is usable and understandable by the reader; often we find that materials are written at a level far above what is required for a staff person to understand. It is equally important that where many local staff may not have English as their primary language, creating material useful to them that enables them to deliver on your brand promise to consumers should be reasonably available.

In Summary

When properly structured, providing franchisees, their management and staff with information they require is not a trigger to joint employer or vicarious liability risk. Once your training program is complete, consistently look for ways to improve upon it. And always monitor changes with your lawyers and consultants, as they likely have a familiarity with the details of what is going on broadly in franchising.