Franchise Strategies
Jun 27, 2025
Learn how workforce availability impacts franchise success, from employee training to local job market conditions and strategies for retention.
Workforce availability can make or break a franchise. Struggles to find and keep skilled employees lead to higher costs, reduced customer satisfaction, and slower growth. Despite challenges like labor shortages and high turnover, franchises are growing faster than many other sectors, with jobs expected to rise by 4.7% from 2023 to 2025. Key factors influencing workforce availability include:
Employee Skills: Training boosts productivity by 17% and income per employee by 218%.
Local Job Markets: Regions like the Southeast and Southwest offer better hiring conditions, while high-cost states like California face declines in franchise employment.
Turnover Costs: Replacing employees can cost up to $36,723 annually, highlighting the need for retention strategies.
To succeed, franchise owners must focus on better hiring practices, competitive pay, flexible schedules, and choosing locations with strong labor markets. Professional consultants and tools like CareerPlug can also help streamline staffing efforts. Workforce planning isn’t just about filling roles - it’s critical for long-term franchise success.
Helping Your Franchisees Reduce Turnover and Hire Smarter from the Start
Main Factors That Determine Workforce Availability for Franchises
Understanding what drives workforce availability is essential for franchise owners. It helps them make smarter decisions about staffing, choosing locations, and planning operations - all of which are critical for running a successful business. Let’s break down some of the key elements that shape workforce availability, including worker skills, local job market conditions, and the challenges posed by employee turnover.
Worker Skills and Training Requirements
Franchise employees often juggle multiple responsibilities, so comprehensive training is a must. Most franchise training programs focus on six main areas: operations, sales, marketing, financial management, customer service, and technology. This kind of well-rounded training ensures that employees can adapt quickly to their roles.
And it’s worth the investment - effective training can boost income per employee by 218% and improve productivity by 17%. To achieve these results, training programs should include a mix of on-site learning, classroom instruction, and ongoing support. It’s also important to keep these programs up-to-date with industry trends. Franchisors should clearly explain the training process, covering its duration, format, and the resources available after training. Providing materials in accessible and language-appropriate formats is another critical step.
Local Population and Job Market Conditions
The local labor market has a huge impact on recruitment and retention. Factors like age distribution, education levels, gender ratios, and ethnic diversity all play a role in shaping the pool of potential employees. Employment rates, the number of job openings, and competition from other businesses further influence hiring success.
Regional trends also matter. In the Southeast, franchise employment is thriving, thanks to lower costs and fewer regulatory hurdles. For example, South Carolina expects franchises to contribute nearly 88% of its employment growth, driven by favorable local conditions. On the other hand, high-cost states like California face more challenges. While California’s overall employment is projected to grow by 2.5%, franchise employment is expected to drop by 4.5%.
Demographics are shifting, too. The percentage of Americans aged 60 and older grew from 16% in 2000 to 24% in 2021, and labor force participation among those 55 and older dropped from 40.3% in December 2019 to 38.5% by December 2021. By 2045, it’s projected that diverse Americans will make up 50.3% of the population. For franchises, this means location planning must include thorough research into local demographics, employment rates, and competitive wages and benefits.
Employee Turnover and Staffing Shortages
High turnover and staffing shortages are persistent headaches for franchises, especially in industries like retail, food service, healthcare, and hospitality. These issues often lead to reduced operating hours, lower customer service quality, and delayed expansion plans.
Turnover is expensive. On average, it costs businesses $36,723 per year in rehiring and lost productivity. For some hiring managers, this figure can climb to over $100,000 annually. As Bob Funk, Jr., CEO of Express, puts it:
"Employee turnover isn't just a staffing issue, it's a financial one. Companies that want to stay competitive must be intentional about retention. Which means building a workplace where people see long-term value - not just in compensation, but in leadership, clarity of direction and the opportunity to contribute meaningfully."
The restaurant industry is particularly hard-hit. Around 70% of restaurant operators report struggling to fill job openings, and 45% say they don’t have enough staff to meet current demand. Low wages, limited benefits, high-pressure environments, and shifting workforce demographics are all contributing factors.
Franchisees often face additional hurdles compared to larger corporations, such as limited cash reserves, which makes it harder to compete for talent with higher salaries or better benefits. While only 50% of U.S. workers are satisfied with their pay, many also prioritize flexible schedules, remote work options, and career growth opportunities. In fact, nearly two-thirds of workers consider workplace flexibility a top priority.
In 2024, 87% of franchisors reported that franchisees needed help finding qualified candidates. This has led to creative solutions like using EB-3 visa programs, recruiting underemployed groups such as retirees and individuals with disabilities, and fostering a workplace culture that values recognition and career advancement. Tackling these challenges head-on is essential for keeping franchises competitive and efficient.
Workforce Patterns Across Different U.S. Regions
Workforce availability across the U.S. shows significant variation, and franchise owners must account for these regional differences. Some areas experience strong growth, while others face labor shortages that can directly impact business operations and success.
Regional Labor Market Comparison
The Southeast and Southwest stand out as regions with promising franchise workforce opportunities. Projections for 2025 indicate franchise output growth of 6.2% in the Southeast and 8.5% in the Southwest, with the latter leading the nation in this metric.
U.S. Region | Projected Output Growth | Key Advantages |
|---|---|---|
Southwest | 8.5% | Business-friendly policies and a growing population |
Southeast | 6.2% | Lower operating costs and fewer regulations |
Midwest | ~4% | Stable workforce with moderate growth |
West | ~3.5% | Higher costs that can limit expansion |
Northeast | ~3% | Regulatory challenges and elevated expenses |
For example, South Carolina demonstrates a strong labor market with over 2.3 job openings per unemployed person and anticipates 8.8% franchise employment by 2025. It’s one of nine leading Southeast states in this regard.
In contrast, states like Kentucky, Alaska, and West Virginia face significant hiring challenges. Kentucky leads with a 6.5% job openings rate, followed by Alaska at 6.0% and West Virginia at 5.9%. These states also report low labor force participation rates, often below 58%, compared to the national average of 62.5%.
Unemployment rates further highlight these disparities. In May 2025, the District of Columbia recorded the highest unemployment rate at 5.9%, while South Dakota reported the lowest at 1.8%. These figures directly influence franchise staffing and operations.
Additionally, high-cost states like California, New York, and Illinois present unique challenges. Franchise employment in these states is declining, even as overall job numbers grow.
These regional dynamics create distinct challenges for various franchise sectors.
Industry-Specific Workforce Challenges
Beyond regional trends, specific industries face unique workforce hurdles. For instance, quick-service restaurants (QSR) are expected to employ over 4 million workers by 2025, making them particularly vulnerable to labor shortages in certain areas.
Personal service franchises are experiencing the fastest growth at 7.8%, but they face challenges in regions with aging populations. States like Kentucky, West Virginia, and Arkansas are seeing demographic shifts, including declining birth rates and an aging workforce, which reduce the labor pool for service-based businesses.
The healthcare franchise sector is grappling with acute shortages of specialized skills, particularly in rural areas of the Midwest and parts of the South. Similarly, manufacturing and construction franchises are struggling to find skilled workers in regions where economic growth has outpaced workforce development.
Regional policies also play a critical role. The Southeast and Southwest benefit from business-friendly environments, including lower taxes, reduced operating costs, and fewer labor regulations. These factors contribute to a stronger franchise presence and better workforce availability. As Matt Haller, President and CEO of the International Franchise Association (IFA), explains:
"The resilience of the franchise business model not only helped the sector survive the uncertainty of recent years, but thrive in the face of challenging economic conditions."
The U.S. Chamber of Commerce emphasizes the importance of flexibility in addressing workforce shortages:
"Flexible work is one of the top solutions to labor shortages, especially among younger and mid-career workers seeking better work-life integration."
For franchise owners in competitive labor markets, offering flexible scheduling and work arrangements can provide a distinct advantage in attracting and retaining employees. Understanding these regional and industry-specific nuances is essential for aligning workforce strategies with franchise success.
Methods for Solving Workforce Availability Problems
In today’s competitive labor market, franchise owners need to actively address workforce challenges to build and retain a skilled team. With predictions that 38% of employees may leave their jobs by 2025 and 79% of franchisors struggling with unfilled positions, finding solutions to workforce issues has become a pressing priority.
Finding and Keeping Good Employees
Attracting and retaining talented employees is at the heart of solving workforce challenges. High turnover can cut profitability by 33%, making it essential for franchise owners to focus on strategies that encourage long-term commitment.
Hiring for Cultural Fit is often more effective than seeking candidates with perfect skill sets. A study by Robert Half highlights the risks of waiting for the "perfect" candidate:
"Hiring managers that wait for a candidate to check every box experience higher turnover due to increased workloads for everyone else (45%), higher recruitment costs overall (42%), and loss of candidates to competitors (39%)."
Instead, focus on candidates who align with your company culture and provide training to build the specific skills they need for the role.
Robust onboarding programs can dramatically improve employee retention, increasing rates by up to 82%. These programs should include comprehensive orientation, mentorship opportunities, and regular follow-ups during the first 90 days to ensure new hires feel supported and connected.
Competitive Compensation and Benefits remain key factors in attracting talent. Regularly review pay structures to ensure they meet or exceed industry benchmarks. Additionally, offering flexible schedules - especially with 55% of employees favoring hybrid work options - can help differentiate your franchise from competitors.
Recognition and Development Programs play a critical role in keeping employees engaged. With 82% of workers feeling undervalued, formal recognition systems and clear career advancement opportunities can foster loyalty. Businesses with high employee engagement see turnover drop by 51%.
Building Community and Connection is another powerful retention strategy. Employees who feel a sense of belonging at work are 66% more likely to stay. Encourage this by implementing peer recognition programs, hosting team-building events, and creating employee resource groups.
Leveraging technology can also simplify hiring. Tools like CareerPlug, an applicant tracking system, help franchisors streamline recruitment, improve hiring practices, and track key metrics.
While internal strategies are critical, selecting the right location is another major factor in addressing workforce challenges.
Choosing Locations Based on Labor Market Research
Beyond refining hiring practices, choosing the right location can significantly impact workforce stability. Poor location selection is a leading cause of franchise closures, with 60% of new franchises failing within three years due to inadequate market research.
Demographic Analysis is a vital first step. Franchise owners should gather data from sources like the U.S. Census Bureau and commercial real estate reports. Key metrics include population size, income levels, education, and age demographics to ensure a strong labor pool.
Economic Environment Assessment focuses on identifying areas with growing industries and stable income levels. Thriving local economies often translate to a more reliable workforce.
Infrastructure and Accessibility are equally important. Locations near public transportation, major roads, and with ample parking tend to attract more applicants. Accessibility can be a deciding factor for potential employees.
Future Growth Projections provide insight into long-term labor market stability. Urban development plans, population growth trends, and emerging economic activities can help franchise owners anticipate future workforce needs.
To simplify the decision-making process, franchise owners can use scoring systems to evaluate and compare locations based on factors like labor availability, competition, and economic conditions.
When internal strategies and location planning aren’t enough, professional consulting services can provide the expertise needed to navigate complex workforce challenges.
Using Professional Consulting Services
External expertise can complement internal efforts, helping franchise owners optimize workforce planning and location selection. Franchise consultants bring specialized knowledge to the table, as The Entrepreneur's Source explains:
"A consultant in any field is someone whose work is to share their experience and expertise in the form of advice. A franchise consultant is someone who understands the world of franchise ownership and the franchise industry as a whole and can act as a guide for those with less experience through the challenging learning and discovery processes."
Objective Market Analysis is one of the key advantages of working with consultants. They provide unbiased insights into workforce conditions and help identify locations with the best potential for staffing success. Consultants also analyze performance metrics and recommend strategies to improve operations.
Industry Connections and Resources are another benefit. Franchise consultants often have access to a network of professionals, including lawyers, HR managers, and real estate experts, who can provide valuable insights into local labor markets.
Services like Franchise Ki offer tailored support for franchise owners. By connecting entrepreneurs with pre-vetted franchise opportunities in areas with strong labor markets, Franchise Ki helps owners align their business goals with workforce availability. Their services also include funding guidance and due diligence, ensuring owners make informed decisions about compensation packages and hiring strategies.
Ongoing Expert Assistance is particularly useful as workforce conditions change. Consultants can help franchise owners adapt to seasonal hiring needs or shifts in regional economic trends.
Don Daszkowski, Founder of IFPG, underscores the importance of consultants in the franchise industry:
"Franchise consultants truly get out of their businesses what they put in. And I believe franchise consultants are needed - they fill a knowledge void for this large segment of the U.S. economy."
Conclusion: Why Workforce Availability Determines Franchise Success
Workforce availability is undeniably the backbone of franchise success, shaping everything from daily operations to long-term profitability. As Will Seel, VP of Business Development and Industry Affairs at FHI, aptly states:
"You can build the most advanced facility in the world, but if you don't have the right people to run it - especially on nights and weekends - you're already at a disadvantage."
This challenge underscores the need for franchise owners to take a proactive approach to workforce planning.
Strategic workforce planning is more than just filling open positions. It involves conducting skills gap analyses, leveraging predictive analytics to forecast future talent needs, and adopting flexible workforce models. For example, Netflix demonstrated the effectiveness of this approach by forecasting staffing needs six to twelve months in advance, ensuring a balance between talent supply and demand.
Location planning also plays a pivotal role. Workforce availability and readiness should be key factors in site selection, alongside demographic research and economic assessments. These elements are crucial for identifying regions that can support long-term operational success.
However, only 33% of HR leaders report that their workforce planning efforts are effective, highlighting the importance of seeking professional guidance. Platforms like Franchise Ki offer valuable resources, connecting entrepreneurs with franchise opportunities in labor-rich markets, while also providing support with funding and due diligence.
Seel further emphasizes the importance of workforce development initiatives:
"Regions that prioritize workforce development and create clear pathways for training and upskilling are changing the game. They're not just offering land - they're offering long-term value. That's what makes the difference in today's competitive environment."
Franchise owners who prioritize workforce availability - through meticulous planning, strategic location choices, and expert guidance - set themselves up for sustained success in an increasingly competitive market.
FAQs
What can franchise owners do to reduce employee turnover and manage staffing shortages effectively?
Franchise owners can address employee turnover and staffing challenges by fostering a workplace that prioritizes employee well-being and support. Providing competitive wages, clear paths for career advancement, and acknowledging accomplishments can go a long way in boosting job satisfaction and keeping staff on board.
On top of that, dedicating resources to employee training and development not only builds a more capable and motivated team but also encourages loyalty. Connecting with the local community to discover potential talent and understanding their unique needs can further enhance recruitment efforts and help close staffing gaps over time.
Why is understanding local demographics important when choosing a franchise location?
Understanding the local demographics is key when choosing a franchise location. Why? Because it ensures your business matches the needs and preferences of the people in that area. Things like age groups, income levels, lifestyle choices, and population size can heavily influence how well your franchise resonates with the community.
When you dig into this data, you can pinpoint areas with a strong potential customer base and avoid spots where demand might fall short. This kind of informed decision-making can lead to more foot traffic, happier customers, and a better chance of long-term success for your franchise.
Why is workforce planning essential for the success of a franchise?
Workforce planning plays a key role in the success of any franchise. It’s all about having the right people in the right roles to meet customer expectations and hit your business targets. When staffing needs are managed thoughtfully, franchises can lower employee turnover, build stronger team morale, and deliver a seamless experience for customers.
A well-thought-out workforce strategy allows franchises to stay ahead of future talent needs, respond effectively to market shifts, and keep operations running smoothly. The result? Improved efficiency and a solid foundation for long-term growth, even in a competitive landscape.
