From financing to real estate, there are a lot of pieces that go into launching a franchise location in a new geographic market. Before opening the doors, however, you need to find another major piece of that puzzle — a local team to run the daily operations.
Recruiting, hiring and building sound franchise compensation plans are major (and related) components of a human resources process that makes it possible for a franchise to break into new markets. We’ve already covered recruiting and hiring, so let’s go over what you need to know about compensation to make your geographic expansion a success.
Navigating Compensation Challenges
Obviously, the cost of living, and thus salaries, probably won’t be the same across different markets and/or geographic regions. That means you’ll need to perform a compensation analysis to help determine baseline salary ranges and long-term compensation plans before you start hiring. These are two key components of franchise growth.
Failing to plan is planning to fail in cases like this. If you enter a new market and simply begin “hiring blind” in an attempt to staff up quickly, you can wind up paying more than you should. That’s one problem. However, you could also be setting the stage for wage inequity and maybe even pay discrimination claims down the road. That’s a whole other problem entirely.
Best Practices for Setting Franchise Compensation Levels
Here are some tips for conducting compensation research to develop realistic pay ranges:
- Base your salary structure on market compensation research, and include factors like company size, annual revenue, industry, location, etc.
- Pull market comparisons from similar, specific geographies.
- Don’t set pay levels according to your corporate location (if your corporate location is in Philadelphia, while your new market is in Coudersport, PA, you obviously need to account for the dramatically different cost of living between the two areas).
- Establish a pay philosophy and develop salary ranges for each position. If necessary, seek help to ensure your compensation packages are in line with the demands of the area.
- Don’t be afraid to establish different pay ranges for different areas if you have multiple locations.
- Pay attention to the compensation data you’re using — avoid crowd-sourced sites that can be influenced by former or current employees. Stick with employer-provided data instead.
A special note about pay transparency laws: At the time of this writing, approximately 20 cities and states have laws on the books that require employers to list minimum and maximum salary ranges for printed or online job postings.
That means you’ll need to determine if your new market has this type of requirement in place, and if it does, start planning to ensure your franchise follows these regulations. It also might be a good idea to establish compensation structures that can scale as your franchise locations grow.
Finally, Don’t Forget Non-Salary Compensation
Don’t forget that the total compensation you pay includes both salary and non-salary rewards. This means part of getting your new location up and running and setting your compensation levels involves ironing out your benefit offerings.
If you can’t offer a full medical benefits package from the start, consider a phased approach that kicks in at different headcount thresholds. Also, consider getting creative about additional benefits you can offer that will help you attract and retain top talent in your new market — a “friends and family discount” for products or services, for example.
Finally, don’t keep those benefits a secret! Perks can be a significant part of your overall compensation package and recruiting efforts. So, make sure you highlight them in your job postings.
Get Help from the Experts at RKL
Did you know that our Workforce Strategies team can assist franchise owners when it comes to managing team growth across new markets? We can help ensure you’re competitive and well-positioned to attract and retain the kind of top talent that’s going to help you grow and scale. Contact your RKL professional or use the form below to contact us today to see how we can help.