10 Reasons Undertaking a HR Audit with Each Franchise Site is Important

The importance of HR audits for franchise networks

Audits: no one likes them, however, they’re part of running a successful business. Some are mandatory and some are recommended best practice.

Franchisors are responsible for compliance across their network. How do you ensure that each franchisee is playing their part in being compliant?

That is the million dollar question many Franchisors are wondering. Introducing a regular audit into your operations is a quantifiable way to assess the current status of each Franchisees operations and ways of managing their people.

One of the many areas of business that Franchisors needs to be across is the Human Resources (HR) function within their network.

HR and Employment Law in Australia is a complicated beast at the best of times for any independent business. Let alone a Franchisor who may be responsible for HR across multiple businesses.

How can a Franchisor ensure Franchisees are complaint when it comes to HR obligations?

It is recommend that you introduce a mandatory HR audit, facilitated by a third party provider. The audit should be conducted on a regular (yearly) basis for each Franchisee.

10 reasons why HR audits for franchise networks are important:

  • Your Obligation: Franchisors can determine if Franchisees across the network are complying with obligations under the Fair Work Act, Franchising Code of Conduct, Protecting Vulnerable Workers Act and the Franchise Operations Manual.
  • Be Informed: Determines what is missing from a knowledge and processes perspective, when it comes to employing staff. Do you have an onboarding staff process? Did they adhere to this onboarding process correctly? Are they paying the correct pay rates?
  • Ability to Improve and Amend: Allows for an independent party to dig deep into HR matters across the network and provide recommended actions. This in return enables Franchisees to implement changes to improve current process but also  provides feedback to the Franchisor of items that are important to be aware of. As a result, protects the brand reputation from any negative publicity.
  • Provides Education to the Network: We find that most times, it is lack of understanding of the requirements and obligations as an Employer.  However, this is easily fixed by having a HR expert educating your Franchisees and Head Office staff members in a simple, clear and concise manner.
  • Reduces the Risk: Preventing any conventions of the associated Acts or the Franchising Code of Conduct before they occur. Take a proactive approach, rather than reactive approach!.
  • Identifying Opportunities for Improvement: Finding areas of strength within the HR function from  a franchise business level and an overall franchise perspective. Being able to find these HR matters early on allows the Franchisor to work with the HR expert to be able to find solutions to amend it, rather than taking the reacting approach and constantly putting out fires.
  • Reduces Liability: The last thing anyone wants is to end up in the Fair Work Commission due to an employee filing a complaint. Examples include unfair dismissal, bullying complaint or underpayment claim.
  • A Positive Reputation: Work towards building a positive reputable brand in the market place and a place where more people want to be a part of your franchise network.
  • Having the Peace of Mind: Provides the Franchisor and Franchisee with peace of mind their practices are in line with legislation and internal process.
  • No More Sleepless Nights: Conducting regular audits will enable a business to not have to worry about things that may go wrong from a people perspective.  The aim is to build a great culture and create a happy workplace that people will want to be a part of. This in return will attract better staff members who want to join and stay for the long haul.

Why does a Franchisor need to ensure compliance is adhered to when a Franchisee is a business owner in their own right?

  • Under the Protecting Vulnerable Workers Act 2017 Franchisors have responsibilities for breaches of workplace relations laws and instruments of Franchisees. If a Franchisee contravenes the Fair Work Act the penalty can also be against the Franchisor.
  • Franchisors needs to take reasonable steps to ensure their Franchisees are complying with their obligations as an employer.
  • Franchisors should be aiming to ensure they have a reputable brand in the marketplace. They do not want to be known as that brand in the Fair Work Commission for underpaying staff.
  • It is in the best interest for Franchisors to ensure that all their Franchisees have the best and most current resources at hand. Therefore, ensuring that all HR documentation is available and is  constantly updated. Along with support at the end of the line. This enables each Franchisee to have the best resources to run a successful and compliant franchise business long term.

Now Actually has significant experience with providing outsourced HR services for franchise networks. If you need help with HR audits for your franchise networks, feel free to reach out to us.