Expanding Your Franchise: How PEOs Can Be Your Growth Catalyst

Understanding PEOs

A Professional Employer Organization (PEO) is a company that partners with other businesses to help manage their employees' incentives and compliances, including their work schedules, pay, and training services. They also work to handle all HR compliance, such as tax filing, reporting, and issuing W-2 forms, once the client company has signed the Client Service Agreement (CSA). However, they differ from other types of HR outsourcing in that they also share some of the legal responsibilities of their job.

The Challenges of Franchise Growth

A franchise is a business model where an individual runs a business that has already been established by a trademark owner. To operate using the trademark owner's brand name, products, services, and business system, the individual typically has to pay an initial fee and royalties. However, the individual is still responsible for managing their HR, growing their company, and complying with state and federal laws.

Franchises and franchisees are related terms, but they refer to different things. A franchise is a company that has a well-known brand and operates using a specific system. A franchisee is a person who buys the right to use the brand, system, and products of an established franchise business.

PEOs work with both. For instance, franchises may benefit from a PEO when managing HR for a chain of businesses, which generally requires less guidance because they are already familiar with HR practices. 

Franchisees, however, face a whole other set of challenges as a small business, from knowing the rules and requirements of HR to actually implementing them in their franchise. Therefore, a PEO can help take the risk out of their responsibilities with professional human resources management and guidance. 

The PEO Solution for Franchises/Franchisees 

Small to medium-sized businesses, such as franchisees, usually do not have the money or time to devote to HR administration, payroll processing, employee benefits administration, and other HR tasks. Nor do they typically understand everything it takes to ensure ethical and legal employer duties on their own. However, a PEO has a highly knowledgeable and experienced team of experts in all things HR available to help them ensure success. 

As part of their services, they will keep track of your employees' working hours and salaries, provide employees with life insurance, health insurance, and retirement plans, and ensure worker's compensation coverage is kept up to date. 

They also ensure all Occupational Safety and Health Administration (OSHA), Equal Employment Opportunity Commission (EEOC), and other safety and labor laws are followed, and they train employees on their obligations under each regulation to ensure compliance on all levels. 

This way, your business can focus on providing quality products and marketing that increase your sales while they handle your employees' needs. 

HR outsourcing through PEOs can help reduce administrative expenses, ultimately improving profitability. Additionally, it can relieve businesses of the burden of managing HR administrative tasks, allowing them to focus on their core operations.

How to Choose the Right PEO for Your Franchise/Franchisees

The first step to finding the right PEO for your business is to consider your needs so that you can find one that offers the services you are looking for. 

You also need to ensure they have a good reputation in what they do to ensure your business's future success in the market. So be sure to read their customer reviews and ask for references. This will allow you to see what customers and other professionals have to say about their services to help make a trustworthy decision. 

It is imperative that you ensure their staff possesses the necessary qualifications for the roles and services they offer. Certifications obtained from the Human Resources Certification Institute (HRCI) or the like serve as a valuable display of their competence. 

Likewise, it is best to choose a company with top certifications, such as the Employer Services Assurance Corporation (ESAC), that guarantees the PEO has the financial ability to support your business. You also need to look for accreditation from the IRS, which designates a PEO as a Certified Professional Employer Organization (CPEO), assuring their ability to fulfill their tax obligations.

When selecting a company, it's important to gather detailed pricing information from each one. This will enable you to compare their fee structures and find the one that offers the services you require at the most reasonable cost. Additionally, it will help you determine if the company has transparent pricing and if there are any hidden fees.

Before you sign the CSA, make sure you understand the services that will be provided. Be sure to ask questions to clarify anything that's unclear, as this will help you avoid being disappointed later on. 

The Top PEOs for Franchises/Franchisees

Infiniti HR specializes in providing their services to franchisors and franchisees alike, whereas AlphaStaff PEO caters specifically to franchisees. However, ADP, Justworks, and Paychex are some of the top PEOs that are worth looking into for their extensive and specialized HR services.

The Future of Franchises with PEOs

Based on the cost and time savings alone that PEOs help provide, it seems fair to speculate that the need for them will continue to grow as more and more entrepreneurs look to run or own a franchise or franchisees. They may also be key to small businesses' success during the startup stage when they are at high risk of failing. 

Businesses can benefit from evolving technology that can manage HR tasks. This ensures that the HR tech used by franchises stays current, meets the needs of employees and allows for growth. By keeping up with the latest HR technology, companies can readily adapt to changes in employee demands and continue to thrive.

Conclusion

If you are a franchise owner or have individual franchisees, it may be worth considering PEO HR outsourcing for your HR needs. However, it is important to perform thorough due diligence and vet the company for its expertise, reputation, and trustworthiness to ensure the best services possible for your success. Hopefully, this brief explanation of PEOs has helped you understand how to find the best one for your specific needs. You can also check out our review, comparison, and blog pages to assist you in your search.

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