The legal considerations for franchising
Research has shown that salons are increasingly part of national chains or franchises.
All franchises operate differently and so it is difficult to make any generalisations, but the key tip is to ensure you have read and fully understand all the issues regarding staff and employment in the franchise before you begin.
David Wright explains the employment considerations surrounding franchises.
I am opening a salon under a franchise agreement. Am I free to appoint new staff?
If this is a new site, then yes, you are. However, if you are taking over an existing business or franchise, then the Transfer of Undertakings/Protection of Employment (Tupe) regulations almost certainly apply.
This means that you inherit all of the existing staff. There is no alternative to this.
Of course, if an employee chooses not to transfer then they will be deemed to have effectively resigned from their previous post and there are no implications for you.
As vacancies occur you can, subject to the rules of the franchise agreement, appoint staff on different terms and conditions of employment.
I am taking over an existing franchise. The salon is fully staffed and established. This is a benefit to me but is there anything I need to check out?
Yes, and it is essential you do so. You inherit the staff, but also their existing terms and conditions of employment. I would recommend you request all of the following information in writing from the existing owner:
- A copy of the existing contract for each employee
- A copy of the terms and conditions that apply in the salon
- Details of any current disciplinary sanctions in place for any employee
- Details of any outstanding claim by an employee against the business.
If I open a franchise am I free to have terms and conditions of my choice?
This is almost definitely the case, ie, the employees are your responsibility. However, it is essential you check out the terms of the agreement.
In some cases, management support is available in terms of HR issues, and sometimes there is guidance given as to rates of pay.
However, this is the exception rather than the rule, but obviously this needs verifying.
I am considering taking over an existing franchise. A manager is currently employed, but I want to run the business myself. What can I do?
As indicated above, all the staff transfer to you under the TUPE regulations. It is possible to implement post-transfer changes to the staffing for an 'economic, technical or organisational reason'.
In your situation, it would appear possible to consider a redundancy. However, if you make the manager redundant you should obtain professional advice beforehand.
The cost of the redundancy would fall to you. I would recommend that you commence consultations with the manager as early as possible.
There are a range of possible solutions, including redeploying the manager into a more operational role or even sharing the managerial duties.
I have spent almost six months researching the benefits of taking a franchise. I have a business plan and have had the document reviewed by a legal expert. However, is there anything to consider when employing staff?
The quality of your staff will really be a key determinant as to whether your venture is a success.
Firstly, spend time recruiting professionally. You need good, quality job descriptions and a comprehensive selection process, ie, an interview is not enough.
You need a contract of employment. Understand the wording of your contract yourself and be confident that you have covered the key issues - that is a golden rule.
Finally, I recommend you have your working salon rules and any employment policies in place before you begin the recruitment process.
The salon rules will cover issues such as booking leave, uniform, sickness reporting and staff benefits.
Spending time getting these rules in place will, in the longer term, save you potential dispute and conflict with employees.
Employment policies, such as an equal opportunities policy, are invaluable and should be read and understood by new appointees from day one of their career with you.
What are the advantages to me as an employer in taking on a franchise?
As an employer, when you seek to recruit, it is likely that the brand name will be known and established - and this can be attractive to applicants.
As part of a management fee you might have access to some HR support and advice; there may even be template contracts and policies that can be adopted (usually, these are not compulsory and you must read them carefully to decide if they need adapting for your purposes).
Is your salon part of a franchise group?( surveys)
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