Importance of Employment Agreements for Franchisees

Franchisees are heavily reliant upon their employees and as such they need to legal structure those arrangements and effectively manage those critical relationships.

Contact Neufeld Legal PC for franchising legal matters at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

Employment agreements are critical for franchisees as they define the relationship between the franchisee (as the employer) and their employees. While the franchisor controls the franchise system, it is the franchisee who is the direct employer and is responsible for all aspects of the employment relationship, including hiring, managing, paying, and, if necessary, firing staff.

A well-drafted, legally-compliant employment agreement helps the franchisee:

• Comply with the Law: Employment law in Canada is complex and varies by province, in particular with respect to employee pay computations. An employment agreement serves to establisn critical legal pre-requisites, such as wages, overtime, benefits, vacation and holiday arrangements, and termination notice periods. Unfortunately, far too many employment agreements are generic and all too often set up the franchisee for statutory non-compliance with applicable employment standards legislation.

• Mitigate Legal Risks: Employment agreements protect the franchisee from claims of wrongful dismissal, breach of contract, or other employment-related lawsuits. A clear contract outlines the terms of employment and grounds for termination, which are vital if a dispute arises.

• Protect Confidential Information: Franchises often involve proprietary business information, such as operational manuals, client lists, and marketing strategies. Employment agreements can include confidentiality and non-disclosure clauses to prevent employees from sharing this information with competitors or the public.

• Maintain Brand Standards: Franchise agreements require franchisees to operate the business according to strict brand standards. Employment agreements help enforce this by clearly stating an employee's responsibilities, from customer service protocols to uniform requirements. This aligns employee conduct with the franchisor's expectations.

• Prevent "Joint Employer" Liability: The distinction between franchisor and franchisee as employers can sometimes be blurred. In some cases, a franchisor might be considered a "joint employer," making them liable for the franchisee's employment practices. A well-structured employment agreement helps reinforce that the franchisee is the sole employer, reducing this risk for both parties.

Christopher Neufeld is a business lawyer knowledgeable in the rigors and challenges of the franchise business, together with the legal constructs that are critical to their effective operation. For experienced legal representation with respect to employees and employment arrangements for your franchise, contact franchisee lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.

Importance of Employment Agreements for Franchisees: Employment agreements are critical for franchisees as they define the relationship between the franchisee (as the employer) and their employees. While the franchisor controls the franchise system, it is the franchisee who is the direct employer and is responsible for all aspects of the employment relationship, including hiring, managing, paying, and, if necessary, firing staff. Read more.

 

Understanding Employee Pay for Franchisees: Unfortunately, employee pay is not as straightforward as most payroll providers and payroll specialists would have you believe, especially where there has been inadequate legal analysis of the employment agreements and the outputs of the payroll software. Such oversights, especially in certain Canadian provinces, can be highly problematic and costly, when these matters could have been avoided by not simply using generic employment agreements and the default payroll outputs. Read more.

 

Contact us via email at chris@neufeldlegal.com or call 403-400-4092 / 905-616-8864.