QSR FRANCHISE & EMPLOYEES: Demands and Challenges

Launching a new Quick-Service Restaurant (QSR) franchise can be extremely challenging, making the professional advice of a franchise lawyer invaluable.

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

Quick Service Restaurant (QSR) franchisees face significant employee-related demands and challenges, largely revolving around staffing, compensation, and work environment, which must be a top prior for ownership and management. Employment-related matters are ongoing, and highly unpredictable, as they emanate from human interactions, which of their very nature are uncertain, such that it is absolutely critical that the appropriate framework be instituted for employee relations and vigorously managed to maintain employer-employee relationships in the best interests of the QSR's business.

Employee demands are driven in large part by a tight labour market and changing expectations, which includes a strong focus on:

• Competitive Compensation and Benefits:

  • Higher Wages: Employees are seeking wages that better reflect the demanding work and the rising cost of living. Increased minimum wages in several provinces put upward pressure on all QSR pay scales.

  • Better Benefits: Demand for benefits like health insurance, paid sick leave, and other perks often common in other industries.

• Improved Working Conditions and Work-Life Balance:

  • Flexible Scheduling: A high demand for more predictable and flexible scheduling options to better accommodate personal needs and commitments. The QSR industry is characterized by irregular and long working hours, which leads to burnout.

  • Positive Work Culture: Employees look for a work environment where they feel valued, respected, and recognized. High employee recognition is a strong factor in retention.

  • Reduced Stress/Workload: The fast-paced, high-customer-interaction environment can be draining, leading to burnout. Demands for adequate staffing to manage the workload are often implicit.

  • Career and Skill Development: Training and Development: Employees seek opportunities for ongoing education, skill development, and clear career growth paths within the franchise system, viewing this as an investment in their success.

This in turn creates significant challenges for QSR franchises, as their efforts to meet employee demands and maintaining operational stability, imposes considerable stress upon the business operations, including:

• Labour Shortages and High Turnover:

  • Chronic Staffing Deficit: The industry faces persistent high job vacancy rates and struggles to find and keep enough staff, particularly in entry-level roles [more on legal challenges of chronic deficits].

  • High Turnover Rates: QSRs are notorious for high employee turnover (often soaring well above 70%), which is costly, strains existing staff, and hurts service quality [more on legal challenges of high turnover].

• Rising Labour Costs:

  • Increased Wages: Provincial minimum wage increases and the need to offer competitive wages to attract staff are significantly raising overall labour costs. This squeezes already thin profit margins (which are typically low in the industry).

  • Cost of Recruitment and Training: The relentless cycle of recruiting, hiring, and training new staff due to high turnover is a substantial financial and operational burden.

• Competition for Workers:

  • Attracting and Retaining Talent: QSRs compete not only with other restaurants but also with other industries that may offer better pay, benefits, and working conditions.

  • Perception of the Job: The industry is often perceived as a source of low-paying, part-time, or seasonal "first jobs," making it difficult to attract long-term, career-minded employees.

• Operational and Regulatory Complexities:

  • Scheduling and Management: Effectively managing shift work, part-time employment, and high absenteeism can be complex.

  • Regulatory Changes: Franchises must continually adapt to evolving labour laws, including those potentially affecting the classification of workers (e.g., independent contractors vs. employees).

  • Impact of Technology and Automation: While automation (like self-service kiosks and robotics) is an operational solution to reduce dependency on manual labour, franchises face the initial cost of investment and the need to train existing staff on new technology.

Christopher Neufeld is a business lawyer knowledgeable in the rigors and challenges of the franchise business (with a particular emphasis on the restaurant sector, given my prior background in the hospitality industry), together with the legal constructs that are critical to their effective operation. For experienced legal representation in starting, acquiring / selling, operating and managing a franchise, contact franchisee lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.