IDENTIFYING AND ADDRESSING TODAY’S LABOR TRENDS IN FRANCHISING

The International Franchise Association (IFA) today released its annual 2023 study on labor trends in franchising, showing that the availability of qualified labor remains the number one challenge facing franchised businesses today. In this second inaugural study, conducted by FRANdata, the survey shows slight improvement in labor market conditions, but four out of five franchised brands continue to experience constrained growth due to labor challenges.

Key findings from the report, “Identifying & Addressing Today’s Labor Trends,” include:

• Availability of qualified labor remains the most important problem facing franchise businesses today, continued from 2022. 87% of franchisors report their franchisees have had difficulty filling openings for unskilled labor, skilled labor, or both (in comparison with 88% in 2022).
• 81% of franchise brands experienced constrained growth due to labor challenges, continued from 2022.
• Franchising continues to remain a source of job growth. 34% of franchisors experienced an increase in employment, while 45% of franchisors reported unchanged employment numbers. More than half of all franchisors expect total franchised business employment to increase.
• Wage pressure is considerable but lessening. 85% of franchised businesses increased wages in the last six months of 2022, and 60% anticipate continued increases in 2023. Over the last 6 months, 43% of franchised businesses reported benefit increases, and 42% anticipate continued increases.

Franchising is unique in that individual business owners have a stronger network of support – both from their brand and other franchisees to address today’s labor challenges. Franchisors have taken a number of actions to help their franchisees, including:

• Providing more resources and hiring corporate recruiters to assist franchisees in recruitment
• Creating a “Recruiting Fund” to pool resources for all franchisees
• Additional investments in digital and social media advertising to help drive applicants
• Streamlining the system for posting, applicant processing, and automated applicant process
• Giving royalty rebates for hiring of sales staff
• Testing AI job boards