Understanding Employee Struggles: A Franchisee’s Perspective
I have always known that my clients — fast-food franchisees on the front lines of the industry — have a far better understanding than many Americans of what it means to live life at the lower end of the income spectrum. That is true both because of the customers their employees serve and who their employees are.
With fast-food worker turnover running at 130% a year or more, many franchisees are desperate for low-cost ways to boost employee retention. A smart way to accomplish this is to use what you know about your employees to make their lives better.
The Payday Loan Trap
One thing that holds people down, for example, is payday loans. Many hourly employees live paycheck-to-paycheck with no emergency savings. A mishap as minor as a flat tire can force them to take out payday loans at interest rates as high as 400% a year.
Earned Wage Access (EWA): A Game Changer for Employees
At a regional franchisee conference in 2022, I met representatives of a company that has a solution for that — Tapcheck. They partner with franchisees, integrate with their payroll systems, and provide employees a benefit called earned wage access (EWA) — instant access to a predetermined percentage of their pay. I pushed these guys, asking all kinds of questions. By the time I was done grilling them, I was sold. This is a legitimate service. The cost to the franchisee is zero, and employees pay only the equivalent of an ATM fee — a far better option than doing business with payday loan sharks.
If I am a job applicant with a choice between a job where I can get the cash I need for emergencies now, and a job that pays the same but doesn’t offer the emergency cash, why wouldn’t I take the first one? Since I met the Tapcheck reps in 2022, the company has pulled down several fintech industry awards and is currently working with Burger King, Dunkin’ Donuts, Little Caesars, and other major brands. One Tapcheck customer, a four-generation, family-owned McDonald’s franchisee in Pennsylvania, says his employees take out an average of $150 each time they use Tapcheck.
Other companies have developed similar benefits used by fast-food franchisees, including Instant Financial, which offers employees same-day pay, and Branch, which provides instant tips and mileage reimbursements for hourly employees.
Innovative Banking Solutions for Hourly Workers
Another unmet need among fast-food workers is access to basic banking services. Intent on lowering the 150% turnover among his 2,000 employees, Farzin Ferdowsi, a Taco Bell franchisee, realized that he wasn’t offering hourly employees the same kinds of incentives to stick with the company that he gave management. So, in 2022, he partnered with a banking executive to co-found Sonata Bank.
Non-Financial Perks Matter Too
Sonata partners with fast-food operators to offer creative benefits for hourly employees, including telehealth, savings accounts with attractive interest rates, roadside tow service, and cellphone insurance. If I’m a bank with close ties to a business and its employees, and I understand the employee’s history and role in the business, maybe it’s easier for me to underwrite a car loan for that employee. Franchisees bear part of the cost, but Sonata Bank also benefits from gaining new customers.
Creative Solutions for Employee Retention
Other successful operators hold down employee turnover with non-financial perks. I once asked a Taco Bell franchisee as he was preparing to sell his company, “What do you think the brand did for you?” His response: They made it cool for kids to work at Taco Bell, and that was a huge, huge help.
The best franchisees I’ve met know that their customers want a consistent, reliable experience and want to be treated with respect. They also know that treating employees the same way can go a long way toward achieving that goal.
As the industry grapples with rising costs and shaky customer traffic, there has never been a better time for operators to think creatively about low-cost ways to meet their employees’ needs.
Employee retention is critical. Reach out today to ensure your franchise is set up for long-term success. Let’s Talk
