Franchise owners: one brand, many payrolls

Each location is its own labor market

An owner with five stores across three states faces three sets of minimum wage and overtime rules, sometimes with city layers. One schedule for everyone does not work. Give each site its own rules for daily overtime, breaks and rounding, and view totals by site and as a group.

See how EZTime works for your industry, from time tracking to shift scheduling.

Employees who work at two stores

When one employee works at two of your locations, the hours at both are added together for overtime. A person who works 28 hours at one store and 16 at another has 44 hours. The second store manager may not know. A single employee record with hours across locations prevents this.

Total earnings are $720, so the regular rate is $16.36. Overtime for 4 hours at half the rate is $32.73.

The franchisor and joint employment

Brand standards on product and customer service do not ordinarily make the franchisor an employer. Direct control over scheduling, hiring, discipline or pay can. The legal tests have changed over time, and they differ by state and agency. As an owner, keep your own handbook, make your own personnel decisions and record who approved each schedule.

Reporting back to the brand

Franchisors often ask for labor cost as a percent of sales. A report by location lets you answer, and spot the store whose labor is rising faster than sales. Keep the definition of labor the same each month: wages only, or wages plus taxes and benefits.

Opening a new store

• Set up the schedule template before hiring.
• Enter the state and city wage rules for the new site.
• Train managers on approvals in week one.
• Check hours against budget for the first eight weeks.

Comparing stores fairly

A store with high labor cost is not always badly run. It may have lower volume, a harder lease or a state with higher wages. Compare hours per transaction instead of dollars, then adjust for local wage rates. Give each manager the same view of the numbers on the same day, so conversations start from shared facts.

The rules that follow an owner across locations

Owning several units means several layers of rules apply at once. Wage and hour rules come from the Fair Labor Standards Act, enforced by the U.S. Department of Labor, plus each state and city. Health coverage rules under the Affordable Care Act, administered by the IRS, can treat related companies as one employer. Joint employment questions are decided by agencies such as the National Labor Relations Board and by courts, and the tests have shifted over the years.

A worked example: when three LLCs count as one employer

The numbers are fictional. An owner holds three stores, each in its own LLC, with 22, 19 and 17 full-time-equivalent employees. On their own, none reaches 50. Because the companies are under common ownership, the IRS aggregation rules generally combine them: 58 full-time equivalents in total, which makes the group an applicable large employer. Each LLC then has its own duty to offer coverage and to file the required forms.

This is why one time record across stores matters for more than overtime. Hours worked feed the full-time-equivalent count, and a separate spreadsheet per store makes the total hard to prove. Ask your tax adviser to confirm how the rules apply to your ownership structure.

Mistakes multi-unit owners make

• Copying one store’s break and overtime settings to a store in another state.
• Paying a shared employee from two payrolls without combining hours.
• Letting the franchisor’s field consultant approve schedules or discipline.
• Using the brand’s manual as your employee handbook word for word.
• Measuring labor percent with a different definition at each store.

A first-week checklist when you buy an existing store

1. Get the last two years of time records and payroll registers from the seller.
2. Check for open wage claims, agency audits or unpaid overtime.
3. Confirm each employee’s pay rate, exempt status and accrued paid leave balance.
4. Re-check break, overtime and rounding settings against the store’s state and city rules.
5. Issue your own handbook and collect acknowledgments from every employee.

Some liabilities can follow the business to a new owner, so ask your attorney how the purchase agreement handles them.

Where EZTime fits for franchise groups

EZTime lets you run several locations in one account, with clock-in by app, web, tablet kiosk or NFC tag at each store and geofences around approved sites. A shared employee keeps one record with hours by location. Labor rule alerts flag overtime thresholds and rest between shifts, real-time labor costing sits next to the schedule, and reports export to Excel or PDF for your accountant or the brand’s reporting. Announcements can go to one location, one role or the whole group.

Questions people ask

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