Franchise businesses are all over the world, in every nook and cranny of the globe. The franchisees who scale up and operate the business on a daily basis often become a key part of the local community. Franchisees often bring a proven and what is likely a guaranteed success to a new location, which comes with a number of benefits and stability that an independent business does not offer.
By virtue of the recognizable brand and proven business practices, when a franchisee lands in a town, it’s expected to be there for the long haul and often is. This means that a franchisee can afford to hire staff and pay local taxes, all in a dependable and predictable manner with little worry of the business folding and leaving people in a lurch. They also involve themselves with local charities, sponsorships, and fundraisers.
It’s not just taxes and jobs either; large brands are always welcomed into smaller communities yearning for a taste of a high-quality service that they previously never had access to. In many parts of the world, having a McDonald’s or Pizza Hut is a staple of the area and their lack of presence can be felt.
As brand power grows, the demands for franchised locations in smaller communities will continue to rise.
Job creation and taxes
One of the most immediate benefits of a franchisee opening a location in a community will be the jobs made available to local people. Whether it’s a Wendy’s or a NerdsToGo location opening up, franchised businesses require a variety of people to staff its new locations, from relatively unskilled to skilled workers.
“Franchisees own their own locations, and beyond an annual royalty fee or marketing contribution, most of the profits will stay in the local community.”
The recent report from the Oxford Economics and the International Franchise Association (IFA) demonstrates that franchisees offer their employees a better wage, benefits and opportunity to move up the ladder than an equivalent independent business. This stems from the stability of a franchisee’s business, which comes from being a part of a successful brand with successful practices. https://www.global-franchise.com/insight/ifa-publishes-the-value-of-franchising-report-from-oxford-economics
Franchise workers were promoted to manager sooner than their non-franchised counterparts; 14 per cent versus 11 per cent after 20 months of employment. This represents a significant difference, as franchisees offer their workers a career path, not just a job as is often the impression of franchised businesses.
Tax revenue is an important source of revenue for local authorities. Franchised businesses are incredibly reliable as a result of them being part of a wider national or international network, as are their taxes and contributions.
“Franchise businesses tend to have higher sales. Basically, you can afford to pay more people and pay people more, and as a result, you’re going to be paying more in taxes,” said Dan Rowe, CEO of FranSmart.
Franchises suffer from the misconception that large portions of profit a store generates goes back to a central office, but that simply isn’t the case. Franchisees own their own locations, and beyond an annual royalty fee or marketing contribution, most of the profits will stay in the local community.
“Having more money flowing in, they’ll be able to provide more to the community. Most franchises require that the franchisee follow all local laws and pay all their taxes,” said Rich Bernstein, a Huntington Learning Center franchisee with multiple locations in New Jersey and Pennsylvania.
Local events, charities and supplies
Many businesses like to get involved in the local community. Whether it’s for purely selfish or altruistic reasons, both the local community and the business see long-term benefits.
“I give $1,500 a year in scholarships to local middle school students through a local business group that we belong to. We’ve been doing it for about six years, and do it consistently,” said Bernstein
The stability that comes from a franchised business lends itself to having a more stable marketing spend. This means that franchised businesses can comfortably fund and sponsor local events, teams and charities during the course of its life and significantly grow its profile in the community. Many franchisees nowadays are not only expected to get involved in the local community; it’s mandated.
“Every franchise I’m involved with actually has a specific mandate to go get involved in the local community by sponsoring local events and giving money back to your community. But it’s all about getting into your community,” said Rowe.
“Franchisees pay one check to the mothership for the company to do its branding and marketing, but then there’s always a mandate to go do local store stuff. They do this by sponsoring teams, schools or doing free food drops, I can’t think of one that doesn’t have a mandate to be involved in the local community. Every franchise has pages in its operations and their marketing manual about how to get involved in your community.”
“Karen could only say three words: “Mom,” “Piano” and “Donalds,” indicating just how much the fast-food restaurant meant to her.”
Franchisors can plainly see the value of getting involved in the local community and acting as a force for good, not merely a business that exists to collect profit and nothing else, though the involvement in the local community certainly adds to long-term profits and stability.
While there may be no room for a franchisee to purchase local supplies, it can employ local services. Nothing stops a Five Guys Burger & Fries franchisee, for example, in establishing a relationship with a local cleaning company or advertising agency.
These types of relationships benefit everyone. Smaller, local companies benefit from the association with an international brand and a franchisee can build its profile in a community as well as the potential of enjoying discounted services. Local charities and sports clubs can sustain themselves with sponsorship and the local community are constantly made aware of the brand’s presence in their lives.
“We donate to local charities and we sponsor some of the local teams. We sponsor fundraisers for the local basketball team, football team, soccer, as well as the marching band. In our particular case, we give lots back in terms of fundraisers, as well as also sponsoring various types of events,” said Bernstein.
Intangible gains
Franchised businesses tend to be large and recognizable. Many small towns and communities across the world tend not to have much in the way of food options, as it can be quite a risk to open such an independent business in any region or community. Owners must have knowledge of every facet of their business as well as provide all the capital needed to kick-start their venture.
People enjoy seeing a McDonald’s or Wendy’s coming to town; it represents a new food choice, one that they’ve likely enjoyed elsewhere. It also helps to build a profile of a community; fast-food franchises are so ubiquitous that it’s hard to imagine any community without one. This is especially relevant after the COVID-19 global pandemic, which snuffed out many businesses and saw so many people lose their jobs. It can be seen as a sign of revitalization when large franchises come to town and provides the footfall that other businesses can benefit from.
“If you think about opening a franchise in a shopping area and it’s a name brand that people have seen on television, or Facebook, all of a sudden because they’re a known quantity, they bring people to the neighborhood that helps the other local businesses,” said Bernstein.
“It brings a lot of traffic into town and when people are buying burgers, they might also need to stop to fuel their car, or they may need the dry cleaner next door, it just brings more people to that neighborhood. Wherever that franchise is located.”
One of the most important things a franchisee provides to local people is employment. Large franchises have established processes, and that makes it easier to employ and teach a huge variety of people.
McDonald’s has always valued disabled employees and employed them to give them a sense of purpose and routine. In 2019, Chris Campbell, a McDonald’s employee in Buford, Georgia, passed away. Chris had down syndrome and worked at the Buford location diligently for over 27 years, earning him a ‘Golden Star’ for his service. There are countless stories of such franchises employing disabled people and giving them the chance they deserve in life.
The passing of Karen Ann Sydow went viral after her brother wrote her a beautiful, touching obituary in a local paper, outlining how important McDonald’s was in her life. Karen could only say three words: “Mom,” “Piano” and “Donalds,” indicating just how much the fast-food restaurant meant to her.
These types of gains are what help a franchisee lay roots and be an active part of the community for years to come.
People do business with people
Ultimately, getting involved in the local community helps everyone. Nobody loses from it; the local community enjoys the jobs, sponsorships and charity initiatives, and franchisees benefit from the size of the brand and positive image generated by the outreach efforts.
When Rich Bernstein was contacted by his local school superintendent to give some relief to students after a rough year, he was more than ready to fund some fun for them. Though these types of donations are for purely altruistic purposes, they can lend to marketing efforts.
“We’ve donated some money, just straight donation, so they [the local school superintendent] can provide ice cream to every one of the school students on the last day of school or last week of school, and it went out in a newsletter with our name and a link to our website was embedded in too,” said Bernstein.
“We get some recognition for it. And that’s fine, but a lot of it goes unnoticed as well.”
Franchised businesses can be a boon to local communities and can mean a lot to people, whether it’s a sense of belonging, much-needed funding, or a career.
