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Employee Retention Tips from Successful Franchisees

Retaining employees is an ongoing challenge for new franchisees -- and a key ingredient in building a successful business. After training employees to do their jobs well, the franchisee's goal is to retain them as productive, reliable workers. It costs much more to hire and train replacements than it does to work with current employees to improve their job performance.

So how does a new franchisee learn how to retain employees? Initial training from the franchisor should cover this, but for most franchisees, the focus in the early going is more on learning the system, marketing, finding a site, and how to open -- which involves hiring employees, not retaining them. Learning how to retain employees is a learnable skill, but is often neglected as new operators learn how to run their fledgling business.

Another good way is to learn from franchisees who have been doing it for years. Each issue of our Multi-Unit Franchisee magazine features in-depth profiles of successful franchisees from all types of industries. One of the questions we always ask is, "How do you train and retain employees?" Another is "How do you recognize/reward top-performing employees?" Below is a sampling of their replies to these questions from recent issues. Visit our archived issues online to learn more about these remarkable franchisees, many of whom started out as teenagers working for the brands they now own and operate.

Jeff Orlando
Owner, Wingstop & Schlotzsky's franchises
1 Wingstop, 1 Schlotzsky's (opening a Schlotzsky's/Cinnabon in 2011)

"We have a family atmosphere. Everyone knows everyone's families and kids. We try to do company things together. It's just a nice environment. It makes you feel good when people say, 'This is the best job I've ever had' or 'I'm never leaving.' You know it's not always true, but it's nice to know, even for a moment, that they feel part of the family. We also have a bonus structure for managers, assistant managers, and shift leaders. And any time we get a 95 or better on a mystery shop everyone on that shift gets $20."

Andy Lanz
Owner, Lanz Restaurants LLC
5 Cousins Subs, 2 Chocolate Shoppe Ice Cream, 1 Big Apple Bagels, 1 Figaro's Italian Pizza

"We have incentive programs. Our corporate office mystery shops, where they send people in to buy subs, find out if the service is good, is the restaurant clean. If an employee gets 100 percent, they get a $100 bonus. That happens pretty often, and managers have a bonus system in place as well. The bonuses are the most formal thing I do. A lot of it is making sure your employees know they're appreciated."

Pierre Panos
Founder, CEO, QS America
41 Papa John's Pizza; 6 Fresh To Order, 1 Brookwood Grill

"Other than our profit-based bonus programs, we are very consistent with our people. They always know what to expect from us, and this certainty is much appreciated in these uncertain times. This has resulted in our turnover rate in the top ranks of our company being almost zero, and less than half the industry average for our hourly employees. Our people are paid on a percentage of the store profits, from a manager to a GM to area supervisors to district managers, so everyone is aligned. We obviously have safeguard components in our bonus program that prevent them managing the business down just to have great short-term profits. Public recognition of a job well done also always works."

Glenn Miller
Managing partner, Miller Group LLC
4 McAlister's Delis in Virginia with a fifth opening this spring; 18 Arby's in Central Illinois

"Our directors of operations are looking at individuals and saying, 'How are you growing a specific part of the business? What are you doing for the local store? How deeply are you getting into the local community? We want you to change your behavior. Smile more and do more and I think that will be more effective.' Top employees could earn 10 to 15 percent of their pay from bonuses."

Rick Huffman
CEO, HCW LLC
4 Value Places, 2 Hampton Inns, and a Hilton Convention Center, Hilton Promenade, and Hilton Garden Inn
"Treat them great. The best way is to tell them when they accomplish things. Obviously we make sure they're compensated, but they like to be recognized and told they're doing a great job. We're a small company, a pat on the back is important. We are too small to single out one person. We try to reward everyone as a team."

Bob Chase
President, Money Mailer Response Marketing
30 Money Mailers

"We pay a generous commission. We have bonuses and prizes, like TVs or iPods. There are national sales contests and usually we have the top one, two, or three employees in the company. We've had the top salesperson in the company for the last 18 years, and that's been a couple of different people."

Greg Willman
Co-owner, CEO, president, 316 Investments LLC
27 Qdoba Mexican Grills;1 Steak N Shake

"We pay them well. We have provided extremely stable employment and growth opportunities for over more than a decade now, which is what we view as our most important function. In addition, we've had a general manager profit-sharing program from day one along with generous health insurance and 401(k) plans. We also provide park membership discounts, YMCA membership discounts, along with holiday parties, an annual offsite planning meeting, and the like. We also ask them to help take care of others through programs such as United Christmas Service and Habitat for Humanity.

We reward top-performing employees with aggressive profit-sharing based on a percentage of store-level profits and new, higher-volume stores, new store openings, and financial awards for sales achievement and recognition within their brand systems. We offer peer recognition on a "Wall of Fame" in our corporate office with pictures of each award-winning GM right outside our ops training room and GM meeting room, and we track and report on a variety of measures weekly. Qdoba is also working with the University of Phoenix now to give our employees 7 percent off tuition when they enroll in degree or certificate programs. They can also get credit for real-life work experience through the program."

Iris Cohn
President, RLC Enterprises/RLC of Michiana
47 Taco Bells (includes 9 KFC, 3 Pizza Hut, and 3 Long John Silver's multi-brand units)

"We create a family culture and pride ourselves on employees who have many years with our company. We provide employees access to benefits to protect them and their families. RLC has an annual managers' conference to share the state of the business, best practices, and recognitions and awards. In addition, we continually recognize excellent performance throughout the year. Our organization has won Taco Bell corporate's two highest honors: The 2009 Glen Bell Award and the 2006 Franchise Operator of the Year Award. We've also won the Pepper Award and the Flying Pig Award. We share these honors and attribute our success to our wonderful team."

Jason Mann
President, Mann's Diversified Industries and FSSG
Planet Smoothie: 2 locations; area representative for 28 others
"Retaining requires effective communications through ongoing evaluations and creating a fun atmosphere. We try to provide a great working environment for our employees, a good place to earn some extra money while they're supporting themselves through school. I have bonuses available for managers, based on increases in sales. It's frankly tough to get that right now. Some managers take the kids out for parties. They'll also do trades with another restaurant for rewards. We also try to pay them well, reward them with increases in wages even in a down time."

Subodh Patel
President, Bluebonnet Hospitality Management
14 hotels, several different brands; 1 Einstein Bros. Bagels

"We take care of them in a number of ways. We give them family time off, bonuses at the end of the fiscal year, and we have events. We reward all employees in a small way at the end of the year. We also reward top-performing employees based on their contribution to the bottom line."

Tom Kazbour
President and area developer, Managing Foods
56 Hungry Howie's

"We offer those who do well the opportunity for advancement. We have a bonus program for managers who keep their food and labor costs down while maintaining store cleanliness. And we encourage them to look ahead, work hard, and maybe someday give them the opportunity to own their own store."

Anil Yadav
President, JIB Management Inc.
155 Jack in the Box and 26 Denny's, with 2 Denny's and 1 Jack in the Box under construction

"We have a lot of store-level incentives. We have a unique program every month where we recognize the top five performers. We allocate $1,500 toward the program. And there is a lot of internal recognition. We go out and make them feel good, showing them we care and appreciate the hard work. People look forward to the recognition. We have a bonus program for all the managers, assistant managers, and above. If they achieve certain numbers, they can qualify for bonuses. Then there's a 401(k), health care, medical, vision, and all that good stuff."

Gary Hughes
CEO, GCH Management
11 ColorTyme; 1 RimTyme 

"We have good medical insurance plans, vacations, 401(k), and incentive trips, based on goals. We provide a performance report on all employees' performance every Monday. They're ranked on how they performed in their jobs compared with all others, with cash bonuses for top employees and profit sharing for managers. We have annual incentive trips for people who meet their goals."

Atour Eyvazian
Vice president and operating partner, AA Management
59 Jack in the Box, 49 in Houston,10 in Sacramento

"Folks come looking for a place to work but they stay because of the bosses we have. We keep them through how we treat them. From production employee to director of operations, we have a lot of indicators that tell us how we're doing. Everybody knows the goals. When a restaurant manager has a good audit, straight A, that person gets a couple hundred cash. Some people may get a couple of baseball tickets, maybe a dinner. Our bonus system is pretty strong. Managers get a special night out, and they come up with it. If I get what I want, what do they get from me? Red carpet treatment. They choose a night they want to go out. I rent a limo and bring area managers together who hit an area goal. I don't need superstars. I need super teams."

Aziz Hashim
President, CEO, National Restaurant Development Inc.
27 Checkers/Rally's; 9 Popeyes; 4 Moe's Southwest Grill; 4 Subway

"High-quality leaders offer a commitment to professionalism and personal growth. We invest in them. We train, we coach, and we mentor and publicly praise and reward their success. We have a wide range of reward programs, from "spot bonus cards" to redeem music downloads and so on to giving away a car, a Kia Soul currently, to a restaurant manager twice a year. That causes a great feeling. I go through the drive-thru and give the keys to the manager. We're blowing horns, cheering. It's really exciting."

Jeff Rigsby
President/owner, Bojangles of Western NC
21 Bojangles'

"We have a good compensation and benefits plan, we offer a 401(k), which we match, they get paid vacation, health insurance, life/dental, and we reimburse for gym memberships. We always look for ways to recognize top performers. We have email recognition that is sent out to the company. We use special on-the-spot bonuses. We give out tickets to sporting events and races. At the end of each year we have a Christmas party and awards banquet. We give out plaques to recognize top performance in our company. Did I mention each plaque comes with a check? It's a big deal each year and a lot of fun."

Jerry Heath
President, Heath Management LLC
11 Hungry Howie's Pizza; 5 Jimmy John's Gourmet Sandwiches

"We try to supply them with health insurance. We've had to institute a 50/50 co-pay for insurance, with the cost of health insurance lately. If they need a weekend off we try to accommodate them. We are very flexible, seeing that most of our employees are still in school. We pay a performance-based bonus. For example, Hungry Howie's corporate just went to all of the stores and graded them, and we gave small bonuses to the two managers with the highest scores. And we have a big bowling party every year. We had over 150 employees last year and everybody looks forward to it."

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