
For most franchisees, their best skills lie in running their franchise, not in labor compliance and personnel management. As your labor employee base expands, more time will be spent on HR activities from recruitment to payroll reports. If your daily headache is related to employment activities for your workforce, you can benefit from a PEO.
A PEO, or Professional Employment Organization, is a vendor who partners with your franchise business to provide outsourced HR functions and guidance. If you are not an HR professional, your franchise has probably experienced a variety of employment challenges. PEO’s are there to help with multiple functions that enhance your organization and, often, reduce your costs and risks. They are designed to serve smaller companies who lack internal HR expertise. Usually, a franchise of up to 50 employees can benefit in these areas:
1. Better Benefits: Some states require that businesses offer medical benefits to employees. It is unquestionably a costly requirement. With a PEO, benefit programs are part of a larger buying group that provides your franchise with better group pricing and more generous offerings like free life insurance.
2. Worker’s Comp: In some industries with a higher risk of injury, worker’s compensation expenses are crippling to a small business. With a PEO, small companies have access to a different evaluation process and cost structure. As a franchise owner, this is not a cost-benefit you can access on your own.
3. Legal Compliance: Labor law is unforgiving if you end up on the wrong side of it. Even a small error can deplete a franchise’s financial resources. A PEO offers confidence by ensuring compliance with new laws and updates. In particularly difficult states, like California or New York, the PEO stays on top of labor law compliance details that no franchisee could ever do alone.
4. Reduced Legal Risk: While PEO’s vary, many of them act as a co-employer of your employees. The status changes nothing in your business operation, but it does mean that the PEO shares the legal responsibility to do as they promise—protect you from legal challenges by avoiding them. In addition, as a co-employer, they become co-defendants, if needed, and help protect your bank account from a disgruntled employee or their own reporting mistake.
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