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Long Term Employees

A great HR and tax strategy - turn employees into franchisees


What is the exit strategy for your long term employees?


An amazing strategy to manage long term employee success is franchising. Having a franchise option for experienced employees can be a strategic and helpful way for an employee to invest their buyout money into a business that they are experienced in. By offering long-term employees the option to become a franchisee, employees can capitalize on their loyalty, experience, and familiarity with the company's operations. Many employees are not ready for retirement, and want to have more autonomy and opportunities later in life.


Here's how the process could work for in-house employees that want to transition from employee to franchisee:


Offering the Opportunity: The business owner can approach the long-term employee with the promotion of becoming a franchisee, or an employee can ask if they are eligible for the franchise program. Many employees want the autonomy and ownership of their own business, especially when they see new franchisees making more money than they are at their job.


Utilizing Buyout Money for Investing: Instead of employees taking a hit with a huge tax bill for their lump sum pay out, they can reinvest their earnings into their own franchise. This investment serves as a win-win situation: the employee gains ownership of a franchise with established brand recognition and support, while the business owner retains a dedicated and experienced individual within the company's network. It also signals to other employees that the company takes care of their people.


Training and Support: The business owner will provide comprehensive training and ongoing support to facilitate the transition from employee to franchisee. This includes guidance on business operations, marketing strategies, and financial management. Usually long term employees are already familiar with the business processes and make the transition quite easily. Long term employees also have extra support from their connections/friends at the main office, which can create an exciting atmosphere.


Expansion Opportunities: As the former employee transitions into their new role as a franchisee, they can contribute to the company's expansion efforts by opening new franchise locations in strategic areas. Their intimate knowledge of the company's operations and culture can help ensure consistency and quality across all franchise outlets.

Long term employees often become multi-unit operators.


Maintaining Company Culture: By converting a long-term employee into a franchisee, the business owner can preserve the company's culture and values, ensuring continuity even as the business expands. The franchisee remains connected to the original brand identity, fostering a sense of loyalty and alignment with the company's mission.


Overall, leveraging buyout money to transform a long-term employee into a franchisee provides a viable exit strategy for the employee and also facilitates the company's growth and expansion efforts. It's a strategic approach that capitalizes on existing talent and fosters a mutually beneficial relationship between the business owner and the franchisee.



The benefits of converting long term employees into franchisees



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