Payroll Services for Franchises

If you’re a franchisee, franchise owner, or an entrepreneur considering opening a franchise, working with a qualified payroll provider can empower your business to shift focus to what matters most: long-term growth, business success, time & cost savings, and employee satisfaction.

While a third-party payroll provider can help you quickly automate and simplify payroll, a manual, in-house process often leads to miscalculations, late payments, employee retention issues, inaccurate tax payments, compliance headaches, and other avoidable issues.

Understandably, most franchisees have questions about how to avoid these problems, how payroll for franchises should work, and how a franchise payroll provider can support business growth. Here, we’ll explore how payroll works for franchises and how you can enjoy lasting peace of mind about essential HR processes with the support of a qualified payroll provider.

Who Pays Employees in a Franchise?

As a franchisee and business owner, you are typically obligated to manage payroll, including employee payment and a host of other payroll, time tracking, tax, and compliance-related responsibilities. Although a franchisor may require that your franchise abides by general system standards, in the area of day-to-day operations, your franchise is considered an independent business.

Each franchise agreement outlines the degree to which a franchisor provides operational support, but often this excludes payroll operations, unless you are considered a joint employer – a less common situation. In this case, your responsibilities may be lessened and/or liability for any FLSA violations may be shared in the event of a compliance or payroll error.

In the majority of situations, it’s important for a franchisee to not only utilize payroll software, but to work with a provider that can seamlessly integrate payroll with other related HR processes like time & attendance, workforce management, benefits administration, and more. In the next section, we’ll explore the numerous steps required to manually run payroll in-house as a franchise, and the benefits of working with a payroll provider to simplify the process.

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Payroll for Franchises: How it Works

Running payroll in-house using a manual process, or with a range of disparate digital tools, can lead to inaccuracies, late payments, issues with employee retention, unintended compliance violations, or simply a lack of focus on key business tasks and long-term business growth. Here are the steps necessary to start running franchise payroll.

Gather Employee Information

You’ll first need to gather all employee data, including each employee’s name, DOB, address, total compensation, Form W-4/withholdings information, and other data.

Accurately Classify Workers

Whether a member of your workforce is a contractor who requires a 1099, or a non-exempt employee with a W-2 (who is subject to FLSA minimum wage and overtime regulations), it’s essential to classify each worker or employee correctly to avoid penalties or lawsuits.

Develop Time & Attendance System

A qualified payroll provider should help you integrate your time tracking or time & attendance system with payroll and other HR functions. If handled manually, you may need to use traditional paper time sheets or multiple pieces of software to calculate/adjust hours, incorporate overtime hours, and more.

Determine Pay

To calculate any employee’s net or take-home pay, you must first calculate gross pay (including cash and non-cash tips) and then subtract any exemptions or deductions from local, state, or federal taxes, as well as Social Security, benefits contributions, and more.

Manage Business Taxes & Recordkeeping

As a franchise employer, you are required to report and pay all withheld taxes from your employees’ paychecks by submitting Form 941 on a quarterly basis, as well as Form 940 to account for FUTA taxes. If these taxes are not paid on time or in full, it can lead to multiple penalties for noncompliance. You must also consider and prepare for local and state tax and recordkeeping requirements.

Establish Pay Frequency

In some states, pay frequency is determined by state law, but in many cases, employers can solicit feedback directly from employees to determine how frequently they’d like to be paid (biweekly being the most popular frequency).

Establish Payment Method

Like pay frequency, valid payment methods to compensate employees are sometimes affected by state law. In general, employers can choose between traditional paper checks or a paperless method, with direct deposit being the preferred method among most employees.

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What to Look for in Payroll Services for Franchises

Although it’s possible to handle payroll tasks using a manual, in-house process, it is almost always more expensive, time-consuming, and error-prone than working with a qualified payroll provider. Investing in a payroll service solution not only automates and delegates payroll and related HR tasks, but allows your business to focus on your business’ most pressing concerns.

As a franchise owner or entrepreneur, it’s essential to choose the right payroll provider for your business: one that can offer expert support, leading-edge technology, and HR integration features that streamline and simplify payroll. Here are some of the key factors you should consider:

Ability to Integrate with Other HR Processes

Time & Cost Savings

Help users master your product

Intuitive, User-Friendly Platform

Expert Support

Ability to Integrate with Other HR Processes

Payroll is directly related to key HCM and HR processes like time tracking, workforce management, onboarding, benefits administration, and more. It’s essential to choose a provider that can offer seamless integration between your payroll and these related processes using a single digital platform.

Time & Cost Savings

A qualified provider should be able to concretely demonstrate how its service frees up time for your business to thrive – automating tedious manual processes that would otherwise burden your staff, increase the likelihood of costly errors, and create payroll issues that impact employee satisfaction and employee retention.

Help users master your product

by delivering contextually relevant training at the heart of the product experience, where users need it the most.

Intuitive, User-Friendly Platform

A qualified payroll provider should offer a payroll platform that includes automation features, easy permissions setting, advanced security/encryption, and a cloud-based and/or self-service system that is accessible for employees 24-7.

Expert Support

At CAVU, each of our clients is assigned a CAVU Payroll Guide, who can help you manage and troubleshoot any issue with payroll, time & attendance, or legal compliance. From the start, we connect you with a dedicated specialist who can help you navigate the specific concerns that apply to your business based on jurisdiction, industry type, and many other factors.

FAQs: Payroll for Franchises

Do franchises have HR?

Although franchises can attempt to handle HR responsibilities in-house, many outsource HR processes to third-party providers to utilize automated software, receive expert support, and easily integrate payroll with other HR functions like time & attendance, workforce management, onboarding, and more. In general, working with a qualified provider is more cost-effective, employee-friendly, and compliance-friendly in the long term, empowering franchises to prioritize revenue growth, employee satisfaction, and other key business concerns.

Does the franchisor or the franchisee manage payroll?

In the vast majority of cases, the franchisee is responsible for managing payroll and other related HR processes based on what is best for day-to-day operations and the workforce at their location. The only exception is if a joint employment relationship is in place, in which case the franchisor may be responsible partially or entirely for payroll and partially liable in the event of a noncompliance issue.

What should I look for in payroll services?

An ideal payroll provider should be able to help you automate and streamline your payroll process (including payroll taxes, compliance, and by offering an intuitive, user-friendly portal). Additionally, your payroll provider should offer easy integration between your payroll process/platform and other related HR functions like time tracking, workforce management, and more. You should also consider how the provider addresses customer service and security: whether you are offered a dedicated specialist and advanced security measures, or a call center and minimal protection against fraud or data breaches.

Simplify Franchise Payroll with CAVU HCM

Managing payroll and related HR processes in-house is a demanding task, especially when you’re focused on revenue growth, employee satisfaction, and the long-term success of your business.

Ready to streamline your franchise payroll process to experience lasting peace of mind about payroll, taxes, compliance, and other HR concerns? Contact CAVU HCM today for a personalized consultation and discover how our expertise in serving franchises can help your business thrive.

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Payroll Solutions

Payroll Services for Franchises

A qualified payroll provider can empower your business to shift focus to what matters most.

Who Pays Employees in a Franchise?

Ready to focus on your core business tasks and enjoy peace of mind with your payroll?

Payroll for Franchises: How it Works

Find the right payroll package for your Franchise

What to Look for in Payroll Services for Franchises

Ability to Integrate with Other HR Processes

Time & Cost Savings

Help users master your product

Intuitive, User-Friendly Platform

Expert Support

FAQs: Payroll for Franchises

Simplify Franchise Payroll with CAVU HCM