Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Franchisees Use Shared Labor Pools to Cut Costs
Transcript
- Lucas: So you walk into a franchise — say a Subway or a Smoothie King — and you see three employees behind the counter. But across town, at that same franchisee's other location, there's only one person working and the line is out the door. Luna: Classic staffing mismatch. One unit is overstaffed, the other is understaffed, and the franchisee is paying for both. Lucas: Exactly. And what a growing number of multi-unit franchisees are doing about it is creating shared labor pools. Instead of hiring employees for each location independently, they hire a pool of workers — often part-timers — and deploy them across multiple units based on real-time demand. Luna: I've heard about this in the context of fast food, but is it really catching on? Give me a concrete example. Lucas: Let's talk about a Subway franchisee in Phoenix — operates ten units. In the first quarter of 2026, they started using a shared labor model. They had about forty employees total across those stores, but instead of assigning each person to one location, they used scheduling software — 7shifts — to move people between stores based on projected traffic. Luna: And did it actually cut costs? Lucas: They reported a 12% reduction in labor costs year-over-year for Q1. That's meaningful. On a typical Subway unit, labor is about 25-30% of sales. If you're running ten stores each doing, say, $400,000 a year, that's roughly $1 million to $1.2 million in total labor spend. Saving 12% is over $120,000. Luna: That's real money. But isn't it a headache to train employees on multiple store layouts, equipment, and procedures? Lucas: It can be, but that's exactly where the technology comes in. Platforms like 7shifts and When I Work allow franchisees to track certifications and skill sets per employee. So you only send someone to a store if they've been trained on that store's specific setup. Some franchisees also create standard operating procedures that are identical across all their units, which makes cross-training much easier. Luna: So you're essentially building a mini internal staffing agency. Do franchisees need approval from the franchisor to do this? Lucas: Great question. Most franchise agreements don't explicitly prohibit shared labor pools, but some do have clauses about employee uniforms or branding consistency. The Phoenix Subway franchisee I mentioned actually worked with their franchisor to get a waiver — because the labor savings improved unit economics, which ultimately benefits the brand. Luna: That's a smart move. And look, if these kinds of operational insights have helped you run your franchise a little better, we hear from listeners who say the same. It's part of why we keep this show ad-free — listener support is what makes it possible. If you'd like to chip in, you can find us at buy me a coffee dot com slash fexingo. Lucas: Yeah, we appreciate that. So back to the labor pool model — another key piece is how you handle wages. If you pay different rates at different stores, you might run into fairness issues or even legal complications. Luna: Right, especially if one store is in a higher-cost area. Do you standardize the wage across the pool? Lucas: Most franchisees who do this pay a single base wage for the pool, often at the higher end of their range, to attract workers willing to travel. Then they might add a small shift differential for stores that are harder to staff. The Phoenix franchisee paid a base of $16 an hour across all ten stores, with an extra $1 for the two stores in busier parts of town. Luna: That seems fair. But what about compliance? If an employee works in multiple locations in the same day, how do you handle breaks, overtime, and travel time? Lucas: This is where it gets tricky. Under federal law, travel time between job sites during the workday is generally compensable. So if an employee works two hours at store A, then drives 15 minutes to store B, that 15 minutes is paid time. Scheduling software can track that automatically, but franchisees need to build it into their labor budgets. Some states like California have even stricter rules. Luna: So the model works best in states with simpler wage laws — or for franchisees who invest in good time-tracking systems? Lucas: Exactly. And it's not just about cost savings — there's also a retention benefit. Employees in shared pools tend to get more hours because they can fill gaps across multiple stores. That means they're less likely to quit. The Phoenix franchisee saw their turnover drop from 150% annualized to about 110% in the first quarter. Luna: That's a big improvement. Turnover in fast-food franchises is notoriously high — if you can cut it by a third, that saves on recruiting and training costs too. Lucas: Right. And it's not just quick-service restaurants. I've seen this model used in hotel franchises — housekeepers and front desk staff shared across multiple properties owned by the same franchisee. Also in retail franchises like cell phone repair shops, where technicians can be deployed based on appointment volume. Luna: Is there a minimum number of units where this makes sense? Could a two-unit franchisee do it? Lucas: Probably not as effectively. The fixed costs of the scheduling software and the management time to coordinate the pool don't pay off until you have at least four or five units. But if you're a growing franchisee planning to add more locations, it's worth setting up the infrastructure early. Luna: So what's the takeaway for someone listening who's thinking about trying this? Lucas: First, talk to your franchisor — make sure there's no conflict in your agreement. Second, pick a scheduling platform that fits your size — 7shifts is popular for restaurants, When I Work is more general. Third, start with a pilot: maybe pool employees across two stores that are close to each other, see how it goes, then expand. Luna: And keep an eye on those compliance details. But the savings and retention upside seem real. Lucas: Yeah. In a tight labor market — which we're still in as of June 2026 — any tool that helps franchisees get more out of their labor dollar is worth exploring. The shared labor pool is one of those ideas that sounds simple but requires discipline to execute well. Luna: Well said. Thanks, Lucas. Lucas: Thanks, Luna. Talk next time.