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This is the new employment benefit of the franchise sector

January 31, 2020

Education is the new benefit. More and more franchises are financing their employees' careers because this helps them gain their loyalty, reduce turnover and increase productivity.

15+ min read

The opinions expressed by employees are personal.

This is the new employment benefit of the franchise sectorThis is the new employment benefit of the franchise sector

When a customer buys something in, they ask if they would like to round the amount of their purchase. They tell him that it is to support the education of the employees, but, of course, this may seem abstract and superficial to someone who simply felt like a chalupa, so when someone effectively rounds out the amount of his purchase at the Bloomington Taco Bell , Indiana, employee Megan Humphreys-Savell always tries to smile and turn the experience into something personal.

“I tell them: 'Your donation helped me go to school,'” says Humphreys-Savell, 20. These cents have helped, among other things, contribute to a $ 25,000 scholarship he received through the foundation of the franchise; She is now enrolled at the University of Indiana, studying a degree in art education. “They are definitely surprised,” he says describing the reactions of his clients. “I don't think they ever stopped to think about it. I love seeing their faces when I tell them. ”

Humphreys-Savell remained in a home from 12 to 14 years old, age at which she was adopted by a family with three children. A university degree always seemed out of reach, but I was determined. This was the reason he started working at Taco Bell – although he had no idea about educational benefits. At that time, he was just trying to earn some money to pay for some classes at his local community college. He then discovered that he could apply for a Live More scholarship to Taco Bell, he did so, and became one of the 513 people (chosen from among 13,000 applicants) who received the aid in 2019.

In the world of franchises, its history is becoming common. An increasing number of franchises have begun to offer educational benefits for full-time and part-time employees , ranging from contributions to college tuition to English teaching and high school certification programs.

This happens because these businesses have discovered something that seems to go against common sense: spending money on the education of their employees – and, therefore, providing them with access to opportunities that go beyond their current jobs – is not only good for Young; It is also good for the business .

“If you look at how competitive the market is for jobs that are paid by the hour, you will realize that having this type of program is now fundamental,” says Bjorn Erland, who recently served as Vice President of People and Experience for Taco Bell (He left the company in October). So far, the results are undeniable: in a pilot program implemented in 700 restaurants, Taco Bell obtained a 34% increase in retention during the first six months among employees who received educational benefits.

“This is the next move,” says Rachel Carlson, CEO and co-founder of Guild Education , a company that helps operate education programs for clients ranging from Walmart to Walt Disney, and is now expanding into the franchise sector.

“If in the sixties the issue was medical care and the eighties were about 401k plans (retirement savings plans), education is neither more nor less than the labor benefit of our era. Franchises are thinking: How can we compete? And (funded education offers) a great return on investment. ”

Walmart, Starbucks and Uber set the example

Here are the statistics that tell the story: 10 years ago, employers spent $ 13.8 billion (adjusted for inflation) to help their employees pay for a college education. Today, there are almost 16,500 million, according to the University Committee. Part of this increase is due to an increase in the benefits available to low-paid workers, which have become more difficult to find as the unemployment rate falls.

The movement began outside the franchises, inside some of the brands with more weight in the United States. One of the first to venture was the biggest employer: that in 2012 he offered to subsidize 15% the cost paid by employees to study at a private university online (after it has been expanding this benefit to cover a higher percentage of costs of those employees who study business, supply chain management, technology or health and well-being, and it has also expanded the number of universities where they can do so).

Then it was the turn of, which began to cover the cost of the titles of its baristas, through the online platform of the Arizona State University (ASU). Other large companies followed; now even Uber offers its drivers and relatives of these free programs through the ASU online division.

Once enough companies provided this benefit, data scientists were able to track its impact on business. The results are impressive. An independent study by the CIGNA health care company made the calculations focusing on its reimbursement plan, which at that time offered up to $ 5,250 per year for undergraduate degrees (the maximum allowed by federal law, so as not to be subject to tax rent), and $ 8,000 a year for postgraduate courses. CIGNA found that for every dollar invested in education the business saved $ 1.29 in administration costs. Retention improved by 8% and participants were 10% more likely to be promoted.

These statistics are extremely attractive for those businesses that face difficulties in hiring and retaining employees – and franchises definitely face such problems. In the fast food industry alone, annual staff turnover is at a record 150%, according to Oracle's subsidiary, PeopleSoft. This means that a restaurant with 20 jobs has to hire an average of 30 people a year to cover them.

“It's a difficult market,” says Ron Holt, founder of the cleaning services franchise Two Maids A Mop, which has more than 500 employees in 70 markets. Holt launched an education program in August, through which he will grant grants of $ 10,000 to five of those workers. “These are un glamorous posts. This gives us an opportunity to excel. ”

Who pays: the corporate or the franchisees?

Of course, the opportunity does not come cheap. And in the world of franchises, companies are adopting different approaches on how to finance it and even on who pays.

In some cases, the franchisor is the one who pays. This is the arrangement in for example, whose corporate program Archways to Opportunity pays for employees to learn English, obtain their high school certificate or go to college. “It's very difficult to attract talent in this economy,” says Marie Cini, president of the Council for Adult and Experiential Learning (CAEL) for a Council for Adult and Exeriential Learning, a nonprofit organization that provides consulting McDonald's employees about their educational options.

In Taco Bell it depends on the origin of the scholarship. The company actually operates multiple programs (and this year distributed a total of 4.6 million dollars in educational benefits). In some cases, scholarships and tuition reimbursements are covered, either by the corporate or by franchisees , depending on whether the branch in which the employee works is owned by the corporate or a franchisee.

Sometimes, when there is no corporate program for store-level employees, individual franchisees establish their own. This is the case of the Wolak Group, a Maine-based company that owns about 100 Dunkin 'Donuts branches. Once employees have worked in one of the units for more than a year or the equivalent of 1,000 hours, the Wolak Group pays for them to obtain associate degrees online through the University of Southern New Hampshire.

Increasingly, the talent pool is not only responding to these types of programs: it is demanding them. When Taco Bell conducted a survey among its employees about their preferred benefits, education took second place, only after transportation to work needs. “There is a huge demand from employees,” says Erland.

In different industries, low-paid workers are those who most want to access a better education, which is restricted not because of academic limitations, but because of the cost. The amount of low-paid preparatorians who aspire to a college education is almost the same as that of their higher-paid counterparts, according to a federal study that traced their trajectories.

But thirteen years later, only a small part of the first – just one in seven – has obtained a bachelor's degree. Employer financing programs may have the power to flip these numbers.

Sal Napoli, a McDonald's franchisee that operates 61 restaurants in New York, New Hampshire, Maine and Vermont, has seen the benefits since Golden Arches began offering its annual educational benefit. The “repeaters” – employees who request the benefit more than once – have increased from 25 to 41%, which means that Napoli team members are staying longer in their jobs to be able to benefit from the benefit. One of her employees, an immigrant from Liberia, divides her time between McDonald's and her psychology studies, thanks to a support of $ 6,000 granted by the company.

For Napoli, himself the son of an immigrant who found an opportunity at McDonald's, the program is not only good for business, but also a source of pride. “When I think about the brand, I think about how we have been an easy target” in terms of everything from employee salaries to food quality, he says. “But I am very proud of our brand and the opportunities we offer, and this is one more reason to be.”

Make alliances with an expert

In the franchise world, even the oldest educational benefit programs have only been in existence for a few years. And companies working to implement them have quickly realized that they have much to learn.

When McDonald's launched its program in 2015, for example, it required employees to work 20 hours a week for 12 months before being able to request an educational reimbursement of $ 700 per school year. In 2018, the time requirement dropped to 15 hours a week for 90 days, and the reimbursement amount rose to $ 2,500.

“For someone 18 or 19, 12 months is an eternity,” says Lisa Schumacher, director of Education Strategies for McDonald's. “So it didn't really have the impact we were looking for.”

Almost all franchises that offer educational benefits have hired someone else to manage them, whether this involves designing personalized courses, or simply choosing the winning fellows. “If higher education is complicated for a student, it is also difficult for companies to understand how the system works,” says Schumacher.

Holt, the founder of Two Maids A Mop, registered with the nonprofit organization Scholarship America to evaluate and select applicants for his scholarship. Homewatch CareGivers, a health care franchise that has invested $ 1 million in the education of its employees over the past 11 years, has partnered with Relias Learning, a firm that develops personalized training. McDonald's works with CAEL.

“Taco Bell is very good at making tacos,” says Jennifer Bradbury, director of the Taco Bell Foundation, the arm of the company that manages the Live More Scholarship scholarships. “We have learned a lot about the field of upper secondary education in recent years, but we are by no means experts. When you join efforts with a partner, you can have a greater impact. ”

This may mean additional levels of support for employees who study. Through CAEL, McDonald's offers academic and career choice consulting, in English or Spanish, by telephone. “It was very important for me that, in addition to having the provision of tuition, we had help so that people could navigate the world of higher education,” says Schuma Schumacher, especially for all those employees who are the first of their Family going to college.

The winners of the Taco Bell Live More Scholarship are invited to attend summer workshops that cover areas such as curriculum writing and interview preparation, and are assigned a mentor within their community through LinkedIn.

“We know that financial assistance is a critical first step, but we also know that they need support that goes beyond a simple check,” says Bradbury.

These programs are not cheap or easy, says Cini, president of CAEL. But they bring great rewards – even if employees continue on their way after the six years it typically takes them to obtain a bachelor's degree with a part-time job. “An employee who stays six years is really worth it,” says Cini. “Employers are making companies save millions and millions in terms of staff turnover.”

They are also creating an intangible amount of goodwill, not to mention building a network of administrative talent that may serve them in the future. Ron Williams, 27, was already borrowing to pay his tuition on the Stanislaus campus of the State University of California, when the McDonald's franchisee he worked for sat down in front of him and told him to apply for his educational benefit . Williams received additional support, and after graduating in 2017, he returned to McDonald's for a position in the corporate as an operations associate, in which he works directly with franchisees.

To this day, he never misses the opportunity to make sure franchisees know about the program – as well as the high levels of loyalty it has as a result – says Williams. “I felt that someone was really interested in my future. If they gave me this money I was not going to let them down and miss my job. I felt that it was really part of the business. ”

Win for doing good

While the first results of these programs within the franchises are positive, there is no doubt that there are years of refinement and rearrangements as companies discover what practices translate into better results for the business. And just as franchises sought in large companies a guide to launch these benefits in their beginnings, now looking for a guide on how to evolve.

Walmart, for example, has continued to expand its offer. In June, it extended educational benefits to employees still in high school, and added 14 degrees and certificates in technology, for which its full-time and part-time employees can receive tuition, books and other expenses, as well as consulting academic The store expects the number of employees taking advantage of this benefit to rise from the 7,500 that are now up to 75,000 over the next five years.

This will mean additional pressure on your competitors in labor matters, including franchisees and franchisors. Carlson says his company, Guild, is anticipating a rapid expansion of its client franchise portfolio as the industry increasingly sees educational programs as a way of “earning good while doing good.”

Back in Bloomington, Humphreys-Savell still works at the Taco Bell near his university campus. Your employer's support has accelerated your career development and provided you with better academic opportunities. Without him, she says, she would still be struggling to pursue community college. And while she strives to get her degree and plans to become an arts teacher, she knows well that she has already become a lifelong advocate for the fast food chain.

In fact, now that her younger sister begins to think about getting a job, Humphreys-Savell has a suggestion: “I am encouraging her to work at Taco Bell.” As you can see, the benefits are many. Follow the example of these brands and offer this incentive to your collaborators.

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