10 Questions You Should to Know about retail franchise cultural and creative products

More than 200,000 quick-serve restaurants in the United States don’t count the company as owners. Instead, these locations are franchises, meaning a company (the franchisor) allows an individual or group of partners (the franchisee or franchisees) to run a location of that restaurant under a franchise agreement.

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At a glance, opening and operating a restaurant franchise seems more straightforward than building your own restaurant concept. They’re established brands, and most of the marketing comes from the corporate office. But that doesn’t mean franchisees have an easier path to restaurant success. There’s a unique set of challenges that come with franchising. Here are 7 of them, and what to do about it.

1. Long approval processes

The franchisor and franchisee are a team. For a successful partnership, the brand has to be the right fit for the franchisee, and the franchisee must be a right fit for the brand.

Franchise agreements are also long term relationships–10- to 15-year contracts are the norm. It’s absolutely essential to get right. Which means oftentimes the approvals process can be long and intensive.

How to solve it

To expedite the process a bit, make sure you gather all the documents you need and follow the franchisor’s requirements. A long(er) approvals process can help prevent many more issues down the line, be they financial or cultural. For franchisees, take this time to assess if the franchise is a good fit for you.

2. Higher-than-expected operating costs

Aspiring franchisees must be prepared to front a hefty sum of money to get the business off the ground. Between up-front licensing fees and opening costs, the amount can easily break into the six or even seven-figure range.

Some of the common franchises and their startup costs, according to Business Insider, are:

• Subway: $116,000 to $263,000 + $15,000 franchise fee
• Kentucky Fried Chicken (KFC): $1.4 million to $2.8 million + $45,000 franchise fee
• McDonalds: $1.2-$2.2 million + $45,000 franchise fee
• Taco Bell: $1.2 million to $2.9 million + $45,000 franchise fee
• Wendy’s: $2 million to $3.7 million + $50,000 franchise fee

Some franchisors even require aspiring franchisees to have hundreds of thousands of dollars of cash on hand, which runs the bill up even more.

In addition to these one-time opening investments, franchisees regularly pay fees based on sales and operating costs. For example, McDonald’s charges a service fee of 4% of all monthly sales, while Subway charges 12.5% of weekly gross sales for franchise royalties and advertising.

How to solve it

There’s no real way to avoid royalties and fees, as they’re typically required to reach a deal with the franchisor. However, you can work to mitigate your opening costs by shopping contractors and renovators in your area to see who can give you the best price, which could bring down your restaurant opening costs. You could also explore buying an existing franchise rather than opening your own, which brings renovation and remodeling costs way down.

Another way to solve this is through integrated restaurant technology, such as POS and restaurant schedule software. When franchisees have granular data on sales and staff performance, they can make impactful changes that save on costs. When you can shave off a few percentage points of expenses, franchise fees become easier to manage.

Recommended Reading: How to Manage Your Restaurant Labor Cost Percentage

3. Less control over the brand

Affiliation with beloved brands gives franchise owners an advantage in recognition and brand affinity. But it can also work against you. When a number of Chipotle locations were responsible for foodborne illnesses in late , the entire brand reputation suffered–even though just a handful of their 2,000 locations at the time could be traced to outbreaks. Multi-location restaurants are under a close eye in the media because of their presence nationwide. A slip up by one individual at one restaurant, big or small, can impact the performance of other locations.

How to solve it

The first step to avoiding this issue is to hold yourself to the highest possible standards of service. If these big problems affect your brand, there’s solace–for you and your loyal patrons– in knowing your location was not responsible.

If a larger issue does arise out of the situation (see Chipotle’s half-day closing for food safety training), all you can do is stay in close touch with your franchisor to see what is expected of you in these times.

4. Not as much decision-making power

Independent restaurateurs get to define their restaurant’s theme, alter the menu whenever they want, and work to establish a place in their community.

This is not (always) the case for franchise operators.

It’s common for franchises to have promotions, new menu items, LTOs, and rebranding efforts mandated from the top. This is not a bad thing–and changes aren’t made in a vacuum. They’re researched, piloted, and found to increase revenue and/or profit–a win for franchisees and the franchisor.

It can be frustrating for owners who don’t feel like they have control over their business. They’re the ones who are living it day-in and day-out. But that doesn’t mean franchise owners’ voices can’t be heard.

How to solve it

Franchisees who have ideas on how to improve the business, but can’t act on them, can always contact their head office. Explain your point of view, with numbers to back it up, and there’s a good chance your ideas will be considered. If you can, suggest a survey to be sent to other franchisees. You may not be the only one who thought of it. Change can happen, but it’s incremental given all the moving parts of a national franchise.

That being said, there can be opportunity for individual franchises to make an impact. After all, some iconic fast foods–the Big Mac, KFC bucket, $5 foot long, and Filet-o-Fish–were all created by individual franchisees.

5. Different regulations

Operating your franchise in a major city like New York, San Francisco, or Chicago? If so, you’ll need to adhere to an extra set of rules known as Fair Workweek laws, affecting the state of Oregon and the cities of:

• Chicago, IL
• Emeryville, CA
• New York, NY
• Philadelphia, PA
• San Francisco, CA
• San Jose, CA
• Seattle, WA

These laws apply to restaurants operating in the locations above that have anywhere from 20-56+ locations worldwide and/or employee count of 500+ people worldwide–criteria that franchise locations almost always meet.

These laws add significant changes to the way restaurants manage and schedule employees, requiring affected restaurants to compensate employees for last-minute shift changes, share schedules at least two weeks in advance, and/or allow input on scheduling, among other mandates.

How to solve it

Familiarize yourself with the laws and regulations in your area. Additionally, you’ll also benefit from the resources available to you within your larger restaurant group. For example, many franchisors require all of their locations use an employee scheduling software that helps them schedule with ease and avoid breaking fair workweek laws.

Recommended Guide: Free Restaurant Labor Compliance Guide

6. High employee turnover

Overall, the restaurant industry has around a 75% employee turnover rate. However, franchises tend to see significantly higher turnover rates compared to the industry average, with fast food industry location turnover double that at 150%. For example, Panera’s turnover rate is reportedly nearing 100%, while Domino’s is recovering from a reported 107% turnover rate.

Among the reasons for such high turnover is the constant demand for employees at these restaurants (which allows dissatisfied employees to easily find work elsewhere) and the reliance on younger and less specialized labor pools, which typically have less incentive to stay at a franchise for years on end.

How to solve it

There is a two-pronged approach to managing turnover at your franchise: better hiring and better retention programs.

Working at a franchise seems like a good idea to aspiring restaurant workers due to brand recognition, but this can unfortunately attract some less-than-qualified candidates because of their perception of convenience. Make sure you’ve put the time in to find and hire the right people, such as sourcing candidates proactively and asking the right restaurant interview questions.

“As people continue to come back into the hospitality workforce, restaurant owners need to think about implementing creative incentive plans that can help them get staffed up quickly and then keep successful employees long-term,” says Ryan C. Whitfill, partner at Culhane Meadows.

7. Potential for brand dilution

One last common franchise problem is market saturation of the same restaurant. Believe it or not, Chick-fil-A made more per location than McDonald’s and Starbucks combined in , according to this QSR report. And that’s with 15% fewer operating days a week!

There’s a long list of reasons why, but the volume of locations is certainly towards the top of that list. Chick-fil-A operates one store for about every six McDonald’s or Starbucks, and about every 10 Subways. With fewer stores, each Chick-fil-A becomes more unique, and by extension, draws more of a crowd to that specific location.

If you’re operating a franchise restaurant (more specifically, a franchise fast food restaurant), you can expect strong sales due to your brand recognition and convenience, but you should also be aware of your potential market share. This comes from knowing how close another restaurant with your same name and menu is.

If there is an excessive number of locations of your restaurant in your city or town, this can take away from its novelty and potentially dent your sales. After all, being one of two McDonald’s in town seems a lot more financially enticing than being one of seven McDonald’s in that exact same town, doesn’t it?

How to solve it

Before opening a franchise, conduct a feasibility study to see how you’ll stand out in the area you’re looking to open up shop in. Forcing yourself to sit down and consider your sales forecasts compared to costs-and what role other franchise locations could play in those predictions-can help you choose the best spot to maximize sales.

Offer great customer service and food quality, so this is reflected in your online reviews and word of mouth. People may pick your location over another one nearby.

Recommended Reading: How Top Multi-Unit Restaurants are Using Tech to Grow

Facing Your Franchise Problems

Although opening and operating a restaurant franchise comes with its own unique challenges, most of them can be solved with a mindset shift, a new process, or a call to your corporate office. Your franchisor is counting on you to keep sales strong so everyone can take home a paycheck, so don’t be afraid to reach out for support and a clear ask to ensure everyone ends up better off.

Retail employees, in many ways, are the extension of your brand and reputation, serving as the focal point for many customers looking to engage with your products and services.

In the retail industry, interviews act as an opportunity to understand the ability of potential employees; how they interact with customers, offer excellent customer service and how they problem-solve. Even though interviews differ, it’s likely that similar types of questions will be asked that focus on interpersonal skills, retail knowledge and working examples.

Generate interview questions in minutes with our interview question generator.

Here are​​ 25 of the most common retail interview questions that you could ask as an employer to identify the best talent, and how a candidate might answer them.

General interview questions - experience and background interview questions

Tell me about yourself

Employer: A common question to begin most interviews, this is a great way to learn more about a candidate’s background, previous experience and skills they’ve picked up from other roles. This question can also be extended to try and learn more about the candidate on a personal level, understanding how they could fit in at your company.

Candidate: There are multiple ways to approach this question. An effective way for a candidate to structure a response would be to start with their current role and what they do, then move on to past experiences relevant to the role and finish with why they're interested in the vacancy. ​​Our expert consultants can help with your next career step.

Why do you want to work in retail?

Employer: A relatively standard opening question, to help with understanding the reasons a candidate wants to work in your industry is a great way to gauge their passion for the role. By asking why the candidate wants to work in retail, you’re allowing them to provide key buzzwords and phrases that you’re looking for. Such as, ‘customer service’, ‘interacting with people’, and ‘helping customers have a positive experience’.

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Candidate: The retail environment can often be challenging. This question gives the candidate a platform for a passionate response, indicating their enjoyment working in the industry. Answers from candidates may illustrate their people skills.

Why do you want to work for our company?

Employer: This question will test potential candidates to see if they have done their homework. As a hiring manager, you want to discover if the candidate understands your brand and vision. Look out for answers that include knowledge of both the company values and digital presence.

Candidate: An ideal candidate will focus their answer on your company’s values and ethos, reinforcing the fact that they’ve spent time researching your organisation. Candidates should highlight why the brand is important to them, and what they like most about the company, its products, or services.

What makes you stand out? Why should we hire you instead of somebody else?

Employer: In answering this question, candidates should be aware of the requirements of the role through the job description. Look for mention of the essential criteria points, but also pay attention to the candidate’s body language, attitude and how they present themselves when answering this question. ​For more information about the recruitment process, our sales recruiters can help.

Candidate: Retail is about sales – so candidates will need to ‘sell’ themselves to the hiring manager to highlight why they are the best person for the job. By offering a unique and sincere answer, candidates can prove how they are a perfect fit for the company and would complement an already strong team.

What do you know about the products we sell?

Employer: Interviewing a candidate who is already aware of the product or service is a great start. Not only does this question show a candidate’s forward-thinking, but also that they have put the time in to understand the product, its purpose and how it helps customers and clients.

Candidate: Listing a few products or services the company provides is a great start, especially when it’s a retail manager interview question. Even if the candidate doesn’t know the intricate details surrounding the products, a basic knowledge of the industry and what the company sells highlights that a candidate has taken the time to understand the organisation, in turn, making their application more appealing.

What is your greatest strength?

Employer: This is a standard interview question that is used across most industries. As an employer, this question allows you to get to know a candidate’s skill set while helping you determine if they are a good fit for the role.

Candidate: Interviewees would do best to be honest in this situation​​, as it’s a classic sales assistant interview question. For a sales assistant role, candidates may discuss their greatest strength as an ability to work under pressure while ensuring their work is always of the highest quality. This will show employers that their strengths lie in the right places.

What do you consider a weakness of yours?

Employer: In retail, this question is a great way of assessing a candidate’s self-awareness and is considered of the most common retail job interview questions. Look out for answers that show a candidate’s ability to self-assess and show improvement.

Candidate: This a tricky question to answer. On one hand, a candidate shouldn’t show any insecurities, but not be too boastful. Any answers indicating a growth mindset and a willingness to improve means an employer could develop a candidate into the perfect fit for their organisation.

Other questions to consider:

• What are your ​​salary expectations for this retail job? Use our salary guides to help inform your answer.

• What three words would you use to describe yourself?

• What do you hope to learn in this position?

• Where do you see yourself in five years?

Experience and background questions

What do you consider good customer service?

Employer: A very important question to ask – supplying high standards of customer service is the backbone of the retail environment. You will want to find out if your company’s definition of customer service matches the candidate’s response.

Candidate: Candidates should focus on what good customer service looks like, using examples of service they’ve experienced, or given in the past. Customer service is about providing a memorable, positive experience for customers, so any examples of this will form a strong answer.

Tell me about a time when you’ve worked well as part of a team?

Employer: Being able to work as part of a team is a crucial component of many retail jobs, as the industry lends itself to collaborative working. Take time to understand how a candidate works with their colleagues to create a successful working environment.

Candidate: Scenario-based questions help employers to understand a candidate’s practical ability. For questions about teamwork, candidates are encouraged to provide examples or talk about how they overcame challenges as part of a team, and what their role was.

Can you provide an example of a time when you went above and beyond for a customer?

Employer: Within retail, you want to hire employees who are passionate about helping the customer. Here, you’ll want to discover what a candidate has done previously to go above and beyond in customer service – offering multiple examples of high standards.

Candidate: Competency questions are used to assess scenarios where a candidate has interacted with customers. Interviewees may use these questions to highlight when they’ve received praise in previous roles from customers, and what the overall outcome of their hard work was.

Tell us about a time you exceeded expectations at work?

Employer: Positive experiences encourage managers to trust employees. Asking questions centred around excellence in service and exceeding expectations will help you to understand a candidate’s motivations and willingness to push the boundary and promote their work ethic.

Candidate: Hiring managers are looking to be impressed by a candidate's commitment to the role. Similar to going above and beyond, a candidate should focus on times when they were tasked with an assignment and received adequate praise from line managers, customers or external providers. If a candidate hasn't worked in retail before, they should think of an example from another job or role.

Other questions to consider:

• What experience do you have in problem-solving to meet the needs of the customer?

• Can you describe the accomplishment you're most proud of?

Position-relevant questions

Tell me about a time when you had to deal with a difficult customer?

Employer: Another common scenario-based question: this is designed to show if a candidate knows how to show empathy, de-escalate situations, and offer solutions. This question could also pinpoint a candidate’s accountability and self-awareness – valuable traits for employees in the retail industry.

Candidate: An ability to deal with conflict resolution is highly desirable. Candidates should provide a clear description of the situation including the circumstances under which a difficulty occurred, how they dealt with it and the eventual outcome.

How well do you perform in a busy work environment?

Employer: Within retail, employers understand how pressured the work can be. Questions around performance will allow you to discover how a candidate copes with challenging situations and demanding customers. You also want to figure out if candidates can work well in a fast-paced environment, especially during busy periods such as Christmas and new year.

Candidate: An ability to juggle priorities and tasks is part and parcel of many retail roles. Candidates should give examples of when they’ve worked well under pressure, alongside how they’ve maintained strong organisational skills to avoid becoming overwhelmed.

Tell me about a challenge you experienced in a past role and how you overcame it.

Employer: An answer to a behavioural question around challenges can tell you a lot about what type of person the candidate is, providing useful insight into how they work and react to adversity. Look out for evidence of certain characteristics including resilience, adaptability and a positive mindset.

Candidate: Candidates are encouraged to find examples that clearly demonstrate their competency in relation to the role they are applying for. The best answers to this question usually follow the STAR (situation, task, action, and result) technique, where candidates keep their responses focused and ensure they tick all the boxes for the interviewer.

What is your favourite thing about working in retail?

Employer: It’s important to understand a candidate’s passion behind why they work or want to work in the retail industry and give the interviewee the opportunity to show you a glimpse of their personality, drive and ambition. You want to make sure that the candidate will be a good fit for your team.

Candidate: Working in retail can be very rewarding. A candidate should think about the factors that make them like their job. These can include improving interpersonal skills, the flexibility the industry offers, the benefits leading to a good work-life balance, growth opportunities or simply being able to interact with customers.

Other questions to consider:

• If the payment machines went down on your shift, what would you do?

• Tell us about a time you exceeded a customer's expectations?

• What do you do when your replacement worker fails to show up?

• Tell me about a time that you demonstrated leadership in a previous role.

Important things to remember

Interviews can be a challenging experience for both employers and professionals alike within any industry, especially retail. Outside of the answers asked and given within the interview, there are other steps that can be taken to ensure the interview runs smoothly and is a good experience for all parties. Here are a few important things to remember during a retail interview:

Do research

In retail, it's important for an interviewee to have a basic understanding of what a shop sells, who the target audience is and the culture the company is trying to establish. On the other hand, employers should consider conducting a candidate background screening process, as this helps streamline the recruitment process.

Interviewee questions

Throughout the interview and beforehand, it's a good idea for candidates to ask questions to the hiring team that will help inform their decision if the role and company is right for them. For employers, this is a great opportunity to sell the company culture and list all the benefits of working for the organisation.

The follow up

After the interview, it’s the responsibility of both the interviewee and employer to make sure any further details and next steps are outlined. For candidates, if writing a follow up , reiterate gratitude and ask any relevant questions about when a decision will be made by. Employers should take the time to reach out to the shortlist whether successful or unsuccessful.

If you are looking for the next top professional for your business or looking for your next role, ​​get in touch with one of our expert consultants today.

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