Franchising Has a Gen Z Problem
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Franchising Has a Gen Z Problem

Franchising Has a Gen Z Problem

No matter who you talk to in franchising, the labor shortage continues to be one of the greatest challenges facing the growth of the franchise sector. Not only did the pandemic force many people out of the workforce, it also caused many to reconsider their careers and reevaluate what they want out of their jobs.

Compounding that, Baby Boomers retiring in record numbers makes it more critical than ever for franchise organizations to attract and retain younger employees. According to the U.S. Bureau of Labor Statistics, the oldest members of Generation Z—those currently between 20 and 25—will make up 8.3% of the workforce by 2030.

The problem? Gen Z has by far the lowest employee satisfaction and engagement scores on Franchise Business Review’s 2022 Franchising@WORK survey, scoring a 76 on the Satisfaction Benchmark Index—10% to 33% below the overall benchmark.

This hasn’t changed much either over the past few years, despite a growing emphasis and conversation around culture in most franchise organizations. Franchise employee data from the 2019 Franchising@WORK study showed that 67% of Gen Z employees planned to leave their jobs within 2 years. Post-pandemic, the number stayed roughly static, with 66% of Gen Z employees that responded in both 2021 and 2022 indicating they planned to leave within 2 years. Compare that to a general study by Deloitte that reported 40% of Gen Z plan to leave their employers within 2 years.

There is one bright spot for Gen Zers. In 2019, just 56% of Franchising@WORK survey respondents said they felt they were compensated fairly for their position, compared with 71% in 2022, possibly a reflection of franchise organizations increasing salaries to retain employees amid the Great Resignation.

What matters to Gen Z employees?

Everyone has different priorities, values, and life experiences. Broadly speaking, Gen Zers are purpose-driven, multi-taskers, impatient with the status quo, and crave cross-functional opportunities with a clear path to advancement.

While employment mobility is not a new trend among younger workers, job-hopping and freelance/“gig work” have become much more pervasive in the past few years. Given the increased budget dollars going into employee recruitment in the current war of talent, franchise organizations will be hard-pressed to design effective retention programs, and clearly communicate the long-term career path opportunities within their organization—especially for younger workers.

Hiring software firm CareerPlug offers 7 tips for recruiting and retaining Gen Z employees, from making your job postings mobile-friendly to texting and using social media. But even more notably, they point out that offering the right benefits and perks, and focusing on diversity and inclusion, are two important ways to appeal to Gen Z.

How to attract and retain Gen Z employees

1) Mission and purpose

Look at your company’s mission statement and core values. Do they speak to the employees you want in your organization? If you can connect the dots between your brand’s mission, core values and meaningful work—and make it an integral part of your employer brand—you can create a significant recruitment and retention advantage.

2) Flexibility

Flexibility is no longer a perk, it’s expected. A 40-hour work-week in an office is no longer the status quo, especially post-pandemic. Gen Z is more digitally connected and tends to have less defined lines between work and life. Retaining Gen Z employees will require organizations to figure out how to accommodate the flexibility these employees crave.

3) Managers

Not surprisingly, an employee’s direct manager has the strongest impact on their overall satisfaction and engagement. Provide training for managers on how to coach younger employees and foster an environment that emphasizes teamwork, particularly if some or all employees are remote. As this article from Forbes points out, managers play a key role in helping Gen Z workers adapt to an office environment, but there’s also a lot of value that younger workers bring to the team in terms of innovation, technology and challenging the status quo.

4) Mentorships

Many corporate franchise teams are small, with a relatively flat organizational structure, which can make it difficult for younger employees to see a clear career path. Mentorships can help keep Gen Z employees engaged and fulfill their desire for growth opportunities and skill development.

5) Mental health benefits

Gen Z reports being more stressed and emotionally distressed than any other generation. Employers need to take note and offer access to benefits and resources like Employee Assistance Programs (EAPs) that support mental health and well-being.

6) DEI initiatives

Gen Z is the most ethnically and racially diverse generation in the workforce, and they want to see diversity and social awareness reflected in the workplace. If your organization is not yet benchmarking your DEI progress, now’s the time to start.

Editor’s note: For additional perspective on this issue, FBR offers a free ebook called “The Ultimate Guide to Employee Engagement for Franchises.” Download it here.

Franchise Business Review helps hundreds of franchise organizations measure and improve employee engagement and DEI. Find out how your organization stacks up with a free 10-minute demo to see how you can get a confidential assessment of your culture and employee engagement.

Published: January 5th, 2023

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