Process to Develop a Strong Manager Bench

Manager Bench Imperative

The franchise sector is projected to generate over $920 billion in economic output in 2026, adding more than 156,000 jobs. Yet this growth masks a deepening crisis in workforce availability. Labor shortages persist across retail, hospitality, and food service, with 91% of quick-service restaurant operators reporting difficulties in staffing. These issues stem from ongoing demographic changes, including the retirement of experienced workers and lower participation rates among younger demographics. High turnover rates in entry-level and managerial positions compound the problem, creating a cycle of constant recruitment and training.

Multi-unit franchises, which often span multiple locations under one owner, feel this pinch acutely. Operators must oversee complex operations without being present at every site, relying on capable managers to maintain standards. When shortages hit, it leads to overworked staff, reduced service quality, and eroded customer loyalty. In 2025, bankruptcies in the restaurant sector rose 50% year-over-year, partly due to inability to manage rising costs amid staffing gaps. For multi-unit owners, the absence of a ready bench means delayed openings, inconsistent performance across units, and heightened vulnerability to economic fluctuations like tariff-induced cost increases.

The stakes involve tangible financial hits. Turnover costs have climbed to an average of $45,236 per employee, covering recruitment, training, and lost productivity. In a multi-unit setup, multiplying this across locations can erode margins quickly. Regulatory complexities, such as varying state minimum wages, add pressure; California’s recent hikes have forced some operators to cut hours or automate roles. Deadlines loom in expansion plans—many franchisors target adding thousands of units by 2030, but labor constraints could derail these if internal talent isn't cultivated. Risks of inaction include talent poaching by competitors, with 50% of U.S. companies anticipating higher turnover in 2026 due to better opportunities elsewhere.

Less obvious tensions arise in solutions. Automation and AI, like scheduling tools or self-service kiosks, offer relief but require upfront investment and can alienate workers if poorly implemented. Franchisors push for digital transformation, yet adoption lags in smaller multi-unit groups due to costs and training needs. Another angle: over-reliance on external hires versus internal promotion. External candidates bring fresh ideas but often demand higher salaries—up 75% expect wage increases in 2026—while internal development fosters loyalty but demands structured programs. Stakeholder frictions emerge too; franchisees grapple with franchisor mandates for growth while facing local labor market realities, sometimes leading to fragmented support structures.

Surprising data highlights geographic variations. States like those in the Midwest see slower franchise job growth at 1.4%, exacerbating regional disparities. Meanwhile, health and wellness franchises buck the trend, adding 27,000 jobs thanks to demand for preventative care, but even they struggle with specialized manager roles. Trade-offs include balancing short-term cost-cutting, like reduced training budgets, against long-term gains from a motivated bench. Cutting corners here risks higher churn, as mental health concerns drive one in ten workers to consider quitting.