Before I franchise my company, I ran one of our mobile service units with a team of workers, in the automotive sector. We often got tips, and I quickly realized that I needed to share those tips with the rest of the crew. As the crew leader, truck manager, and sole proprietor, generally the customer would give me the tip, and it was very easy for me to put in my pocket and forget about it. However, those tips should be distributed amongst the rest of the crew.
After I franchised my company, I made sure that I put this into the confidential operations manual. You see, I wanted the franchisees to realize the power of those tips from the customers, because it increased customer service, and made employees care more. When the employees know they are getting the tips they are more likely to give better service, and be more polite to the customer. In doing so this also causes more referrals and increased business from each and every customer.
If you go into a Starbucks you’ll notice there is a tip jar, and when someone puts money in the tip jar that money is distributed amongst all the employees at Starbucks, based on the numbers of hours they’d worked. This is the fair way to do it, and if each employee knows that they make more money each week, even if it’s only $5-$10 in additional tips, they are liable to give better service to each of us customers in line when we are ordering our Frappachinos. Do you see that point?
What I find very interesting, as now that I retired I do a little franchise consulting, and I often produce franchise manuals for franchising companies, is that many of the franchisors aren’t thinking here, yet so many of them run a mobile service businesses, or companies that survive and thrive other customer service. And when they don’t give good customer service, those franchised outlets fail. I’ve always wondered how come franchisors that develop their perfect business model don’t have such policies.
Now then, it might sound so obvious, that it doesn’t require a policy because each franchisor will merely let their franchised outlets decide how they wish to deal with the tips. However in keeping with solid franchise business model and consistent customer service from outlet to outlet, this should be considered and documented in the cofidential operations manuals. I hope if you are a franchisor that you will please consider all this and think on it. If you have any comments, concerns, questions, or would like to discuss this further please shoot me an e-mail.