Non-compliance risks include hefty fines, legal actions, and back pay awards. It can damage the franchise's reputation, affecting customer trust and employee morale. Legal disputes can drain resources and lead to operational disruptions. Non-compliance may also result in regulatory investigations, putting additional scrutiny on franchise operations. Ultimately, it can hinder the franchise's growth and sustainability.

Franchises must carefully navigate joint employer status, where the franchisor and franchisee could both be deemed liable for employment practices. They must also handle state-specific laws that vary widely, especially regarding minimum wage and paid leave. Additionally, the differentiation between franchisee employees and those directly employed by the franchisor can present legal complexities. Ensuring consistent policy enforcement across all franchise locations is another unique challenge.

Franchises commonly face issues related to wage and hour laws, employee classification, and overtime payments. They must also ensure compliance with anti-discrimination laws, health and safety regulations, and employee leave policies. Maintaining updated employee handbooks, conducting regular training, and properly managing employee records are also critical. Inadequate handling of these issues can lead to significant legal and financial ramifications.