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Run the Payroll Fee Auditor →Blog · Payroll Management · Franchise
Franchise Operations: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a franchise is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and franchises have industry-specific exemptions on top. Food service managers at the national median earn $1,334 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a franchise can be salaried and exempt
The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded. There has been no DOL joint employer regulation in force since then.
On April 23, 2026 the Department of Labor published a proposed rule to restore joint employer regulations to 29 CFR Part 791, with comments due June 22, 2026. The preamble states that neither courts nor the Department have applied the FLSA to extend joint employer status to all general contractors and franchisors.
The salary math for franchises
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for food service managers at $69,390, which is $1,334 a week, above the floor, so for that role the duties test is the whole question. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.
What changes when a role moves between the two
Moving location managers and crew members from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded. There has been no DOL joint employer regulation in force since then. [29 CFR Part 791 (eCFR, as of September 10, 2026)]
- On April 23, 2026 the Department of Labor published a proposed rule to restore joint employer regulations to 29 CFR Part 791, with comments due June 22, 2026. The preamble states that neither courts nor the Department have applied the FLSA to extend joint employer status to all general contractors and franchisors. [DOL WHD proposed rule, Joint Employer Status Under the FLSA, FMLA and MSPA (April 23, 2026)]
Read the full guide to FLSA overtime rules for employers, and the rest of the franchise payroll library.
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Frequently Asked Questions
Can a franchise pay location managers a salary and skip overtime?
Only if the role meets an exemption: the $684 weekly salary floor plus the duties test, or an industry-specific exemption. The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded.
Does the $69,390 national median for food service managers clear the salary test?
$1,334 a week is above the $684 floor, so salary is not the obstacle; the duties test is. BLS OEWS, May 2025.
What does managed payroll cost for a franchise?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Joint employer liability, multi-entity payroll and franchisor reporting requirements are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Franchise Operations. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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