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Run the Payroll Fee Auditor →Blog · Payroll Management · Franchise
Franchise Operations: Payroll Recordkeeping Requirements (2026)
Payroll recordkeeping for franchises starts at the federal baseline, three years for payroll records and two for the time records behind them, then adds what reaches this industry: USCIS Handbook for Employers M-274, section 10.0 and IRS Employment tax recordkeeping. BEG runs franchise payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Records specific to franchises
A completed Form I-9 must be kept for every person on payroll for three years after the date of hire or one year after employment ends, whichever is later, and must be produced within three business days of an inspection request. This applies even when an employee leaves shortly after being hired.
Employment tax records, including amounts of tips reported by employees, records of allocated tips, dates of employment for each employee and copies of returns filed, must be kept for at least four years after filing the fourth quarter return for the year.
The federal baseline every employer keeps
29 CFR 516 requires payroll records for three years and the records they were computed from, time cards, schedules and piece or commission records, for two years. Employment tax records stay four years after the return they support. Forms I-9 stay three years from hire or one year from separation, whichever is later. For franchises the practical rule is that the pay codes for joint employer liability and multi-entity payroll produce records of their own, and an audit reads those, not the summary.
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.
- A completed Form I-9 must be kept for every person on payroll for three years after the date of hire or one year after employment ends, whichever is later, and must be produced within three business days of an inspection request. This applies even when an employee leaves shortly after being hired. [USCIS Handbook for Employers M-274, section 10.0]
- Employment tax records, including amounts of tips reported by employees, records of allocated tips, dates of employment for each employee and copies of returns filed, must be kept for at least four years after filing the fourth quarter return for the year. [IRS Employment tax recordkeeping]
Read the full guide to how to prepare for a payroll audit, and the rest of the franchise payroll library.
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Frequently Asked Questions
Franchise records: USCIS Handbook for Employers M-274, section 10.0
A completed Form I-9 must be kept for every person on payroll for three years after the date of hire or one year after employment ends, whichever is later, and must be produced within three business days of an inspection request. This applies even when an employee leaves shortly after being hired.
Franchise records: IRS Employment tax recordkeeping
Employment tax records, including amounts of tips reported by employees, records of allocated tips, dates of employment for each employee and copies of returns filed, must be kept for at least four years after filing the fourth quarter return for the year.
How long does a franchise keep payroll records?
Three years for payroll records and two for supporting time records under the FLSA, four years for employment tax records under the IRS rule, and longer where an industry rule cited above says so.
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: Wage and Hour Division
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