Purpose: The purpose of this paper is to extend the current understanding of human resource management (HRM) challenges facing franchise businesses.

Design/methodology/approach: A qualitative investigation, including eight in-depth interviews and 66 semi-structured interviews with various franchise stakeholders as well as 42 participant observations, was conducted in North America to answer the research questions.

Findings: Six major conclusions emerged from the conceptual and empirical work. The findings, for instance, reveal that human resources in franchise businesses lacks in motivation and skills, and franchisees’ distance from the ideal mix of autonomy and risk-aversion determines psychological and financial distress in the system.

Practical implications: The findings suggest that when firms choose the franchising path as a means of leapfrogging resource constraints, they will experience new and more challenging HRM complications for several reasons. Therefore, decision-makers at both franchisor and franchisee firms need to address these new HRM challenges proactively by recognizing their possibility and emergence and by engaging in cooperative learning with one another.

Originality/value: While HRM practices can “make or break” franchise systems, some important research questions still remain unanswered in this context. In an attempt to narrow this gap, and using a qualitative approach, this work identifies and classifies the key HRM challenges facing the franchise industry. Based on the finding, a conceptual model is proposed and discussed.