Staffing and staffing-franchise glossary.

Staffing Business as a Service (SBaaS) is a model in which an established staffing firm supplies payroll funding, back office, compliance, technology and recruiting support so an independent owner can run a staffing business.

The ApTask Franchise is built on SBaaS: the franchisee wins clients and makes placements, and ApTask runs the operation behind them. Read What is SBaaS?

A staffing franchise is a staffing business operated by a franchisee under a franchisor’s brand, system and franchise agreement, in exchange for fees.

What the franchisor provides varies widely — from a brand and training to full payroll funding and back office. Compare in staffing franchise vs starting from scratch.

Contract staffing places a worker with a client for a defined period or project while the staffing firm employs or contracts with the worker and bills the client by the hour.

There is no obligation to hire when the contract ends. The American Staffing Association reports nearly 2.2 million temporary and contract employees worked for U.S. staffing companies in an average week in 2024 (ASA (external source)).

Contract-to-hire is an engagement in which a worker starts as a contractor on the staffing firm’s payroll and the client may convert them to a permanent employee after an agreed period.

It lets both sides test fit on the real job before committing. See contract vs contract-to-hire vs direct hire.

Direct hire is a permanent placement in which the candidate joins the client’s own payroll from day one and the staffing firm earns a one-time placement fee.

The fee is usually a percentage of the hire’s first-year base salary, often backed by a replacement guarantee.

Payrolling is a service in which a staffing firm becomes the employer of record for a worker the client or recruiter has already found, running payroll, taxes and benefits.

The client keeps the relationship and the rate; the payroller carries the employment compliance. See Pass-Through Services.

A pass-through arrangement routes a contractor sourced by someone else onto a staffing firm’s payroll and compliance infrastructure for a flat, agreed margin.

On pass-through business in the ApTask Franchise, ApTask waives the recruitment fee and charges a flat 10% for C2C/IC or 20% for W-2 placements, per the franchise FAQ.

An employer of record (EOR) is the legal employer that hires, pays and handles employment taxes and compliance for a worker who does the job for another company.

EORs let companies hire where they have no legal entity. It is distinct from an IRS-certified professional employer organization, a co-employment arrangement (IRS CPEO (external source)). See Payroll Solutions.

A statement of work (SOW) is a contract that buys a defined deliverable or outcome — scope, milestones, acceptance criteria and price — rather than hours of a worker’s time.

Under an SOW the supplier owns delivery and substitution risk. See Managed Solutions.

The bill rate is the hourly amount a staffing firm charges the client for each hour a contractor works.

It must cover the pay rate, employer burden, overhead and profit. See how staffing agencies make money.

The pay rate is the hourly amount the contractor is paid for their work.

The difference between bill rate and pay rate is the spread.

Markup is the spread between bill rate and pay rate expressed as a percentage of the pay rate.

With a pay rate of 70 and a bill rate of 100, the markup is 30 ÷ 70, about 42.9%. Client rate cards often cap markup.

Gross margin in staffing is the spread between bill rate and pay rate expressed as a percentage of the bill rate.

The same example gives 30 ÷ 100 = 30%. The ApTask FDD currently sets minimum gross margins of 18% for C2C/IC and 32% for W-2 placements.

Burden is the employer cost of a W-2 worker on top of wages, such as the employer share of payroll taxes, unemployment tax, workers’ compensation and benefits.

Burden is why W-2 placements need a higher margin than 1099 or C2C placements (IRS employment taxes (external source)).

Payroll funding is financing or a service that pays a staffing firm’s contractors on schedule before the client pays the invoice for their hours.

In the ApTask Franchise, ApTask funds contractor payroll, so the franchisee never fronts wages. Read how payroll funding works.

Factoring is financing in which a factor advances cash against a company’s unpaid invoices in exchange for a fee.

Unlike a full payroll-funding partner, a factor does not run payroll or employment compliance for the agency.

The back office is the operational side of a staffing firm: payroll, billing, invoicing, collections, onboarding, benefits, insurance and compliance.

It is the part of an agency that needs capital and systems before the first invoice is paid — and the part ApTask runs for its franchisees.

A conversion fee is what a client pays a staffing firm to hire a contract-to-hire worker onto its own payroll.

It commonly steps down the longer the contractor has worked with the client, and belongs in the client agreement before the contractor starts.

W-2, 1099 and C2C describe how a contractor is engaged: as the staffing firm’s employee (W-2), as a self-employed independent contractor (1099), or through the worker’s own corporation (corp-to-corp).

Which is correct depends on the IRS common-law test of behavioral control, financial control and the relationship (IRS (external source)); either party can request a determination on Form SS-8 (external source).

Worker classification is the determination of whether a worker is an employee or an independent contractor for tax and employment-law purposes.

Misclassification exposes the business to back taxes and penalties, which is why many clients route independent workers through a W-2 employer of record.

Form I-9 is the federal form every U.S. employer completes to verify a new hire’s identity and employment authorization, and E-Verify is the optional online system that checks I-9 information against government records.

See USCIS Form I-9 (external source) and E-Verify (external source).

A backfill is a hire made to cover a role left open by an employee who has left, been promoted or gone on leave.

Contract staff are a common way to backfill during leave or while a permanent search runs.

A master service agreement (MSA) is the umbrella contract between a client and a staffing supplier that sets the legal and commercial terms for every future placement or statement of work.

Winning the MSA is usually the gate to doing business with an enterprise. ApTask holds the MSA legally; the franchisee who secured the client is its operational owner.

A managed service provider (MSP) is a firm that runs a company’s contingent-workforce program, managing suppliers, rates and compliance on the company’s behalf.

Staffing suppliers compete for requisitions inside the MSP’s program. See VMS / MSP Specialization.

A vendor management system (VMS) is software a company uses to distribute requisitions to staffing suppliers, collect submittals, and track timesheets, rates and invoices.

Examples include SAP Fieldglass and Beeline. When an ApTask franchisee brings a VMS client, the VMS cost reduces the transaction’s profit before the share is calculated.

A requisition is a client’s formal request to fill a specific open role, including the job description, rate or salary range and approvals.

In a VMS program, requisitions are released to approved suppliers, who compete to submit candidates.

Time-to-fill is the number of days between a requisition opening and a candidate accepting the offer.

Buyers use it to compare suppliers; teams should agree whether the clock stops at offer acceptance or at start date.

Supplier diversity is a procurement program that tracks and grows an organization’s spending with certified diverse-owned businesses.

Programs rely on third-party certification such as NMSDC’s to verify which suppliers count. See MBE-certified staffing.

Tier 1 diversity spend is money paid directly to a certified diverse supplier, and Tier 2 is money prime suppliers pass on to certified diverse subcontractors.

Contracting directly with an MBE-certified staffing firm such as ApTask produces Tier 1 spend.

A Minority Business Enterprise (MBE) is a for-profit business at least 51% owned, operated and controlled by U.S. citizens who are members of a recognized minority group, as certified by a body such as NMSDC.

NMSDC notes that certification is an ownership-based eligibility designation and does not guarantee contracts (NMSDC definition (external source)). ApTask is MBE-certified with NMSDC and NY/NJ-MSDC.

The National Minority Supplier Development Council (NMSDC) is the U.S. nonprofit that certifies Minority Business Enterprises through its regional affiliate councils.

Certification involves an application, ownership and control documents, and a site visit (NMSDC certifications (external source)). Read what MBE certification is.

The Franchise Disclosure Document (FDD) is the disclosure a franchisor must give a prospective franchisee under the FTC Franchise Rule, with 23 required Items covering fees, investment, territory, obligations and financials.

It must be delivered at least 14 calendar days before the buyer signs a binding agreement or pays anything (16 CFR Part 436 (external source)).

The FTC Franchise Rule (16 CFR Part 436) is the federal regulation that requires franchisors to provide the Franchise Disclosure Document and governs what it must contain.

Some states add their own registration and disclosure rules. See the FTC Franchise Rule (external source).

Item 19 of the FDD is where a franchisor may state actual or potential financial performance of its outlets, and only if it has a reasonable basis and written substantiation.

Earnings statements outside Item 19 are restricted (16 CFR 436.5 (external source)). ApTask’s Item 19 is reviewed with candidates at the discovery call.

A franchise royalty is an ongoing fee a franchisee pays the franchisor, usually calculated as a percentage of revenue or gross profit.

Royalties and other recurring fees are disclosed in Item 6 of the FDD; ApTask’s are set out in its FDD.

A Fortune 2000 dedicated territory is an account-based territory in which a franchisee holds exclusive rights to pursue a named list of large companies rather than a geographic area.

An ApTask franchisee selects five Fortune 2000 companies anywhere in the country; after securing MSAs with three of them, five more exclusive clients become available. Small and mid-size clients are open to everyone.

An applicant tracking system (ATS) is software that stores candidates and tracks requisitions, submittals, interviews and placements.

ApTask franchisees use JobDiva, the same ATS ApTask’s internal recruiters use.