For many years successful franchisors have continued to refine their recruitment processes working with professional recruitment companies or even psychological profilers, spending large amounts of time and capital to increase their chances of gaining successful franchisees.
However many franchisors still battle with the human element “Will the franchisee follow the system?”
To understand how well a potential franchise candidate will do in a franchise system, the franchisor should consider the four essential characteristics of successful franchisees. The franchisor will be wise to develop grading systems to observe the franchise candidate during the interview process on how well they follow the system of qualification. If they can follow the franchisor’s interview system, they can probably follow the franchisor’s system. Here is what most successful franchisors look for in potential single unit and some multi-unit franchise candidates before they will grant the franchise:
1. People skills
A successful franchisee needs good interpersonal skills. Seem obvious? Well think about this carefully.
The franchisee must have the ability and desire to deal well with people. If they treat their employees and customers with trust and respect they will probably treat the franchisor the same. If they treat their employees well the employees will usually treat the customers well.
A franchisee will need to manage employees and work to retain them. They’ll have to build good-will with their customers and gain their loyalty and trust.
In many cases, a franchise owner’s role will be to make local community connections by joining civic organizations and networking with various groups.
Franchisees that do not enjoy a lot of human interaction tend to become stressed. This will often lead to rudeness to employees, customers and eventually to their family, which will tear down the business instead of building it up.
Your skills are closely related to your personality. If you are truly a people person, you have one of the most valuable assets to successful franchise ownership.
2. Follow the system
Many people think being your own boss requires you to be a true entrepreneur, someone who wants to take charge and challenge each step in the process.
That’s simply not true for franchising. If someone has already done the work, tested the procedures and proven that a system works, a clever person will pay attention and follow that system. This person is truly focused on success.
Someone willing to listen and learn from others to avoid making mistakes will avoid many of the pitfalls of business ownership and find success sooner. That is the essence of franchising.
Franchising is one area of business where your specific experience is less important than other factors.
That’s because of the excellent training provided by most franchise companies. In truth, many franchisors prefer franchisees without industry experience because it is easier to train someone in a franchisor’s system than it is to “untrain” a franchisee that has ideas that may conflict with the way a franchise system works.
Again, it is the overall business experience you’ve attained through life that will make you a “star” in a franchisor’s eyes.
If the potential franchisee can’t or won’t follow a system for success, the franchisee should consider starting their own business or buying a non franchised business.
3. Good attitude
Carefully consider the potential franchisee’s attitude. Are they asking a lot of questions about failure or do they ask more questions about the success of the franchise?
They should be seeking to find out what makes the franchise successful rather than dwelling on what makes the franchise a failure.
All franchisors that have many units and that have been around a few years have failures. Most of the time it is due to the failure of the franchisee to follow the system. The franchisee must be self-motivated to take action and follow the successes of others.
Unfortunately, there is just no substitute for hard work, particularly during the first year. A successful franchisee is someone who is willing to do whatever it takes to get the job done. They should have a good work ethic and not be afraid to roll up their sleeves and work side-by-side with their employees.
In the same vein, a good franchisee candidate is someone who will let the franchisor help and support them.
At most franchise companies, there are teams of people who will train you in every aspect of the business. There are people to call for help. There are people who will come to your place of business to show you the way.
The motto of franchising is that you are in business for yourself but not by yourself. It is up to you to take the help and follow the advice. When you are successful, the franchisor is successful.
If you are someone who understands what it takes to be successful and have the motivation to make your business succeed, you have the cornerstone of a winning franchisee personality.
4. Proper capitalisation
The franchisee must have the minimum amount of liquid capital and net worth available to meet the franchisor’s requirements. A good franchisor will not allow the potential franchisee to move forward without the proper initial capital.
The franchisee must have good credit, not perfect, but decent credit. This is essential for qualifying for a loan if necessary. Good credit also has a direct correlation with how successful the franchisee will become.
Multi unit franchisees and master franchisees will need to have the four characteristics listed above and, in addition, a fifth characteristic listed as follows:
5. Extensive business experience
Real life success in the franchised business is essential. Successful franchisees will need experience and a proven track record of success before most franchisors would consider them for either a multi unit franchise or a master franchise.
If the franchisor is willing to offer a new franchisee more than one site before they have even started their first, then chances are the franchisor is only focused on selling more franchises than your success.
Although it may not be immediately evident, a franchise company is under no obligation to grant further franchises to existing franchisees, although many franchisee’s may be given first right of refusal on a future franchise. This however, may be subject to their performance and not to just anyone who can afford it.
Like any good business, a franchise company will want to populate their system with great people.
Since franchising has as its foundation a strong, consistent brand, a franchisor looks for franchisees who will present the brand in the most positive light. In the same manner, they will want to have only those people as franchisees who are able and willing to learn the system and work within the specific parameters of the business.
When researching a franchise company, you will find that they may have as many questions about you as you do about their company. A franchisor is putting their time, money and reputation on the line, so most have developed a “profile” of a successful franchisee which they use to determine if you are “right” for their business.
If you encounter a franchise that doesn’t discriminate when choosing franchisees – look out. They’re just going for volume and hoping some of the businesses succeed. Stay clear of these companies as they will not be vested in helping you achieve your long term goals.
The goal for every franchisor is successful franchisees. As much as you may want to qualify for a franchise opportunity that interests you, remember that the franchisor has the background and experience to know what type of person makes a good franchisee in their system.
While this may sound exclusionary, franchisors have a very good reason to learn what works and then to stick with it. Successful franchise companies want their franchisees to excel. They have refined their systems around a set of standards they have learned franchisees need to thrive.
Starting a business by yourself is taking a big risk. Buying a franchise reduces the risk. In fact, successful franchisees are typically risk averse. They want to minimize their risk as much as possible and so they choose a strong franchise system with a proven track record.
If you love to take big, bold risks, franchising probably isn’t for you. If you are careful and thorough in your franchise research so you know just what you are signing up for, then you have the stuff to triumph as a franchisee.
So, how many of these qualities do you have? Unlike a magazine survey on health concerns, you can’t get most of the answers wrong and still be in reasonable shape. You need all of the above attributes to consider yourself a great candidate for franchise ownership and success.