Choosing A Viable Franchise
Companies franchise because it's a great way to build an organization
, expand markets, and leverage growth beyond their capital limitations. Fast growth can be exciting but, too often, adding to the unit roster becomes a matter of quantity rather than quality. Successful franchisors know that being picky about who is allowed to buy a franchise is vitally important to the ultimate health of the company. It's important to find qualified, competent franchisees who can and will promote the brand, add value to the organization, boost the unit success rate, and increase revenues and market penetration.Here are our tips for selecting the best franchise candidates for your organization:
1. Conduct credit and background checks; investigate any red flags.
2. Be thorough when checking references.
3. Require a business or marketing plan to gauge the level of knowledge and expertise.
4. Reject candidates who don't fit the personality profile and list of qualifications you're looking for.
5. Have diverse staff members interview candidates, not just the franchise sales personnel.
6. Field staff should meet and interview candidates before completing the process.
7. Never rush to close a sale.
8. Don't grant more territory or other considerations to close a sale.
9. Choose candidates who are active and able to network in their communities.
10. Look at current affiliations with professional and community service organizations
Many franchisors go into franchising with the wrong idea, and that is to sell as many franchises as possible to anyone and everyone who will buy into your franchised business. However this method is only going to be detrimental to your franchise brand and company integrity. Over time the unsuitable franchisees you have taken on will soon fold or mis manage the company giving your franchised business a trail of bad feeling and failed businesses. The correct way to choosing franchisees is to first ensure that they are suitable to run the business or trainable. If a window cleaner comes along looking to buy an executive coaching franchise then there is a distinct possibility that they just do not have the knowledge and experience to ever make this succeed, no matter how much training you give. This is not to say that people cannot learn new skill bases but you have to really learn about the prospective franchisee and ensure that you are set in your own mind that they will be able to run the franchise as a long term profitable business in the way that you want your brand to follow.
Quite simply: If you choose the right franchisees, making sure they are suitable, then your turnover rate should be fairly low, perhaps around the 15% mark. Franchising is not about the franchise fee but about expanding your brand, hopefully if you are one of the franchise companies that understands this, and many don't, then you will have a long successful franchised business with a reputation to go with it. With so many franchised businesses out there now you have a lot of competition, so ensuring the integrity of your franchisee base and company is an absolute must.
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