Important Do’s and Don’ts When Considering A Franchise

by Greg Nathan, Managing Director,
Franchise Relationships Institute

Some Initial Thoughts

If you are in the market for a franchise you will find that franchisors tend to take a variety of approaches to the recruitment process. A company with a popular brand, a profitable business model and happy franchisees will have a steady stream of people wanting to buy a franchise. For this reason they can afford to be choosy. In fact it is largely because they are choosy about who they let into their system that they have developed the reputation that makes them a sought after business.

Other franchise companies with less well-known brands or new concepts will naturally attract fewer enquiries. This does not necessarily mean that their franchise offer is any less valuable. All successful franchise networks started as small, unknown entities. And getting in early can mean less competition and better returns. However there will inevitably be greater risks when dealing with a less well-established franchise concept.

Franchisors that are growing rapidly will be keen to attract good quality franchisees quickly. However they should still be fussy about whom they choose. Be wary if the person you are talking to seems overly desperate or tries to manipulate you through high pressure sales tactics such as “if you don’t sign up now you are going to miss out”. Some franchisors are under-capitalised and fund their expansion through the sale of franchises. This is a dangerous and misguided approach that inevitably leads to a lowering of recruitment standards, which is not in your interests.

Understand the Recruitment Process

Once you have short-listed a franchise system of interest to you, find out the franchisor’s recruitment process. Most reputable franchisors will have a structured process and will be pleased to explain the steps involved.

When you have ascertained that the franchisor has a legitimate recruitment process, and you are comfortable with what you have heard about the company, you need to go through a mutual screening process. This is where you and the franchisor “suss” each other out to see if there is a good fit between your needs and expectations and their requirements for a franchisee. Ideally there should be mutual enthusiasm for each other.

Buying a Franchise is NOT Like Applying for a Job

Treat the franchisee recruitment process similar to if you were choosing a business partner. Buying a franchise is not like applying for a job, nor is it like buying a product.

You may at times feel intimidated by the process, particularly if formal assessment processes are involved. Resists the temptation to exaggerate your strengths or your assets, or to make yourself out to be something you are not. This will backfire on you, guaranteed. You are looking to run a business where you will be totally responsible for what happens. A franchise is not like a job where you can just walk away if you are not achieving the results that you expected.

On the other hand you may at times feel like you have to quickly sign a franchise agreement because of a sense of obligation or because you feel psyched up by your hopes of what the franchise will give you. Remember that this is not like buying a car or a home entertainment system. You can’t take it back if it does not work the way the salesperson said. Be systematic and thorough. As they say in the carpentry business. Measure twice, cut once.

Why Your Franchisor Should Have a Thorough Selection Process

Assuming that the franchise system you are looking at is based on a proven business concept with sound training and support systems, our research suggests that the extent of your future success will still largely be determined by your own hard work and abilities. Your franchisor should be thus assessing your potential strengths and weaknesses to see how they can best help you to succeed, should you proceed with the business.

Consider also recent research conducted by Professor Lorelle Frazer from Griffith University on the causes of franchisee failure. She found that inadequate franchisee selection procedures were a major factor behind the franchisee failures she studied. These franchisors had poor selection procedures, enabling people into the business who were under-prepared, under-capitalised, unsuited temperamentally or who had unrealistic expectations of what running a business was really like.

Elements of a Sound Selection Process

As you work through the recruitment process you will be dealing with people from the franchisor company who should be assessing whether they think you are adequately resourced, suited and prepared to have a go at running your own business.

There are three methods that we recommend they use.

  • A detailed application form. While application forms have traditionally been paper-based it is now common for franchisors to have their application forms completed online using a secure web site. The application form should ask detailed questions about your family situation, background experience, intentions about the business and financial capability.
  • A self-assessment questionnaire. Another source of information that we recommend is a relevant profiling tool to provide insights into your approach to business, life and dealing with other people. This information can then be used to highlights strengths and possible weaknesses in relation to running the business.
  • A structured interview. A structured interview should use pre prepared questions that ask about your past experience and focus on issues relevant to running the business. This protects you and the interviewer from making decisions based on emotion, bias or gut feel. Another method of gaining good information is to talk with people who know you well.

Finally, Some Very Important DO’s and DON’Ts

DO give an accurate estimation of your financial position so the franchisor can help assess whether this is a realistic investment for you.

DO NOT exaggerate how much money you have. Being short of funds is a sure way to go broke in the early stages of the business.

DO give direct, factual and open answers to questions. Be yourself and say it like it is. If you are confused by a question or want to know its relevance ask for clarification. The franchisor will respect your honestly.

DO NOT be vague or skirt issues. The franchisor will be asking specific questions for a reason and will be reading you body language as you respond. How you answer questions is just as important as what you say.

DO complete application forms thoroughly. You will initially be judged on how thoroughly you respond. Remember also the franchisor will be keeping this form on your file if you proceed.

DO NOT leave sections blank, tell lies or make what you think are funny comments. These may be misinterpreted and what you put in the form may come back to haunt you if it is not true.

DO ask how meetings or interviews will be structured. Also if you should bring anyone or anything, and who from the franchisor will be in attendance. Be prepared.

DO NOT assume that you know what a meeting is going to be about or the issues that will be covered. If you are caught by surprise you may come across as clumsy or incompetent.

DO come dressed in neat casual clothes and ensure you are well groomed. Treat the meeting as an informal business meeting. The franchisor will be looking at you as a possible representative of their brand so ensure you fit the image.

DO NOT come dressed like you are on holidays or overly formal. Franchisors may either think you are not taking the business opportunity seriously or that you don’t understand their brand.

DO cooperate with any assessment procedures such as structured interviews, panels, profiling questionnaires or reference checks. These will help the franchisor to determine your strengths and weaknesses so they can more effectively train you if you proceed.

DO NOT try to fake profiling questionnaires, hold back on giving referee information or try to make yourself out to be something you are not. Chances are you will just come across as being a bit strange or even untrustworthy.

DO maintain a professional relationship with the franchisor representative (not too friendly) and tell them to back off if you feel they are pressuring you to make a decision before you have the answers to specific questions or concerns. Allow yourself time to adequately research the company and its existing franchisees.

DO NOT make decisions out of a sense of obligation, fear or excitement from something you have just seen or heard. Remember this is a long-term commitment that you will have to live with long after your emotions have settled down. And the person that sells you the franchise may not be around in the future.

A reputable franchisor, regardless of size, will always be looking for people with the qualities and commitment to implement its systems, look after its customers and help to build its brand. It will consequently treat the recruitment process with the care and consideration that it deserves. I encourage you to do the same.

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