The importance of finding the right franchisee

In the franchising world, there is a lot of emphasis on the franchisor to do a whole list of things correctly, in order for them to stand out and be recognised as being a reputable brand. However, it takes two to tango. In this article, we look at and highlight the important criteria you should hunt out in a person when recruiting for new franchisees.

Franchise agreement

When it comes down to recruiting franchisees for your business, it is imperative that you get one thing straight from the outset. You should be looking for quality and not quantity. By seeking quality, you are only going to boost your business gains and reputation in the right way but also receive the benefits from doing so long-term. Quantity may seem like the better alternative thanks to the quick cash boosts, however the damage it can cause to not only your brand awareness with your customer base, but also to other potential franchisees.

So, what can really happen if you take on the wrong personnel to lead your franchise charge?

Decline in Reputation – It goes without saying that if you have locations around the UK who are all providing sub-par standard of service, then your business is going to suffer. This damage can be fatal (business-wise) and the effects it can cause will be irreversible that all your initial hard work setting up a successful business model will be in vain. It can also affect your franchise reputation to new prospects, which could lead to it being ‘blacklisted’ so to speak in which you will be avoided.

Financial Crisis – It is not just the franchisee that will suffer financially if things go wrong, the franchisor will be out of pocket for a multitude of reasons. The new franchisee would have gone through a lengthy training process which would have costed time and money. Also, the set-up costs of a new franchise can be subsided through funding from the franchisor as well kitting them out with all the essentials. Things can soon fall apart if due diligence has not been taken.

Added Pressures – Running a business is no walk in the park (unless you are a dog walking franchise). Concentrating on your business and being mindful of your franchisees comes part and parcel of being a franchisor, it has its similarities to being a parent and looking after your children in a way. You need check in on them and ensure they feel supported in every way possible, maximising their chances of success for you to benefit. However, if they are failing and are difficult to engage with, then you are only adding unnecessary stresses to your life which can have negative impacts on all aspects of your business and personal life.

If you believe that you may have a franchisor that is not quite cutting the mustard, then you have a few avenues you can explore.

Time Heals Everything – You may be thinking, “why is my franchisee making this so difficult when it is so easy?”. But you need to take a step back and realise that your franchisee is trying to make your business model work. Give them time to work it out and become better. Your business model was not an instant success over night, you made mistakes too. Be supporting and give them everything they need to be successful.

Be a Friend – Being your own boss can be difficult, but knowing you have someone to talk to who has gone down the exact same path as you can make your journey a whole lot easier. Therefore, as a franchisor you need to be prepared to put the time in to guide your franchisee as much as you can. Have your phone, messages and emails open to provide feedback and encouragement for when they need it.

The Final Straw – If you have explored all methods and gone through what you believe is enough trials and tribulations, then you can look to cancel their contract. It is important to note, this is not an easy way out. You are going to have to have solid ground to terminate their contract as a franchisee without the possibility of them seeking legal action for improper conduct. You will need to make sure that you have evidence to highlight which clause in your franchise contract they have broken or if they have made a ‘serious repudiatory breach’.

Now that all the doom and gloom is out of the way, we can show off the great benefits you can receive from seeking the correct, quality franchisee. These people will all have certain traits and attributes that showcase them as ‘quality leads’, these include things such as; willingness to learn, great communication, proven leadership, asks for support, financially aware, hardworking, reliable.

So how do you find these ideal candidates and what do they bring to the table?

Advertise your Franchise Opportunity – Recruiting franchisees is a great position to be in, because it means you are expanding your network and growing. To do this you are going to want to advertise that you are interested in seeking prospects that are seeking a challenge to be their own boss and work for/with you. They will be able to trade under a recognisable and reputable brand whilst having the earning potential of being an independent business.

Benefits of a Franchisee – The benefits of having quality franchisees are huge. Firstly, they are going to be representing you somewhere else in the country and therefore expanding your brand awareness. Most people around the UK would have heard of Costa, but not everyone knows about Tim’s Teas. This boost in brand recognition will help spread the word of your business hopefully bring in new customers.

Another benefit of a franchisee is MSF, or Management Service Fee. This is a percentage of profit or fixed fee that franchisees pay the franchisor each month as a kind of commission for trading under their name and brand. This is a great earner for franchisors if they were to have multiple franchises all successful, as they are all going to be hitting targets and therefore pushing profits up.

Not only will customers soon get word of your business, but people interested in becoming a franchisee will hear and read that your business is rewarding and worthy of interest. The more franchisees of the highest quality you can achieve, the more prospects interested in your franchise, allows you to potentially bring on board more franchisees. It is a win-win scenario.

Depending on how the franchisees succeed, some may even look to further expand their own territory and network which will massively benefit their own business but also yours. This increase in revenue for them will tie back into their MSF and boost your finances.

These have been some key areas to be aware of when recruiting franchisees, both positively and negatively. The negatives can come across severe, and they are if the foundations are not laid correctly. However, if quality franchisees are achieving results and are clearly an asset to your franchise network, then the positives are enormous. Remember, 5 succeeding franchisees are worth more than 10 failing franchise units.