You may have heard the term "Franchise Recruitment" or "Franchise Development", which refers to when the franchisor takes you through their sales process to make sure their business model is a good fit for you and you have the right credentials!
When you're doing your due diligence on a franchise and asking many questions about the business, the Franchiser will have just as many questions about you! Franchises will have a questionnaire for you and hold many meetings to help them determine if you are 'good fit' for the business.
A common exercise with most franchise businesses is going through a qualification process first before you are awarded a franchise and a set of shiny keys, regardless if you have the cash to splash and can afford the franchise fee.
While this may seem harsh, just remember, like any good business, Franchises are looking for positive people who can represent and manage their brand in a positive way, follow the system and work within the business parameters. You are similar to a business partner, and you need to get along with a business partner. The franchisor is putting their reputation on the line, while your running the business, so successful franchises want their franchisees to excel and be profitable too.
These are the common factors a franchisor looks for in with a potential franchisee.
Capital:
Obviously, obvious - this is the critical and main contributing factor with the qualifying process. Many franchisors have a minimum net worth and liquid capital requirement, beyond just affording the franchise fee and establishment costs. There are many other variables that require additional cash on demand, to ensure that you can cover yourself with living and business trading expenses to float you while you are building the business. Whilst you maybe able to obtain franchise financing options it's best not to start out in your business with being heavily in debt. Remember that this also adds to your outgoing costs to be covered too.
Skills:
The training and support will go a long way but having some business acumen is essential. There are many moving parts to each franchise, so understanding the principles of COGs, Wages, Cashflow, and financial management really does help. Other aspects such as managing people, the franchise systems can be learn't as you operate. Even if you've never managed a team of people, or a business before, if you have the right personality trait of enjoying working with people and a can do attitude, this will be fined tuned while running your franchise.
Experience:
Here's a golden nugget! Franchises actually prefer that you have not owned and operated a business before. Why? Because most Franchises provide extensive training prior to you opening your business, so teaching you their way is much easier for them, than having to 'un train' and retrain someone out of all the beliefs and habits that may conflict with the franchise. Franchises are more interested in your overall experience you have developed along your life's journey that will make you favourable as a franchisee!
Personality:
The most underlying common traits successful franchisees have is an ability to get along with and manage people, work hard, be great at problem solving, have a can do attitude and follow the franchises procedures and systems. If you are more of a person who likes to do everything your own way, run rogue with your own ideas, then franchising isn't for you.
Every franchisors goal is to ensure the success and prosperity of every franchisee. Good franchises are vested in helping you achieve your business goals.
If you come across a franchise that doesn't ask the tough questions, offer in depth training - stay clear as these companies will not be serious or supportive with helping you with your business success.
Last updated: October 7, 2019
