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Recruiting Quality Franchisees

By Melissa Eva

At Franchising Plus, we believe franchisee selection is one of the most important factors of developing a sustainable franchise network. The best piece of advice to have the correct mind-set during this process is to AWARD rather than SELL franchises. Franchisors should always look to recruit owner operators and not investors.At Franchising Plus, we believe franchisee selection is one of the most important factors of developing a sustainable franchise network. The best piece of advice to have the correct mind-set during this process is to AWARD rather than SELL franchises. Franchisors should always look to recruit owner operators and not investors.

 

Here are some of the common problems Franchisors face when looking for Franchisees and we have proposed some solutions:

Problem Area

Proposed Solution

Finding Franchisees who are the right fit for their business

  • Ensure you understand your ideal franchisee profile
  • Use Psychometric testing
  • Advertise in a targeted way to reach your ideal audience

Finding Franchisees who have sufficient capital

  • Build relationships with financial institutions early on
  • Think of innovative ideas to develop a less capital intensive franchise model
  • Investigate innovative funding such as Business Partners and crowdfunding, where traditional commercial funding is not an option
  • Consider joint venture (partnering) with Franchisees to reduce capital requirements
  • Incentivise existing, good Franchisees to open more outlets (multi-unit franchising)

Franchisors want to grow too fast

  • Franchisors should understand that their primary income is derived from ongoing royalties and not once-off upfront franchise fees
  • Franchisors should grow support resources and infrastructure in relation to how quickly they sign new Franchisees
  • Award rather than sell franchises
  • Only franchises in areas, where you yourself would invest
  • Open in areas where you can support in line with your country development plan
  • Develop in clusters

When are you Ready to recruit Franchisees?

Firstly, successful businesses will always attract a lot of attention by people who want to use your successful concept by franchising. This doesn’t mean you are ready to franchise, so when are you ready to franchise your business?

  1. You must have operated and proven the business model to be successful and profitable before you can think about replicating it, you cannot franchise an idea
  2. You have to determine if your business is in fact franchisable. Refer to the Is my business franchisable? article 
  3. You have to ensure you have the expansion plan and franchise documentation developed. Refer to Creating a franchise business in South Africa article 

The Recruitment Process:

1. Marketing the Franchise

Now that you are a Franchisor, the product you are trying to sell is a business opportunity.    

  • whichfranchise logoYou definitely need to advertise the franchise opportunity and information in an online environment such as your own company website (franchise page) and www.whichfranchise.co.za. 
  • You should look at targeting your marketing to relevant industry associations and industry media and newsletters eg: Engineering News for construction/ DIY franchises
  • You should also consider registering as a member of FASA and exhibit at business expos, where appropriate.  
  • Most importantly you should ensure you deliver on your promises and help your existing franchisees prosper, as a happy, successful Franchisee will be your best word of mouth advertising

2. Handling of leads

Handling of leads

It is important that you filter leads to ensure you do no spend time on time-wasters. You will receive a lot of interest, but the majority of applicants will likely not meet your requirements. Therefore it is important to send leads a detailed application form to complete. This should include detail such as: contact details, work experience and references, the area in which they want to operate, details of the funds they have available to invest and proof thereof, consent to conduct credit checks and a confidentiality clause.Once this is received back from the applicant you should review this thoroughly to ensure the applicant meets your criteria.

You can then proceed to conducting a credit check, this is an important step as you as the Franchisor will effectively become a creditor to the Franchisee and your suppliers will be creditors. It is important that a Franchisee has a good credit record as this may be a good indicator as to their future behaviour. At this stage, you could provide the Franchisee with your Disclosure Document as well as an UNSIGNED Franchise Agreement.

3. Psychometric Testing

psychometric testing

We believe it is vital to conduct a psychometric test on prospective Franchisees against an ideal Franchisee profile, because not everybody has the characteristics to be a happy Franchisee. People that are strong in characteristics such as strategic thinking and innovation might feel very stifled in the franchise environment where they need to follow rules and guidelines. For further information on our psychometric test, “the E-TEST” please see the FAQ article 

It is important to understand that the psychometric test should not be used as a decision-making tool, but should rather be used to gauge areas of strength and weakness, which can be further probed and discussed at the interview phase.

4. Interview

Interview

Once you have review the psychometric test, you can then proceed to interviewing the applicant. It is good practice to research and prepare for the interview (eg: calling references listed in application form). Here you can discuss areas of concern with the Franchisee and it gives the Franchisee the opportunity to ask you questions. See Interviewing for Success article  

5. Formalities

Application forms

If you are happy with the Franchisee following the interview, you can then proceed to sign the Franchise Agreement, ensuring you have complied with the Disclosure Document waiting periods prescribed by the Consumer Protection Act (“CPA). After signing the Franchise Agreement, be mindful that there is a further cooling off period prescribed by the CPA, so you should ensure you do not incur any costs during this time as all deposits paid by the Franchisee will be fully refundable, if the Franchisee cancels the Franchise Agreement during this cooling off period. Once this period has lapsed, you can then proceed to your standard pre-opening and launch procedures with your new Franchisee.

We do offer the following assistance to Franchisors with the recruitment process:

  • Franchise Planning Process
  • Franchise Package Development
  • Advice on the recruitment process
  • Recruitment Services

Contact us for further information