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The Franchisee
The single most important factor in whether your franchise fails or prospers is the franchisee. This is the person you’re entrusting with your brand, your trademark, and your reputation; you are relying on him to run the show in your stead, make payments on time, and communicate openly and clearly.
Obviously, you can’t be too careful about choosing a franchisee! But when you’re choosing, there are some important things to keep in mind.
Why People Buy Franchises
People who purchase franchises are usually entrepreneurs looking to start their own businesses. Why, then, don’t they start from scratch? There are many reasons:
· Buying a franchise is much more low-risk than starting your own business.
· Franchises offer a pre-built business. There’s no need to come up with a product, business plan, or anything of the sort.
· Franchises offer a quick return on investments. Whereas an independent business can take years to get going, a franchise capitalises on a recognized name and product.
· Because the franchisor provides training and support, the franchisee does not need to have a lot of business experience. He can learn as he goes.
· Franchises usually mean that most of the legwork is done for you. Marketing, pricing, and location, as well as market research, are already complete. All the franchisee has to do is step in and take over.
As you can see, buying a franchise is an attractive option for those who have never run their own business, want to see a quick profit, or prefer to work within someone else’s structure. The ideal franchise is a partnership: the franchisee benefits in the above ways, and you benefit by expanding your business under his leadership.
Questions You Might Hear
Don’t be offended if your franchisee has a lot of questions: it means he’s done his homework. You want someone who’s enthusiastic and committed, who has excellent managerial skills, and that type of person tends to be very well informed about any venture they step into.
There are many common questions franchisees ask (many of them are actually advised to ask these questions by their lawyers or other professionals). It can help you appear professional and in-control if you’re prepared and have at least a sense of what your answers might be. Some common questions include:
· Does the franchise agreement give exclusive territory rights, or will you sell other franchises in this area?
· What are the clauses for terminating the contract? What is the cost of early termination?
· If I sell your franchise, will I see a share of the profits?
· How many years have you been in business?
· Will you assist in finding a suitable location?
· Will you help with merchandising, management and employee training, advertising, and other day-to-day issues?
· What kind of support will you provide during our relationship?
· When do you expect fees to be paid, and what percentage do you expect in royalties?
The Importance of Selecting the Right Franchisee
Your entire franchise is dependent on selecting the right franchisee. Obviously, you are entering this endeavor in the hopes of success, and an irresponsible franchisee can destroy your entire business. Never fear, though: there are several ways you can make sure you have selected the right person.
Traits to Look For
There are a number of desirable traits you want in someone who will manage your franchise on your behalf. Some of these include:
· Experience
· Dedication
· Responsibility
· Intelligence
· Creativity
· Initiative
There are several ways you can assess these traits in your potential franchisees:
· Observe their mannerisms, eye contact (or lack thereof), and general self-presentation.
· Check references
· Look for people who are dressed well – not necessarily in suits and ties, but not in ripped jeans and stained T-shirts, either.
· Listen to your instincts
· Carefully observe and listen to the other person
· Ask lots of questions!
Asking questions is key when it comes to finding the right franchisees. It’s extremely important to hold a personal interview whenever possible. Here are some questions you can use to format your interview:
· Why did you decide to purchase this franchise?
· Are you satisfied with the terms of the franchise agreement?
· What line of work were you in before buying the franchise?
· What are your thoughts on this industry? Where do you see the market heading?
· What are some of your ideas for promoting and managing this product?
· How do you plan to make your business a success?
· How would you handle:
-a dissatisfied customer
-a rebellious employee
-an unpaid account
-a problem in the training manual or support documents
Remember, the answers to these questions will define your working relationship with your franchisee. Don’t take them lightly, and don’t be afraid to ask for more information, clarification, or details!
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