We do a lot of franchise lead generation campaigns for our clients and while our goal is to try to always find the best quality candidates to suit each brand, it’s also extremely important that a franchisor carefully screen candidates to make sure they are a good fit. It may be tempting to accept anyone that is willing to invest but a bad franchisee will cost you much more in terms of time and headaches if things go south. Our guest interviewee Angela Coté provides some great tips on what to look for in the article below.

Angela Coté: Franchise Growth Catalyst

Choosing the Right Franchisees

Angela Coté is an international Franchise Growth Catalyst and the CEO of Angela Coté (AC) Inc. The team at AC Inc. specializes in providing resources, advising, and actionable steps to help franchise systems become more profitable and achieve their goals for growth.

AC Inc. uses the signature AC Method (the 5 areas of franchise system performance) to offer solutions to established and emerging franchise systems while keeping the process fun!

Website: www.angelacote.com

What do you need to do to prepare for meeting new franchisee prospects in terms of presenting your franchise opportunity?

Firstly, ensure your foundations and economics of the business are sound so you can clearly and confidently communicate the franchise opportunity. Next, I see so many franchisors overlook this, take the time to incorporate emotion into your presentation. If a franchisee prospect is all about the numbers, they might not be a fit. You want to ensure they align with your core values and the culture of your brand. Assuming they are a fit, bringing a level of emotion into the franchisee recruitment process via the purpose and core values of your company will help them connect with you and strengthen the chances of them becoming a franchisee. The reason that passion for the brand is so important is because being a franchisee is a lot of work! If a prospect is only interested in the money they may lack the motivation and drive to open and run a successful franchise. So make sure that is part of your preparation and interview process!

What do you need to prepare in terms of getting clear on who you want as a franchisee prior to meeting franchisee prospects?

Ensure you are clear on:

  • Your brand mission (WHY your brand exists)
  • Your brand core values
  • The foundational traits of a high performing zee
  • The industry-specific traits of a high performing zee in your system (e.g. if you are a health concept, they need to exhibit an interest in being healthy, or if kids are involved, experience with kids, and maybe a certification is required – and an extra level of patience.)

What general qualities should a franchisor look for in a franchisee?

Over the years, I have identified that top-performing franchisees have 10 common traits, which I call the DNA of a High Performing Franchisee. A few of the top ten include:

  • Passion: The franchisee must have passion for the brand and passion for growing a business so that they continue to wake up happy to start their day and push through tough times.
  • Community Oriented: Successful franchisees are comfortable getting out into their community to build connections and foster relationships with potential customers and referral sources
  • Leadership Traits: Often overlooked is the fact that in most franchise systems, you are leading a team of entry-level employees who require you to hold them accountable while motivating them to perform.
  • Grit: While it is definitely easier to join a franchise as a small business owner than to start your own business, there are still ups and downs and you often need to hustle, especially when it comes to getting and keeping customers.

When meeting with franchisee prospects, what are the questions to ask to find out if the franchisee is a good fit?

  • Ask behavioural questions like “How have you leveraged community connections in the past?” Or, “Tell me about an experience where you had to follow a system.”
  • Use open-ended versus yes/no questions. You want to get them talking so we can learn about them and surface red flags.
  • Don’t be afraid to dig deep! You want to be really thorough and get clear on whether this person would be a good fit for your brand and the franchise system format.
  • A great question to ask is “What drew you to this brand?” which can highlight whether they have a real passion for your mission.
  • At the end of each call, assess where they are at by asking, “If you could decide right now, would you be leaning towards a yes or no to this opportunity?”

What behaviours should franchisors be looking for as they move through the franchisee approval process?

  • Is the franchisee following your process, or are they all over the place and maybe lacking an understanding of the value in following your process?
  • Franchise recruitment specialists should be assigning action steps (or homework) to the franchise candidate at end of each call. Is the candidate completing the homework? Are they eagerly asking for more (a good sign that they are serious and want to move forward quickly)?
  • Are they being thorough in their communication? Organized?
  • An interest in learning as much as possible. Have they done lots of research into your brand? Are they asking questions that concern you?
  • Are you sensing a level of passion for the concept, the idea of owning a business, business growth, and being a part of a franchise system? Passion is a key ingredient for success for anything in life and most certainly a key ingredient for success as a franchisee.
  • Are they being honest or do they seem to be hiding anything from you?

What red flags should franchisors be aware of as they move through the franchise approval process?

Watch for candidates who are obsessed with how much money they can make. It’s good that they care about profitability but you want to see that they are excited about the opportunity.

When candidates are not punctual. It sounds obvious, but not only is that unprofessional, it also demonstrates a lack of interest.

Candidate asking a lot about doing things differently (e.g. do we have to follow the hours? Do we have to wrap the vehicle? Do we have to use this exact decor?) If they are already questioning everything, it’s likely a sign they will be less likely to want to follow your system.

Candidate asking about working in the biz part-time. It’s not a hard “no”, but in general, part-time investment = part-time results. You’ll end up tying up a market, and leaving money on the table. Wouldn’t you prefer to put a fully invested franchisee in place to optimize the market opportunity?

Should franchisors check franchisee applicants’ references and if so, what type of references?

Instead of references, I recommend using a behavioural assessment to better understand the candidate using scientific data. At AC Inc., we believe so strongly in this step that we have partnered with Zorakle Profiles, which uses a combination of 7 assessments designed specifically for franchise candidates.

The results from Zorakle Profiles show you everything from what culture the candidate will thrive in, to how they interact on a team. These results enable you to better understand the candidate and have transparent conversations in the recruitment process around possible areas of concern.

When should the discussion about investment requirements come up? 

You should ensure the candidate is aware of the full investment on the first call. Not necessary to go deep but to ensure they feel they can figure out the financing.

Do a deeper dive on financials once the candidate is a little more vetted and looks like a fit – typically around the third call. The third call should include any other stakeholders, such as their spouse or any potential business partners.

If a prospect does not have the required liquid cash, should a franchisor recommend financial assistance programs that could help prospects get the financing they need?

Absolutely! Be prepared to help the candidate with where they may be able to find financing, including traditional routes like the major financial institutions but also look at alternative financings, such as grants for new businesses, women, minorities…

Getting financing from a traditional financial institution is usually all about the relationship you have with your bank. i.e. if they have a good relationship with a bank, start there. Some of the major financial institutions (and some of the smaller ones) have franchise programs, meaning they understand franchising and like financing a proven concept rather than a startup with no proof.

Don’t forget to suggest they comb their network for a relative or friend who may want to invest with them.

Is it better to have franchisees who want to be hands-on in the business or those that want to hire a manager and team to run the business?

Most business models in franchising do better with a franchisee being in the business because they are the ones who care the most about customers coming back, taking care of the team and culture, maintaining quality standards, etc. Customers and clients also love to see the owner as opposed to supporting a corporate chain or big entity that is far removed from the front line. This doesn’t mean the franchisee can’t hire a manager to be responsible for managing the operations of the business.

In such a situation, the franchisee can oversee the operations yet focus on the very important element of GROWING the business (e.g. building relationships in the community and implementing organic, boots-on-the-ground marketing tactics to drum up business). The exception to the rule is a business-savvy leader who has experience in building and motivating teams. There are investor types who have a competent, fully trained team ready to take on the management and operations of the franchises they invest in.

Any other tips about selecting franchisees?

LISTEN to your intuition. Besides ensuring they have the traits and skills to be a high-performing franchisee, do you connect with and like the candidate? Would this be someone you would like to have at your home for dinner? You are entering into a long-term relationship with this person and there will be tension at times. If you are aligned and connect, it will be much easier to ride the waves of tension when they do arise.

If you are having small doubts about a candidate during the process, be sure to slow things down and talk transparently about the concerns. The last thing the candidate wants is for you to award them a franchise, having them invest their life savings into a business that you anticipated they would not thrive in.

If you are having strong doubts about the candidate, cut them loose early, ensuring they understand it is your responsibility to bring people onto the team who you believe are a fit from the company culture and skills perspective so that they will be happy with their investment.