In theory, recruiting a new franchisee should be a relatively simple endeavour - however the reality is that there are a number of pitfalls to face if you, as a franchisor , don't have the proper systems and checks in place to assist in the recruitment of franchisees for your network. Coleman Greig urges all franchisors to take a thorough and systematic approach to franchisee recruitment, and can assist you if you are facing difficulty with the process.
Firstly, it is important to take the time to decide whether franchising is likely to be the best path for your business to take. There are other options available to you, such as licensing your business, which Coleman Greig Lawyers have written about in this article.
There are a variety of approaches generally taken by franchisors when recruiting a franchisee. Whether a franchisor can afford to be choosy, or whether
it is in the early stages of trying to get their franchise systems off the ground, franchisee recruitment is imperative to the success and longevity
of any franchise system.
The key to success in any recruitment undertaking is to have a structured process in place, which will allow you as a franchisor to establish whether the prospective franchisee is the right fit for your network.
If the franchisor fails to recruit correctly, it may be detrimental to the franchise system, and mistakes can be made simply for the sake of closing the deal. With this in mind, these mistakes can easily be avoided if a few simple measures are put into place before the recruitment process takes place.
Perhaps the most crucial element of any franchise recruitment process is for the franchisor to understand what it is that the prospective franchisee is looking for in joining the franchise system.
In recruiting any franchisee, a franchisor should give consideration to things such as whether:
- The prospective franchisee's decision is being made based on expectations that have been set by the franchisor.
- The prospective franchisee has their own unrealistic expectations of what the franchise will look like?
- The prospective franchisee has the required skill-set behind them to make their franchise successful?
As part of any recruitment process, a franchisor should, at an absolute minimum, have some crosses and checks in place. These may include:
An application form
This should be more than just the franchisee's name and business history. You shouldn't be afraid to ask about their background experience - with regard to both business, and life in general. Similarly, it is not unreasonable to include some questions relating to their family situation and overall financial position.
A profiling tool or questionnaire
There are various profiling tools available that may help franchisors identify who the franchisee that you are recruiting actually is, by providing the franchisor with some insight into how the prospective franchisee might deal with particular situations. The franchisor can in turn pinpoint the prospective franchisee's strengths and weaknesses, and decide whether they are likely to be a good fit for their business.
Meetings or interviews
While first impressions do matter, it's imperative that the franchisor meets with the prospective franchisee throughout the recruitment process, not just in the initial stages. Follow up meetings and/or interviews allow you to get to know and develop a relationship with the prospective franchisee, in addition to providing you with further opportunities to glean more in-depth information about the prospective franchisee that won't always be visible from the first meet and greet.
Meetings with existing franchisees
It goes without saying that the prospective franchisee will more than likely be on their best behaviour in front of you. To break down the formalities, in arranging the prospective franchisee - it has often served Coleman Greig's franchisor clients well to have the prospective franchisee meet with an existing (and highly trusted) franchisee. This will allow the prospective franchisee to ask real questions that they may be too embarrassed to ask you as the franchisor - which is far from a negative thing. Further, it may reveal a different side of the prospective franchisee that you would otherwise not have known about and may wish to avoid.
One of the best ways to gather information on a prospective franchisee, as well as to both effectively and appropriately set their expectations, is to allow them to have a period of work experience within the franchise. Not only will this allow a franchisor to see what the prospective franchisee is like in action, it will also give the franchisee a taste of the business and may help in addressing their expectations from the outset.
Indeed, recruiting for a franchisee can be hard work. The process involves countless meetings, emails that both ask and answer questions - and can often result in the deal not going through for any number of reasons. Regardless of any real or perceived pressure to find a suitable franchisee for your business - the process should never be rushed, as each individual franchisee is a reflection on the business that you have built.
The success of a franchise system is ultimately hinged on the good will of the business. If your franchisees are unqualified, uninterested or unattached to your business, you are essentially polluting your own brand.
Treat each individual appointment as if it could make or break your business, and ensure that each appointment adds overall value to your brand and system.
For more information on the do's and don'ts of signing up a franchisee, or to speak with someone on our Commercial Law team - please don't hesitate to get in touch with:
Racha Abboud , Senior Associate
Phone: +61 2 9895 9283
About the author: Racha Abboud is a Senior Associate on the Coleman Greig commercial law team, with specialist expertise in franchising.