Many companies are prepared to spend a lot of time drawing up job advertisements and specifications but do not take the time and trouble to do similarly when promoting their franchisee. Many employment contracts have a six month probationary period whereas a franchisee is normally tied to a franchise under a five year contract before an option for review/renewal comes up. When the franchisee represents the franchisor’s brand in a town and the only control is that of the system this is plainly not sensible.
Over the past 20 years an expert in this field of Franchising was advising franchised Brands on key growth strategies. During that time he could see an explosion of franchised business concepts that seemed to pop up one day and disappear the next. What is interesting to note is that in some of these failed business entrepreneurs had often spent years developing their business and had a proven franchise model that actually, made money. Many of these people were often the front runner in an emerging market or they had developed a real edge over their competition with their unique selling proposition clearly defined and distinct.
Unfortunately for the would-be franchisors, they had often invested their life savings to follow their dreams and had planned to become the market leaders in their field. After giving blood, sweat and tears to prefect their franchise model, the result often lead to financial loss. Why?
One of the key factors franchisors get themselves in trouble is because of their inadequate franchisee recruitment processes. Most franchisors are normally entrepreneurial in their thinking and build business accordingly. However, when it comes down to recruitment of franchisees in the business, often the only qualification on which the prospective franchisee was evaluated was that he has the money and also had some business experience in identical products. The latter was almost given no importance.
With this selection criterion in mind, how can one not expect that a business that was trading comes to the verge of bankruptcy? The reason is that partners who were to be supporters in growth never shared the vision with which entrepreneur had set out to develop the brand.
How can you ensure this doesn’t happen to your franchise system?
There are 5 simple principles to help you keep you on track, have fun, and ensure your dreams become reality.
1. Design an ideal franchisee profile that highlights the qualities and characteristics an ideal franchisee must have. Quality franchisees equal a quality franchise.
2. Do not compromise on step 1 irrespective of the money being put on the table.
3. Initiate a step by step franchisee selection process to ensure that unsuitable prospects re weeded out and quality prospective franchisees remain.
4. The selection of a franchisee is not a short term process. Remember that the franchisee will judge you by your business system support and ultimately is ROI. Build a comprehensive 90 day support plan for an incoming franchisee that teaches not only operational issues but goal setting, financial planning, health care issues and important habits that a model franchisee must adhere to. This will certainly assist in getting the franchisee out of the bocks financially and also act as a safe guard to minimizing risk.
5. As a franchisor you must lead by example. But who is feeding you, who is mentoring you? One strategy is to select a mentor with proven track record who can turn your business around.
Having these simple 5 steps in place in your franchise business will ensure smooth operation and best of all franchise sales success.