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The right franchisees will make you; the wrong franchisees will sink you. Maybe one of the most daunting aspects of becoming a franchisor is selecting the franchisees who will grow your brand. The right people do the right thing – pick the right locations, hire and motivate the right teams, hold the highest standards and are always investing in growth. The wrong people do the wrong thing — they pick the wrong location, hire the wrong people, motivate their teams the wrong way, cut corners, ignore standards, etc.
Multi-unit franchisees
The point of owning a franchise is to get wealthy, and you do that by owning multiple units. The most successful franchisees are large, multi-unit franchisees who make you wealthier because they do it right. They pay you more in fees, they refer other franchisees to you, they even have ideas that can improve everyone’s business.
It takes a unique mindset to succeed in franchising — just because someone was successful in a prior life doesn’t mean they will be successful franchisees. Franchising is “sort-of” entrepreneurship — the owners are investing in and taking on the risks of starting a new business, but that business is following someone else’s playbook. They have to believe in and want to keep investing in that playbook.
The Playbook
That playbook is what is making the franchisor wealthy — you only succeed if the franchisees succeed. Franchisees pre-pay you to come into your system, then continue to pay you to stay and prove your brands in more and different markets. As they grow, economies of scale give you more buying power for more profit. The result is a skyrocketing company value that you can sell someday for life-changing money.
In addition to the obvious — honesty, stability, strong finances, etc. — here’s what to look for when you’re interviewing your ideal franchisee:
- Curiosity. Is your interviewee ask