Getting Approved For A Franchise: The Essential Guide
08 Oct 2016
Have you seen something like this: “Disclaimer: This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only.”
That is the legal jargon for “Even though we are providing you information on our opportunity we are not offering you a franchise yet and may not once we get to know you better, even if you want to buy one from us”, you will find it on virtually all franchise websites and much of their promotional material.
A proper franchise investigation is a mutual investigation, not a sales process.
If you are investigating a reputable franchise company, you may have figured out that they probably don’t approve everyone they talk to for their opportunity. Time and time again we see very capable franchise brands that have identified what they want to see in a candidate to feel that they might be successful.
Prospective franchise owners, especially first time candidates, often feel that the process of investigating franchises is a lot like buying a car where the salesman will sell a car to anyone with a checkbook. Franchise companies have very different considerations than a car dealer has.
A mismatched franchisee may be more likely to fail. Savvy franchise companies know that there is not enough benefit in the franchise fee alone to make it worth selling to someone that they don’t genuinely feel is capable of succeeding. Their goal is to find the right match and enjoy royalty revenues from that relationship for years to come in exchange for the training, support and other resources to help that franchisee build their own empire. The quality of the franchise opportunity will be judged on failure rate by future candidates.
A franchisee that won’t follow the systems and guidance of the franchisor may also damage the brand or the unity between the franchisees and franchisor. The strength of the system benefits greatly by everybody winning and working towards the same goals. While protecting the brand both sides have to focus on delivering high levels of service and a quality product. If consumers have a poor experience it can impact sales and reputation of the brand locally, regionally and possibly even Nationally.
While the franchisor and what they deliver for their franchisees is an important piece of the equation, their performance in their space is established and often relatively easy to evaluate. The unknown in the equation is often the prospective franchisee.
Let me say that again, the unknown in the equation is often the prospective franchisee.
Yes, that is contrary to how most people go into the process of finding their perfect franchise. They think the franchise is the unknown, though it may be to them. In reality the candidate is often the harder piece of the equation to evaluate and define.
While the prospective franchisee has a work history the franchisor has not witnessed them on the job. Their data points will be more limited in evaluating the candidate than the candidate’s will in evaluating them. The franchise company will have to use other means to try to determine if the candidate could fit into their system and are they likely to do the work necessary to build their business.
So, if you are a candidate for a franchise brand what do you need to be doing to make sure that the franchisor has the information they need to properly evaluate you as a potential franchisee?
First, keep in mind that all of your interactions with their team are typically noted in your file with the impressions that you leave on them. I have had candidates tell me that they treat each contact with a franchisor as if it was an interview for a job they really wanted to get. Making the right impression on the franchisor keeps the candidate in the position to either accept an offer to become a franchisee or turn it down. It positions you as the final decision maker.
Second, timeliness matters. When you set appointments be on time. Everyone understands that emergencies come up, but again remember that this is different than buying a car so go the extra mile to keep those obligations if at all possible. You can evaluate the franchisor on the same standard and expect that they will be on time for your appointment at well.
Follow the process, each franchisor has a series of steps that they go through with candidates to educate them on the franchise. Along the way at each step they will be learning certain things about you. Sometimes those bits of information they are collecting are obvious like an application form, other times it is learning how you handle new information or carry on business conversations. I know one franchisor that has candidates pitch themselves for the franchisee role at DDay since their owner role is heavy on sales skills.
Most franchisors feel that a candidate’s ability to follow the investigation process and let the franchisor take the lead is a suggestion of how they will follow the system they are buying.
You should also keep in mind that when you do validation calls it is almost a certainty that the franchisee will call and give the franchisor feedback on their conversation with you. While they cannot be compensated, franchisees often take very seriously their role in helping build a strong brand. So, making a good impression flows through to those validation calls as well.
For Discovery Day, dress and present yourself professionally as a team player. Ask questions and engage the franchisor team. Keep in mind that DDay is the franchisors last impression of you before they decide if they should offer you a franchise.
Getting approved for a franchise takes some attention to detail and a good understanding of what the franchisor is looking for. We guide our candidates through each step of this process but you can do it too.
Are your franchise dreams just a few phone calls away?
They are. Let’s chat.
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.
This article first appeared in FranchisingUSA Magazine, September 2016