Darwin’s theory of owner selection
Illustration by Jonathan Hankin
It’s been said before, but it bears repeating—the success of your franchise system depends heavily on the success of your franchisees and the validation they provide.
Without successful franchisees, your franchise program simply cannot flourish.
Selecting the right investors for your franchise program is not unlike Charles Darwin’s theory of evolution by natural selection. It’s a lesson we all learned in grade school science—when organisms are faced with natural adversity (like food scarcity or predatory threats), those that can adapt have the greatest opportunity to be naturally chosen to grow as a species. Those that cannot, face extinction.
Dozens of failed franchise concepts can attest to the consequence of poor selectivity in franchising.
Similar to Darwin’s three key components of natural selection (population levels of a species; variation amongst species; and superior genetic traits) there are three core attributes to seek in a qualified franchise candidate—intelligence, work ethic and capital. I have yet to see the business model that works for the stupid, undercapitalized and lazy.
Thumb through any industry magazine or business publication and chances are you’ll find stories about successful entrepreneurs who lack any type of secondary education. People like Steve Jobs, Richard Branson, Bill Gates and Ray Kroc are some of the most notable and most successful “dropouts,” (Branson didn’t even finish high school), but that path to business success is more common than most realize.
What this tells us about traditional measurements of “intelligence” is they don’t always apply to the world of business. Looks can be deceiving. Rats, pigeons and pigs don’t look pretty, but they are some of the most intelligent animals on Earth. Likewise, franchisee prospects should not be judged based solely on their educational credentials, but instead measured based on their natural instincts and business intelligence. But beyond the balance sheet, how do you judge these basic characteristics?
Some franchisors favor personality testing. And while any microscope that allows you to more closely examine your candidate will add value, one should also be careful that these tools are not used to game the system—both by candidates seeking selection and salespeople seeking insights that will help them sell (not select) franchisees.
Ultimately, though, the key will be in really getting to know the individual. Learn about their motivations by asking what is most important to them and posing alternatives.
Learn about their thought process by asking open-ended and difficult hypotheticals. Learn about their drive by asking them about their greatest accomplishments in life and in business.
And listen closely for clues. If they have started multiple independent businesses during their careers, perhaps they are too entrepreneurial to survive the constraints of your system. If they tell you they are a scratch golfer, perhaps they are spending too much time on the golf course.
Often when recruiting franchisee prospects, franchisors will embrace the theory that existing industry experience isn’t necessary in running a franchise location. Which is true. Some of the time. But rarely is it true that a franchisor can prosper with franchisees who do not have skills.
One of the criteria we look at when determining a company’s franchisability is its teachability. Can someone learn how to run this concept in a reasonable period of time?
Are they then able to translate that information and teach their employees how to operate the business?
In order to find the appropriate fit for your concept, you need to start by identifying the skills and traits that your ideal candidate will bring to your business.
If you’re franchising a food assembly establishment (like a sandwich shop or a yogurt concept), foodservice experience may be less important than a candidate’s ability to manage a high-turnover workforce made up of teens who may prove difficult to motivate.
In some service-based business, deep industry experience may be necessary to provide your franchisee the ability to succeed. In others, by contrast, you may want to look for candidates who have sales skills (as opposed to a background in providing a particular service). Oftentimes, you can teach someone about the product or service—but teaching them to sell may be outside of their capabilities.
Far more than we’d like to admit, business leaders, managers and owners have made poor hiring decisions. And making a bad hire often prevents the growth and evolution of a company. Fortunately, as business owners, we can surgically remove any such cancers. But if we allow franchisees who are not a good cultural fit into our gene pool, it is much more difficult to eradicate.
Far too often franchisors either forget or disregard the personal traits of an individual, assuming the candidate will adapt to your culture. That’s when we often see issues arise.
During discovery calls and discovery days, ask your prospects what their short-term and long-term goals are; identify their motivators for buying a franchise and why they are looking at your franchise in particular; learn about their community involvement and family ties; and most importantly, analyze whether those values align with the internal culture of your organization.
And again, look for the clues on organizational compatibility. Are they willing to follow direction throughout the sales process? Are they constantly questioning why you do things a particular way with a “helpful” suggestion as to how you could improve (or a question on how they could work outside the bounds of the current system)?
The metamorphosis of a candidate into a franchisee does not create a different animal. So most importantly, ask yourself if you like them. Do you get along? Before taking the plunge, remember, in franchising you often mate for life.
Mark Siebert is CEO of franchise consulting firm iFranchise Group. Reach him at 708.957.2300 or firstname.lastname@example.org. His new book is “Franchise Your Business: The Guide to Employing the Greatest Growth Strategy Ever.”