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5 Common Mistakes to Avoid When Recruiting Franchisees

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Recruiting good franchisees is crucial to the success of your business. Therefore, there is much to consider when it comes to recruitment. A franchisee uses your franchise’s brand to operate their business, essentially acting as a brand ambassador. Consequently, it would help if you found the right franchisee for your company who can maintain and build your business’s image.

This article will explain five common mistakes franchisors should avoid when recruiting franchisees.

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1. Panic Recruitment 

Time constraints can be one of the most significant factors that determine whether you recruit the right franchisee or not. Indeed, you will need time to research and plan an effective advertising strategy to get in contact with as many potential applicants as possible. Conversely, if you spend too little time advertising the franchise opportunity, you may restrict yourself to a small pool of candidates.

You should also expect significantly fewer candidates for a franchisee position than for a regular job position. After all, your franchise opportunity will require more than a normal managerial position since a franchisee position typically involves financial investment and working capital to get started. For this reason, it is essential not to recruit the first person to apply. Instead, you should give yourself enough time to conduct the recruitment process carefully, prioritising franchisee quality over availability.

2. Screening-Out Potential Candidates Too Early

Not all candidates that apply for a franchisee position will have experience working in the franchise industry. Therefore, even though a candidate may be perfect for your business, it is hard for them to prove this during the initial stages of the recruitment process.

However, the traits of a good franchisee are often qualities that do not come from having qualifications or extensive experience. For instance, this might include traits such as: 

  • professionalism; 
  • drive; and 
  • creative thinking. 

In this sense, you should not ignore potential candidates too early in the process because they lack previous experience in the franchise industry. Instead, it might be a good idea first to source as many relevant applicants as possible. Then, you can decide what traits make the candidate the right person for the job.

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3. Inadequate Selection Process

Most franchisors will develop their franchisee selection and recruitment processes over time, learning from existing franchisees’ feedback and based on past franchisees’ performance. However, the selection process will vary significantly amongst each franchise model. 

While some business owners prefer a rigorous interview process, others might allow potential franchisees to spend time within the core business. In any event, you should tailor the selection process to suit your business needs rather than basing it on the selection criteria of other franchise businesses.

Many business owners also fall into the trap of asking franchise-focused questions during the interview process. While these questions are essential to finding a good fit for the franchise opportunity, you should also ask questions about your applicant.

4. Overlooking Current Franchisees

Many franchisors forget that their current franchisees can be invaluable when recruiting new ones. As a result, some franchisors encourage prospective franchisees to get in contact with existing franchisees. This allows prospective franchisees to understand what it is like to own and run the franchise daily. In this sense, your prospective candidate can paint a more realistic picture of the internal workings of your business.

Your franchisees also know what it takes to run a successful business within your franchise network. Therefore, existing franchisees can help you decide who they think will be a good fit for your business. Additionally, a prospective franchisee may let their guard down around an established franchisee, compared to how they act in front of you and the recruitment team. In this sense, you can also better understand how your prospective franchisee could work within the franchise network.

To fuel growth, some franchisors include specific criteria for high-performing franchisees in their franchise agreements. For example, franchisors might include criteria that provide franchisees with the first option to buy a new franchise at a lower cost if they perform well.

5. Insufficient Capital 

You should note that some costs come with advertising a franchise opportunity and recruiting franchisees. As a franchisor, you need sufficient infrastructure to continue supporting new franchisees as they establish themselves within the franchise network.

In addition, there are considerable fees associated with:

There are several ways you can recoup these initial expenses through franchisee fees, although you will still need some capital to initiate the franchising process. Ultimately, you must establish everything before the first franchisee signs the agreement and pays the franchise fee.

Key Takeaways

Finding the right person to operate a franchise business can be difficult. However, you can avoid hiring the wrong person for your company by:

  • taking time to advertise the franchise opportunity;
  • not screening-out potential applicants too early in the process;
  • putting a sufficient selection process in place;
  • involving your current franchisees in the selection process; and
  • ensuring you have sufficient capital to select and continue to support your franchisee.

If you have questions about recruiting a franchisee, our experienced franchising lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

How do franchises operate?

Franchising requires a franchisor to assign certain rights to a franchisee. These rights allow franchisees to market and distribute their business’ goods or services using the franchisor’s brand.

What is an operations manual?

An operational manual is a guidebook that tells franchisees how to run the business. An operational manual can ensure consistency across franchises and therefore maintain the integrity of your brand.

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