Attracting and selecting the right franchisee - the key for success

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As the franchise sector continues to grow at a fast pace, so does the competition as franchisors strive to make their brands more appealing to potential franchisees. This often leaves franchisors with the challenge of attracting and selecting the right franchisees with the right skill set, work ethic, abilities and competencies to back their vision.

"One of the success factors for franchise systems is market penetration, which is often achieved through expansion, by opening new stores with quality standards that match the brand - through franchisees. The wrong fit, however, can seriously set a franchise's growth back many years or cause irreparable damage to its reputation," said Ethel Nyembe, Head of Small Enterprise of Standard Bank, as she advises franchisors on how to attract the right franchisees and further separate the wheat from the chaff:

1. Attend industry events: Not only is this a great way to gain exposure for your brand, you'll also - typically - encounter hundreds of people with the ambition to own and run their own franchises. During key annual industry conferences and trade shows (such as The International Franchise Expo), make a point to send attendees, to sponsor or to exhibit in order to increase brand visibility. Also consider participating in panel discussions;

2. Utilise your website to its optimum: Your company website is where most potential franchisees will make their first impression of your company and may be the deciding factor on whether or not you are the franchisor for them. For this reasons the website needs to be professional, attractive, user-friendly and, most importantly, up to date;

3. Qualifying leads: It is crucial to ensure your franchise opportunities appear in franchise directories so that you are visible to the market. Also meet with business managers and financial advisors in order to explain your franchise, so that they too may advise their clients on the benefits of your franchise;

4. Be transparent: Carefully outline the ins and outs of your franchise. It is important that the potential franchisee understands the processes of your franchise. When a potential franchisee knows what they are getting into from the start, he is likely to be in it for the long haul.

Selecting the right franchisee

1. Determine the necessary skill set and qualifications: Certain skills are needed for different types of franchises, so if the franchisee does not have the skill then he should prove that one of their senior staff has the skills required. You may also decide to train the potential franchisees from scratch, should they not have the necessary skills.

   Tip: Decide beforehand whether or not skills training is part of the services you offer to potential franchisees. Consider the following:

   • How important is prior experience in terms of the franchisee's ability to become profitable in their first year?
     
   • Do you have the necessary resources to train and support new franchisees?
     
   • Do you have an adequate value proposition to sell those who have experience in your industry?

2. Capital: Capital is probably the single biggest factor to consider when choosing a franchisee as inadequate capitalisation is the most common reason for a franchise to fail. Tip: Closely examine the candidate's nett worth and credit score before signing on the dotted line with him.

3. Avoid the die-hard entrepreneur: Though a slight entrepreneurial streak is a desirable trait in any businessman, it has been suggested that franchisors should avoid highly entrepreneurial candidates, as they tend to lack commitment to one business and this is the last thing that any franchisor wants.
   Tip: Potential franchisees that have a record for staying long in one job or industry tend to be the best choice, as this shows dedication and responsibility. They are likely to be in it for the long-term.

According to Nyembe, attracting and selecting franchisees will never be the same for everyone. Human beings are too complicated for that, but if the franchisor has clearly defined processes and messaging, they are likely to be successful recruiters.

"You need to be clear about what you want; don't compromise on your required skills, priority traits and qualifying requirements. There's too much at stake financially and reputation-wise to settle for second best," advised Nyembe.

"Also make sure that you are accessible. Make the process easy for applicants; if they can't find the relevant information or forms, or get hold of the right people, they'll simply go somewhere else," she concluded.