Pepin Valley Consulting The Franchising Specialist
What franchisors are looking for in a franchisee
By Bob Hebert
So you know what you’re looking for in a franchise but do you know what a franchise is looking for in you? This is an important question because franchise companies award franchises, they do not sell them. It is an important distinction and some of the best advice I can give is understand just because you want to buy one does not mean a franchisor will sell you one, you have to be awarded one. So what are franchise companies looking for? In January of 2007 Entrepreneur magazine asked franchisors just that question. The answers may surprise you:
#1 good people skills – Money was not the number one answer as most people suspect. Good people skills is number one and for anyone who has owned a business in the past can attest, the ability to communicate effectively, so as to build a rapport, is critical. Communications is in every facet of a business, from the obvious group of customers through to employees, vendors and the franchisor. Right from the start a franchisor is gauging how well you communicate by your relationship with them. Are you conducting yourself in the same professional manner you’d expect from a future business partner? Do you keep your appointments? Is your tone and answers professional? Are you answering the franchisor questions as you are asking questions of the franchisor? Remember, especially at the beginning of the process, it is a two way street, they need to learn about you as you learn about them. How you communicate with the franchisor is the only way they can gauge how you will communicate with others.
#2 The ability to be coached – In other words can you follow a system. The strength of franchising is the proven business plan. Franchising is one of the greatest systematic transfers of business know-how ever conceived. A well matched franchise will accentuate your strong skill base and teach you the skills you are lacking in. If you are looking for a business in which you can be in business for yourself but not by yourself then a franchise is a viable option. To be independent is a great trait and desirable in a franchisee, but can you also be coached in a proven system? That is what the franchisor wants to know.
#3 Adequate Capital – Here is the money. The best business plan in the world would be unsuccessful if the capital needed to execute the plan were not available when needed. Working capital is needed to pay the bills, advertising costs are needed to drive the business through the door etc. Good franchisors understand this and from previous experience know that for their business model to have the best chance to succeeded franchisees need to have a certain level of liquid cash, a certain net worth and the ability to get a loan or access to enough means for the total investment. Therefore there are minimums amounts set in order to be considered for a franchise.