What Franchisors Want
What Franchisors Want
Franchisors can, in DC Strategy’s experience, be categorised into two broad groups. Firstly, those who build long term businesses by recognising the need for both the franchisor and franchisee to succeed. Secondly, those who seek to make money from selling franchises (transactional franchising) and are more focused on franchisee turnover or greenfield site growth than the value proposition to the consumer.
This is an important point as it goes directly to the issue of business sustainability and, therefore, the business’ ability to attract quality franchisees. At DC Strategy we believe a franchisor gets the franchisees they deserve. Adopt a short term approach to franchising and you’ll inevitably attract a particular type of franchisee. Over the past few years it has become increasingly challenging to locate quality franchisees with the necessary combination of capital, commitment and attitude. Undoubtedly, one factor contributing to this challenge is the increase in the number of franchise systems from which potential franchisees can choose. This increase has meant that supply (of opportunities) has outstripped demand (by potential franchisees). Over-supply always places increased pressure on suppliers to find buyers and this is reflected in franchisors increasingly reporting difficulty in locating quality franchisees. On the other hand, the abundant supply of franchise opportunities also creates difficulty for potential franchisees as they sift through competing offers to find the best quality franchisors.
The abundance of opportunities, ready availability of information via the internet and the ease with which potential franchisees can make multiple enquiries has meant the volume of enquiry is increasing. This creates a new challenge for franchisors - sorting through a much large number of prospective franchisees to locate the best applicants. This article looks at the issue of attracting quality franchisees and how this need drives the continued improvement of the recruitment and screening process.
Buying a Lemon?
When prospective franchisees make initial enquiries, they look for signs that tell them whether the franchisor is a quality operator or not. The astute franchisor will prepare a range of materials that clearly demonstrate the opportunity is genuine, of lasting value, and has been developed for success over the long run. Consequently, franchisors should be prepared to demonstrate or provide background information that speaks directly to the issues of quality and substance. If you can’t provide the following information, you should expect that high quality franchisees will dismiss your opportunity and move onto something more attractive:
- Quality of the franchise system including who was responsible for the program development work
- Robust development - no short cuts have been taken. The business and franchising offer is the result of much forethought and planning
- The franchisor is intimately involved in the recruitment process
- The recruitment process is professionally conducted (especially in the early stages)
- A list of quality franchisees with whom prospective candidates can discuss the opportunity, the recruitment process and the franchisor
- A track record of strong performance
- Excellent references from landlords and other suppliers
- Franchisees are making returns commensurate with their initial capital investment
- How the franchisor is planning for the future; direction and network growth
This is not an exhaustive list of course. There are obviously many more questions a franchisee can ask to help them assess the quality of the franchising offer. In our experience, it is difficult for a franchise system of little substance to continue to grow. Franchisee performance or dissatisfaction usually combines with a lack of development by the franchisor and the network simply stagnates. Frankly, franchisees aren’t stupid, they can pick a lemon a mile off.
Consequently, if franchisors want quality franchisees, they need to do the hard yards to ensure the franchise offer, system and future is robust and of high quality.
Buying a Shinning Star
There is no prescriptive list of attributes that automatically makes a franchise system a star. There are many franchise systems in Australia that have demonstrated a sustained performance over extended periods of time. However, there are some common features of best practice franchise systems.
These are the attributes that franchisors should demonstrate and reinforce:
Consistent execution of the fundamentals focusing on customer proposition
Well defined KPIs, benchmarks and financial reporting across the network
Comprehensive compliance management
Field staff as coaches not auditors
A focus on the value of intellectual property
Real marketing and advertising clout on a consistent basis
Continual innovation at the front and back of the business
Competitive return on invested capital for the individual franchise
Sound governance and two-way communications
Ongoing training strategy and program
If, as a franchisor, you really are a shinning star, be prepared to show prospective franchisees exactly why you shine. Certainly don’t be backward in coming forward!
The Recruitment Process
It may seem obvious, but the recruitment process is the only time a franchisor has to select the type of franchisees it wants. The implication is that the process needs to be both rigorous - so that inappropriate applicants are weeded out quickly, and enticing - so that quality franchisees remain interested and progress through the process. Therefore, the process must be well thought out and be strictly followed.
In quality franchise systems, the franchisor typically encourages prospective franchisees to:
Assess financial performance and projections (if any) closely
Evaluate the commercial structure, strength of the brand and network
In the process, the franchisor:
Identifies whether the candidate is suited to a greenfield or existing operation
Ensures the candidate:
Spends the time to research as much as possible information on the operation, such as
demographics and key factors impacting performance:
Considers the company direction and positioning in the industry
Has the commitment to grow and work in the business and not be a passive investor
Seeks professional advice for any legal documentation
Franchisors should be wary of candidates who:
Don’t want to spend the time researching the opportunity, company and its performance
Don’t ask key questions
Aren’t prepared for recruitment meetings
Don’t complete paperwork correctly
Complete paperwork inaccurately
Quality franchisees ask tough questions. They probe, inquire and interrogate franchisors, their suppliers and franchisees. Poor quality prospects expect everything to be handed to them on a platter.
If you want quality franchisees, be prepared for the tough questions, have answers ready, treat enquiries seriously, meet deadlines, and be prepared for every meeting. Above all else, ensure you are focused on building a sustainable, profitable business for all concerned.
What Franchisors Want
The best franchisors are focused on identifying prospective franchisees with the appropriate combination of capital, commitment, passion and attitude to operate within the network. However, it must be a win-win relationship and there must be sincere interest by franchisors to ensure the franchisee is well suited to the franchise system. There is little value ‘selling’ a franchise to a prospective franchisee to later find the individual is undercapitalised or does not have the interest in the business sector. The recruitment process is typically designed to achieve two primary objectives. Firstly, attract and screen a quality of candidate suitable to the system. Secondly, proactively manage any exposure to litigation risk in a sensible manner.
The reason a franchisor typically gets the franchisee they deserve comes down to how the individuals interact during the recruitment process. If the motivations are insincere and based on a transactional view of franchising, this will be reflected in the franchise system. The reverse of this is also true; a franchisee can learn a significant amount about the opportunity and the future motivations of the business through the recruitment process and the interaction with the owners or management.
A Franchisor Perspective
A perspective from a franchisor will assist franchisees to better understand the motivations and focus during the recruitment process. John DiNatale, a specialist in franchising and distribution at DC Strategy, profiles below the recruitment processes, motivations and thoughts of some leading franchisors:
Whereas recruitment in the more general sense has become quite sophisticated, many franchisors still depend on loosely structured processes and a fair degree of “gut feel”. Whilst commercial instinct shouldn’t be discounted, the selection of appropriate franchisees remains an important element in the success of a franchise network, so what can we learn from those that are doing it well?
Forty Winks
Forty Winks is a specialist retail concept in the bedding and furniture industry. General Manager Roger Wilson expressed his views on what Forty Winks seeks in its franchise owners with the clarity you would expect of someone who has been in the industry for many years.
The investment required to establish a Forty Winks outlet is in the order of $150,000-$300,000. The promotional information specifies that experience in the bedding and furniture industry is preferred but not essential. Some of the other factors considered important are in the table below:
Franchise Name: Forty Winks
Franchisor's Name/Title: Roger Wilson – General Manager
Concept: Retail bedding and furniture
Investment Entry Price: $150,000 – $300,000
Skills Pre-requisites: Experience in the bedding and furniture industry preferred but not essential
Ideal Franchisee:
The ideal franchise owner for Forty Winks tends to be sales oriented, with strong business acumen. Whilst Roger admits this sometimes difficult to assess, the recruitment process includes detailed discussions of the opportunity including a review of the P&L statements and balance sheet of the retail operation. This provides an early indication of whether or not a potential franchise owner is capable of analyzing, picking the trends and seeing opportunities and challenges the business presents.
Forty Winks utilises a variety of recruitment methods including direct enquiry from the website, dailys and other publications and the specialist recruitment websites such as SEEK. By far the most effective method however is word of mouth in the trade. Many franchise owners have been drawn from other parts of the industry and have applied that knowledge and experience effectively within the Forty Winks network.
Ideally, franchise owners are family oriented. This seems to fit well with the culture of our business. Whilst the majority of our franchise owners are male, we find that husband and wife or two partner teams work very well. Commonly, each of the partners brings a different but complimentary skill set to the business. One may be very good at sales and operational matters, whilst the other has a flair for merchandising and promotion for instance.
Top three most important questions asked of franchisees during the interview process
The key areas to assess are:
• The prospective franchise owner’s background and experience - ideally there’s some retail in there.
• The work ethic. Unfortunately some people believe that a franchise is a walk-up start or a guarantee of success. Whilst Forty Winks has enjoyed tremendous success, its usually the result of working hard and smart in a vary competitive environment, and
• Passion. Again, difficult to measure with any accuracy, but generally it will shine through in those people who really love what they do and excited by the opportunity.
What franchisees should not ask!
Anything is fair play in the recruitment process. Forty Winks believes that open communication is a key ingredient in the success of the business and so any successful franchise is fully expected to ask all the questions required to satisfy themselves that this is the right opportunity for them.
Short-term goals (Within the next 6 to 12 months)
Forty Winks has just undergone its first major rebrand in 22 years so its an exciting time as the fresh, new look is launched in the media, on the website and in more than 90 stores across Australia.
PACK & SEND
PACK & SEND provides postal, freight, courier, packaging and removals services. Leo Tortorici is the Marketing Manager and explains that the investment required for establishing a Pack and Send outlet is around $160,000.
Tortorici’s major focus in the franchisee recruitment process is to discover whether prospective franchisees have a passion for the business and demonstrate a positive attitude.
Skills Pre-requisites
There are three main areas of skills that we look for in a PACK & SEND franchisee:
• A positive attitude and passion for the PACK & SEND brand. A prospective franchisee should believe in the brand and when selected’ wear it on his/her shirt with pride.
• Sales Skills and people skills. Natural communicators are usually able to convey the benefits of using our services well and generally make effective franchisees.
• Demonstrated Self Starter. We look for a history of being a self starter. Sometimes that is demonstrated by having a strong local network, growing another business, or building a strong team.
Ideal Franchisee:
Ideal PACK & SEND franchisees combine a positive attitude and the ability to seamlessly overcome those obstacles that are inherent in owning a small business.
An ideal franchisee will often have multi-store ambitions and is willing and eager to learn. They get on with using the marketing tools they have at their disposal and instantly create a connection within their local store communities. They are also good team members and contribute to team development within the PACK & SEND network.
On the opposite side of the coin, some franchisees require more guidance and attention and we have developed a process for this. Through our visits to franchisees and our review process we have a system for supporting franchisees that should reduce any possibility of them becoming a “difficult franchisee”. Ultimately, if the franchisee is not right for the system we also have well-developed exit strategies. PACK & SEND stores sell particularly well, so franchisees not well matched with the system can usually exit and move on to other endeavours.
Top three most important questions asked of franchisees during the interview process
1. Why should we grant you a franchise?
The way this question is answered is important. In the answer to this question we are looking for the candidate to show their passion for the business and their belief in their ability to maximise the returns from the business and build local brand equity. An example answer may be, “Because I believe in the business model, its suits my skills and ambitions and as a franchisee I can add value to the PACK & SEND brand”
2. What does your husband/wife/partner/family think about you buying a PACK & SEND business?
With all business there are ups and downs and we are seeking to understand whether the franchisee has an adequate and positive support network. Someone close to home that they can ‘bounce ideas off’ and speak to about any obstacles that may come up.
3. What attracted you to PACK & SEND?
From the answer to this question we are looking for a franchisee to articulate their passion for the b and the essence of why they are looking to join the group.
What franchisees should not ask!
“If it doesn’t work, what are you as the franchisor going to do about it?” Prospects that are already thinking about the concept not working are not ideal candidates. Prospective franchisees also need to appreciate that in franchising the success of the individual franchise comes down to the franchisee and their ability to run a good business. Prospects that expect franchising to deliver guaranteed success, do not understand franchising.
Short-term goals (Within the next 6 to 12 months)
PACK & SEND’s short term goals are two fold:
• To grow the domestic network in both Metro and regional locations of Australia by 16 stores over the next 12 month period, brining our number of franchises in Australia to close to 100.
• On a global scale our goals are to attract Master License holders in the key international markets of the United Kingdom and Canada and also to find the right franchisee with multi-store ambitions in New Zealand.
Hairhouse Warehouse
National Franchise Manager for Hairhouse Warehouse, Peter Collins provides an insight into what makes a successful franchisee in the hair and beauty products and services arena. Investment in the Hairhouse Warehouse system requires funds of around $400,000 and the following personal and professional qualities:
Skills Pre-requisites:
We look for Applicants who have a combination of the following:
• Small business experience
• Team leadership
• Strong customer focus
• Basic accounts keeping skills
• Good communication skills
• Passion and energy.
Ideal Franchisee:
“Someone who shows a real passion for their business no matter what it is.
We look for “intrapreneur's” - who are entrepreneurs that can work within a system. We don't actively pursue people with hair industry experience as candidates will rely on our systems and support teams more than someone who 'knows the industry' and potentially change our system to match their ideals. We look for someone who has shown long-term commitment previously in regards to time spent in and on their business. It is critical that the Franchisee spends as much time as possible in their store for it to perform to its potential. They are team leaders and this can't be done off site. We want people who can match our passion and drive so they can replicate this atmosphere in the store and amongst their staff."
On the flip-side question of difficult franchisees, Peter offers this: “For me it’s all about communication. Because of the close working relationship we have there shouldn't be an issue that we can't sit down and talk out as business partners. If it gets to the stage where the Franchisee will not communicate and they are potentially harming our brand then we are willing to help them exit the system as soon as possible.”
Top three most important questions asked of franchisees during the interview process
1. Describe the relationship between Franchisee & Franchisor?
2. What will you do if things aren't going to plan?
3. Explain how you will make your store the best in the group?
What franchisees should not ask!
What are the minimum hours I can work in the store?
Short-term goals (Within the next 6 to 12 months)
Our strategy for the new calendar year will be to open 3 stores per month for the 10 months of possible construction. We are also currently working on setting in place our international rollout strategy with all legal processes set in place by the first quarter. This will allow us to further investigate the current international Applicants whilst further reviewing the relevant markets.
Conclusion
As the franchise sector continues to expand and mature in Australia, the challenge for franchisees to find the quality franchisor and vice versa will continue to grow. The sincerity of the motivation offers an insight for the franchisee to the future direction of the business and the consequent rationale for being a part of the network. If any of the issues raised above give an indication the motivations are insincere, short term or not aligned with your expectations, my advice is to walk away. For the franchisors reading this article it is important to continue to think about differentiating your franchise system from the rest of the pack to make your business accessible and attractive to the best franchisees. The competition for the best people will only intensify over the coming years as supply and demand realign.
Adrian McFedries is the Managing Director at DC Strategy.
DC Strategy (formerly Deacons Consulting) is widely recognised as the region’s leading Strategy, Franchising and International consulting group. DCS has developed the networks and brands of many of the region’s most successful businesses. Contact Adrian McFedries at adrian.mcfedries@dcstrategy.com
www.dcstrategy.com
What Franchisors Want - To learn more about this author, visit Adrian McFedries's Website.
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The Australian franchising sector continues to go from strength to strength. Currently, the sector represents $128B in annual turnover (approximately 14% of GDP). For many, franchising is still a dirty word or associated with only with hamburgers and fries. However, the growth of majors networks such as Boost Juice, Gloria Jeans, Healthy Habits, Harvey Norman, ANZ Mortgage Solutions and the recent entry of Escape Travel, to name a few, indicate the continuing diversity and success of franchising as a business model.
Franchisors can, in DC Strategy’s experience, be categorised into two broad groups. Firstly, those who build long term businesses by recognising the need for both the franchisor and franchisee to succeed. Secondly, those who seek to make money from selling franchises (transactional franchising) and are more focused on franchisee turnover or greenfield site growth than the value proposition to the consumer.
This is an important point as it goes directly to the issue of business sustainability and, therefore, the business’ ability to attract quality franchisees. At DC Strategy we believe a franchisor gets the franchisees they deserve. Adopt a short term approach to franchising and you’ll inevitably attract a particular type of franchisee. Over the past few years it has become increasingly challenging to locate quality franchisees with the necessary combination of capital, commitment and attitude. Undoubtedly, one factor contributing to this challenge is the increase in the number of franchise systems from which potential franchisees can choose. This increase has meant that supply (of opportunities) has outstripped demand (by potential franchisees). Over-supply always places increased pressure on suppliers to find buyers and this is reflected in franchisors increasingly reporting difficulty in locating quality franchisees. On the other hand, the abundant supply of franchise opportunities also creates difficulty for potential franchisees as they sift through competing offers to find the best quality franchisors.
The abundance of opportunities, ready availability of information via the internet and the ease with which potential franchisees can make multiple enquiries has meant the volume of enquiry is increasing. This creates a new challenge for franchisors - sorting through a much large number of prospective franchisees to locate the best applicants. This article looks at the issue of attracting quality franchisees and how this need drives the continued improvement of the recruitment and screening process.
Buying a Lemon?
When prospective franchisees make initial enquiries, they look for signs that tell them whether the franchisor is a quality operator or not. The astute franchisor will prepare a range of materials that clearly demonstrate the opportunity is genuine, of lasting value, and has been developed for success over the long run. Consequently, franchisors should be prepared to demonstrate or provide background information that speaks directly to the issues of quality and substance. If you can’t provide the following information, you should expect that high quality franchisees will dismiss your opportunity and move onto something more attractive:
- Quality of the franchise system including who was responsible for the program development work
- Robust development - no short cuts have been taken. The business and franchising offer is the result of much forethought and planning
- The franchisor is intimately involved in the recruitment process
- The recruitment process is professionally conducted (especially in the early stages)
- A list of quality franchisees with whom prospective candidates can discuss the opportunity, the recruitment process and the franchisor
- A track record of strong performance
- Excellent references from landlords and other suppliers
- Franchisees are making returns commensurate with their initial capital investment
- How the franchisor is planning for the future; direction and network growth
This is not an exhaustive list of course. There are obviously many more questions a franchisee can ask to help them assess the quality of the franchising offer. In our experience, it is difficult for a franchise system of little substance to continue to grow. Franchisee performance or dissatisfaction usually combines with a lack of development by the franchisor and the network simply stagnates. Frankly, franchisees aren’t stupid, they can pick a lemon a mile off.
Consequently, if franchisors want quality franchisees, they need to do the hard yards to ensure the franchise offer, system and future is robust and of high quality.
Buying a Shinning Star
There is no prescriptive list of attributes that automatically makes a franchise system a star. There are many franchise systems in Australia that have demonstrated a sustained performance over extended periods of time. However, there are some common features of best practice franchise systems.
These are the attributes that franchisors should demonstrate and reinforce:
Consistent execution of the fundamentals focusing on customer proposition
Well defined KPIs, benchmarks and financial reporting across the network
Comprehensive compliance management
Field staff as coaches not auditors
A focus on the value of intellectual property
Real marketing and advertising clout on a consistent basis
Continual innovation at the front and back of the business
Competitive return on invested capital for the individual franchise
Sound governance and two-way communications
Ongoing training strategy and program
If, as a franchisor, you really are a shinning star, be prepared to show prospective franchisees exactly why you shine. Certainly don’t be backward in coming forward!
The Recruitment Process
It may seem obvious, but the recruitment process is the only time a franchisor has to select the type of franchisees it wants. The implication is that the process needs to be both rigorous - so that inappropriate applicants are weeded out quickly, and enticing - so that quality franchisees remain interested and progress through the process. Therefore, the process must be well thought out and be strictly followed.
In quality franchise systems, the franchisor typically encourages prospective franchisees to:
Assess financial performance and projections (if any) closely
Evaluate the commercial structure, strength of the brand and network
In the process, the franchisor:
Identifies whether the candidate is suited to a greenfield or existing operation
Ensures the candidate:
Spends the time to research as much as possible information on the operation, such as
demographics and key factors impacting performance:
Considers the company direction and positioning in the industry
Has the commitment to grow and work in the business and not be a passive investor
Seeks professional advice for any legal documentation
Franchisors should be wary of candidates who:
Don’t want to spend the time researching the opportunity, company and its performance
Don’t ask key questions
Aren’t prepared for recruitment meetings
Don’t complete paperwork correctly
Complete paperwork inaccurately
Quality franchisees ask tough questions. They probe, inquire and interrogate franchisors, their suppliers and franchisees. Poor quality prospects expect everything to be handed to them on a platter.
If you want quality franchisees, be prepared for the tough questions, have answers ready, treat enquiries seriously, meet deadlines, and be prepared for every meeting. Above all else, ensure you are focused on building a sustainable, profitable business for all concerned.
What Franchisors Want
The best franchisors are focused on identifying prospective franchisees with the appropriate combination of capital, commitment, passion and attitude to operate within the network. However, it must be a win-win relationship and there must be sincere interest by franchisors to ensure the franchisee is well suited to the franchise system. There is little value ‘selling’ a franchise to a prospective franchisee to later find the individual is undercapitalised or does not have the interest in the business sector. The recruitment process is typically designed to achieve two primary objectives. Firstly, attract and screen a quality of candidate suitable to the system. Secondly, proactively manage any exposure to litigation risk in a sensible manner.
The reason a franchisor typically gets the franchisee they deserve comes down to how the individuals interact during the recruitment process. If the motivations are insincere and based on a transactional view of franchising, this will be reflected in the franchise system. The reverse of this is also true; a franchisee can learn a significant amount about the opportunity and the future motivations of the business through the recruitment process and the interaction with the owners or management.
A Franchisor Perspective
A perspective from a franchisor will assist franchisees to better understand the motivations and focus during the recruitment process. John DiNatale, a specialist in franchising and distribution at DC Strategy, profiles below the recruitment processes, motivations and thoughts of some leading franchisors:
Whereas recruitment in the more general sense has become quite sophisticated, many franchisors still depend on loosely structured processes and a fair degree of “gut feel”. Whilst commercial instinct shouldn’t be discounted, the selection of appropriate franchisees remains an important element in the success of a franchise network, so what can we learn from those that are doing it well?
Forty Winks
Forty Winks is a specialist retail concept in the bedding and furniture industry. General Manager Roger Wilson expressed his views on what Forty Winks seeks in its franchise owners with the clarity you would expect of someone who has been in the industry for many years.
The investment required to establish a Forty Winks outlet is in the order of $150,000-$300,000. The promotional information specifies that experience in the bedding and furniture industry is preferred but not essential. Some of the other factors considered important are in the table below:
Franchise Name: Forty Winks
Franchisor's Name/Title: Roger Wilson – General Manager
Concept: Retail bedding and furniture
Investment Entry Price: $150,000 – $300,000
Skills Pre-requisites: Experience in the bedding and furniture industry preferred but not essential
Ideal Franchisee:
The ideal franchise owner for Forty Winks tends to be sales oriented, with strong business acumen. Whilst Roger admits this sometimes difficult to assess, the recruitment process includes detailed discussions of the opportunity including a review of the P&L statements and balance sheet of the retail operation. This provides an early indication of whether or not a potential franchise owner is capable of analyzing, picking the trends and seeing opportunities and challenges the business presents.
Forty Winks utilises a variety of recruitment methods including direct enquiry from the website, dailys and other publications and the specialist recruitment websites such as SEEK. By far the most effective method however is word of mouth in the trade. Many franchise owners have been drawn from other parts of the industry and have applied that knowledge and experience effectively within the Forty Winks network.
Ideally, franchise owners are family oriented. This seems to fit well with the culture of our business. Whilst the majority of our franchise owners are male, we find that husband and wife or two partner teams work very well. Commonly, each of the partners brings a different but complimentary skill set to the business. One may be very good at sales and operational matters, whilst the other has a flair for merchandising and promotion for instance.
Top three most important questions asked of franchisees during the interview process
The key areas to assess are:
• The prospective franchise owner’s background and experience - ideally there’s some retail in there.
• The work ethic. Unfortunately some people believe that a franchise is a walk-up start or a guarantee of success. Whilst Forty Winks has enjoyed tremendous success, its usually the result of working hard and smart in a vary competitive environment, and
• Passion. Again, difficult to measure with any accuracy, but generally it will shine through in those people who really love what they do and excited by the opportunity.
What franchisees should not ask!
Anything is fair play in the recruitment process. Forty Winks believes that open communication is a key ingredient in the success of the business and so any successful franchise is fully expected to ask all the questions required to satisfy themselves that this is the right opportunity for them.
Short-term goals (Within the next 6 to 12 months)
Forty Winks has just undergone its first major rebrand in 22 years so its an exciting time as the fresh, new look is launched in the media, on the website and in more than 90 stores across Australia.
PACK & SEND
PACK & SEND provides postal, freight, courier, packaging and removals services. Leo Tortorici is the Marketing Manager and explains that the investment required for establishing a Pack and Send outlet is around $160,000.
Tortorici’s major focus in the franchisee recruitment process is to discover whether prospective franchisees have a passion for the business and demonstrate a positive attitude.
Skills Pre-requisites
There are three main areas of skills that we look for in a PACK & SEND franchisee:
• A positive attitude and passion for the PACK & SEND brand. A prospective franchisee should believe in the brand and when selected’ wear it on his/her shirt with pride.
• Sales Skills and people skills. Natural communicators are usually able to convey the benefits of using our services well and generally make effective franchisees.
• Demonstrated Self Starter. We look for a history of being a self starter. Sometimes that is demonstrated by having a strong local network, growing another business, or building a strong team.
Ideal Franchisee:
Ideal PACK & SEND franchisees combine a positive attitude and the ability to seamlessly overcome those obstacles that are inherent in owning a small business.
An ideal franchisee will often have multi-store ambitions and is willing and eager to learn. They get on with using the marketing tools they have at their disposal and instantly create a connection within their local store communities. They are also good team members and contribute to team development within the PACK & SEND network.
On the opposite side of the coin, some franchisees require more guidance and attention and we have developed a process for this. Through our visits to franchisees and our review process we have a system for supporting franchisees that should reduce any possibility of them becoming a “difficult franchisee”. Ultimately, if the franchisee is not right for the system we also have well-developed exit strategies. PACK & SEND stores sell particularly well, so franchisees not well matched with the system can usually exit and move on to other endeavours.
Top three most important questions asked of franchisees during the interview process
1. Why should we grant you a franchise?
The way this question is answered is important. In the answer to this question we are looking for the candidate to show their passion for the business and their belief in their ability to maximise the returns from the business and build local brand equity. An example answer may be, “Because I believe in the business model, its suits my skills and ambitions and as a franchisee I can add value to the PACK & SEND brand”
2. What does your husband/wife/partner/family think about you buying a PACK & SEND business?
With all business there are ups and downs and we are seeking to understand whether the franchisee has an adequate and positive support network. Someone close to home that they can ‘bounce ideas off’ and speak to about any obstacles that may come up.
3. What attracted you to PACK & SEND?
From the answer to this question we are looking for a franchisee to articulate their passion for the b and the essence of why they are looking to join the group.
What franchisees should not ask!
“If it doesn’t work, what are you as the franchisor going to do about it?” Prospects that are already thinking about the concept not working are not ideal candidates. Prospective franchisees also need to appreciate that in franchising the success of the individual franchise comes down to the franchisee and their ability to run a good business. Prospects that expect franchising to deliver guaranteed success, do not understand franchising.
Short-term goals (Within the next 6 to 12 months)
PACK & SEND’s short term goals are two fold:
• To grow the domestic network in both Metro and regional locations of Australia by 16 stores over the next 12 month period, brining our number of franchises in Australia to close to 100.
• On a global scale our goals are to attract Master License holders in the key international markets of the United Kingdom and Canada and also to find the right franchisee with multi-store ambitions in New Zealand.
Hairhouse Warehouse
National Franchise Manager for Hairhouse Warehouse, Peter Collins provides an insight into what makes a successful franchisee in the hair and beauty products and services arena. Investment in the Hairhouse Warehouse system requires funds of around $400,000 and the following personal and professional qualities:
Skills Pre-requisites:
We look for Applicants who have a combination of the following:
• Small business experience
• Team leadership
• Strong customer focus
• Basic accounts keeping skills
• Good communication skills
• Passion and energy.
Ideal Franchisee:
“Someone who shows a real passion for their business no matter what it is.
We look for “intrapreneur's” - who are entrepreneurs that can work within a system. We don't actively pursue people with hair industry experience as candidates will rely on our systems and support teams more than someone who 'knows the industry' and potentially change our system to match their ideals. We look for someone who has shown long-term commitment previously in regards to time spent in and on their business. It is critical that the Franchisee spends as much time as possible in their store for it to perform to its potential. They are team leaders and this can't be done off site. We want people who can match our passion and drive so they can replicate this atmosphere in the store and amongst their staff."
On the flip-side question of difficult franchisees, Peter offers this: “For me it’s all about communication. Because of the close working relationship we have there shouldn't be an issue that we can't sit down and talk out as business partners. If it gets to the stage where the Franchisee will not communicate and they are potentially harming our brand then we are willing to help them exit the system as soon as possible.”
Top three most important questions asked of franchisees during the interview process
1. Describe the relationship between Franchisee & Franchisor?
2. What will you do if things aren't going to plan?
3. Explain how you will make your store the best in the group?
What franchisees should not ask!
What are the minimum hours I can work in the store?
Short-term goals (Within the next 6 to 12 months)
Our strategy for the new calendar year will be to open 3 stores per month for the 10 months of possible construction. We are also currently working on setting in place our international rollout strategy with all legal processes set in place by the first quarter. This will allow us to further investigate the current international Applicants whilst further reviewing the relevant markets.
Conclusion
As the franchise sector continues to expand and mature in Australia, the challenge for franchisees to find the quality franchisor and vice versa will continue to grow. The sincerity of the motivation offers an insight for the franchisee to the future direction of the business and the consequent rationale for being a part of the network. If any of the issues raised above give an indication the motivations are insincere, short term or not aligned with your expectations, my advice is to walk away. For the franchisors reading this article it is important to continue to think about differentiating your franchise system from the rest of the pack to make your business accessible and attractive to the best franchisees. The competition for the best people will only intensify over the coming years as supply and demand realign.
Adrian McFedries is the Managing Director at DC Strategy.
DC Strategy (formerly Deacons Consulting) is widely recognised as the region’s leading Strategy, Franchising and International consulting group. DCS has developed the networks and brands of many of the region’s most successful businesses. Contact Adrian McFedries at adrian.mcfedries@dcstrategy.com
www.dcstrategy.com
What Franchisors Want - To learn more about this author, visit Adrian McFedries's Website.
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