Franchisee selection and recruitment is one of the most exciting and frustrating experience of any business venture. Franchisees will become the strength and character of the franchise organization. They will help provide leadership, direction, success and inspiration to the franchise organization. Franchisees may also be the most difficult and frustrating challenge that the franchisor ever faces. Franchisees, if not properly selected, may cause serious problems for the franchisor including:

The franchisee may not have the expected level of competence or inner drive that the franchisor anticipated.

The franchisee's financial statement may have been overstated and a lack of operating capital may create serious problems for the franchise.

The franchisee may be lazy and not contain the drive and enthusiasm originally perceived by the franchisor.

The franchisee may have a history of whining and complaining which will be carried over into the franchise operation and is unseen by the franchisor during interviews and investigation.

The franchisee may be disillusioned by the hard work and long hours required and not performed as originally expected.

When these problems occur, the franchisor has some very serious concerns which have to be handled, treated, and rectified. One of the best ways of developing a strong franchisee system is the proper recruitment of potential franchisee.

Recruitment

The proper recruiting of franchising involves several communication and screening processes. The communication efforts are designed initially to develop prospective franchisee leads. The franchisor generally will develop franchisee leads through geographic disbursement from the headquarters organization. For example, if a franchisor is located in Dallas, Texas, they generally will seek expansion of their organization in Texas and surrounding area before expanding into New York or California.

Generating Leads

Advertising and public relations are probably the two most used methods for generating initial leads in franchising. In successful ongoing franchise organizations; however, franchisees generally provide the greatest lead source for prospective franchisees. The new franchisor will generally have to advertise and provide public relations news stories to newspapers and magazines to generate leads.

Advertising

Franchisors have the opportunity of describing their business activities through advertisements in local newspapers, magazines, radios, and other medias. One of the primary print mediums in the United States is the Wall Street Journal or the U.S.A Today newspapers. These newspapers provide sections for the listing of franchise opportunities. The local newspapers also provide opportunities for recruitment advertisements as well as local business magazines and radio spots.

Direct Mail

Many franchisors use direct mail to appeal to prospective franchisees and are able to obtain names from a variety of sources including chambers of commerce, banks, and professional mail list businesses.

Investor Seminars 

Some franchisors go into a community and invite prospective franchisees to attend a seminar on business ownership or investor opportunities. The attendees are invited by the franchisor and have generally been recruited from lists provided by banks, chambers of commerce, brokers, financial institutions, or professional mail list organizations. These programs may often be educational and noncommercial except at the end in which a full disclosure of the franchisor will be made.

Local Referrals

In addition to professional mail lists, local referrals may be obtained by working with professional groups, chambers of commerce, bank executives, newspaper editors, real estate brokers, and other professionals in a community. These people often know of individuals who may be interested in starting their own business and creating a franchise.

Franchisee Referrals

Probably the strongest method of franchise growth is through referrals provided by existing franchisees. Many large franchise organizations only solicit new franchisees from existing franchisees. The existing franchisees are often paid either through free trips, gifts, or money for each franchisee signed. These trips may include such things as all-expense paid trip for two to Hawaii or even monetary sums of $2,000-$5,000.

Recruitment Procedures

Conventional selling techniques are generally not used in selling franchises. The franchise sales person generally never gets to the question "Will you buy a franchise?", rather they take a soft approach (some negative) and ask "Are you eligible to be a franchisee?" In franchising the potential franchisee is required to prove that they are eligible and worthy to be a franchisee.

RULE OF THUMB:  A franchise is never "sold" -- a franchisee is "awarded".

The franchisor's major recruitment technique then, is to learn how to qualify a prospect rather than selling a franchise. The franchisor continues to provide information about the features, benefits, and excitement associated with owning a franchise and being a franchisee. The franchisor, however, must now interact with the prospective franchisee rather than reacting to them. The franchisor's goal is to qualify that person both on their individual characteristics as well as according to their financial worth.

The first contact between the franchisor representative and prospective franchisee is generally to determine the prospective franchisees' interests and objectives, background, and assessment of their physical, mental, and emotional abilities to be a franchisee. The franchisor sales person needs to be an excellent listener rather than a great talker. The sales person is trying to ascertain why and when do you want to get into this franchise business.

The franchisee is meanwhile trying to find out more information about the franchise system and is trying to show the franchisor as to their ability to perform and provide the training and services necessary to insure a successful business operation. The franchisee is trying to indicate to the franchisor relative to their trust, ability to perform, training, services, and quality of personnel.

The franchisee will next complete the application form which is generally divided into two major parts: 

(1) personal and historical franchisee information and 

(2) financial information about the franchisee.

The franchisor will then evaluate the financial ability of the prospective franchisee and, if this is sufficient and strong, the franchisor will then evaluate the characteristics, education, maturity, desire, and abilities of the franchisee. If all systems are go, then the prospective franchisee is generally invited to the headquarter's organization to meet all key individuals in the franchisor's system.

The headquarter's meeting is a final meeting for the franchisor executives to "qualify" the franchisee. This is also a meeting for the franchisee to "qualify" the franchisor executives and the entire franchise system. If everything is okay and they believe that they would enjoy working with each other, then the franchisor generally awards or appoints the franchise to the prospective franchisee.

It is important that records be kept of all prospective franchisees who solicit information from the franchisor or who meet with the franchisor's representatives. Individual names, addresses, phone numbers, and information about the meeting should be recorded. This filing system will allow the franchisor to keep track of all inquiries and to help settle any disputes which may occur in the future.

Helpful Suggestions

It may be helpful for franchisors to realize that many people may call and inquire about the franchise system. 

RULE OF THUMB:  Only 2-4% of all franchise inquiries will result in a new franchisee.

It is useful for a franchisor to develop a qualification form which simply asks individuals when they would like to start to franchise and also if they have sufficient monies to start a new franchise unit. These two basic questions can serve to discourage causal applicants, screen out unqualified applicants, and become a basis for conducting future interviews. Even receptionists at the franchisor's headquarters can be trained to handle inquiries in a pleasant fashion and ask prospective franchisees a few simple questions about their desire and ability to become a franchisee.