Recruiting franchisees
In association with Lloyds TSB
Cost of Recruitment
Recruiting franchisees is usually an expensive process. A survey of franchisors attending a UK franchise exhibition showed that you would typically spend £3,000-£10,000 for each franchisee recruited. These costs are arrived at by dividing total marketing expenses (advertising, exhibitions, interviewing and so on) by the number of franchisees appointed. Once again, a higher percentage of long established franchisors reported that their recruitment costs were at the upper end of this scale.
Choosing Franchisees
Recognising likely winners is not a simple job. A number of factors contribute to the problem.
- Most developing businesses considering the franchise route have much in common with the typical small firm. So your management team may be able and committed in their own field, but is unlikely to possess such specialist skills as personnel selection, a key task.
- Some franchisors prefer to rely on instinct when judging which candidates are likely to make good or bad franchisees. They seem to feel that it would reflect badly on their own abilities to admit that personnel selection can be difficult.
- Other franchisors fall into the trap of looking for people who are exactly like themselves with their weaknesses as well as their strengths. They should really be recruiting franchisees who complement their skills.
- Recruitment may be made even more difficult by the fact that often a husband and wife/civil partners will work together as a franchise team. Any stress between them can turn a source of potential strength into a structural weakness.
Franchisee Qualities
These qualities are considered to be essential for a good franchisee:
- able to cope with the isolation of self-employment
- self-discipline
- prepared to work long hours and under pressure
- ready to learn from failure
- set their own high, but realistic, standards
- will not flinch from taking unpopular decisions
- can resist impetuous or emotional behaviour
- takes a balanced view of events, whether good or bad
- can tolerate uncertainty
- will accept advice
- can demonstrate financial viability
- has the support of their spouse or partner
- can show a background of enterprise
- motivated to make profits
- sales ability
- receptive to franchisor’s training
- keen to grow their business
- happy to delegate
- takes the long-term view
- believes that individuals can ‘make things happen’.
Motivation
We carried out research amongst prospective franchisees visiting exhibitions to find out why franchising appeals to them.
This showed that previous experience of running their own business is a key differentiator:
- those who had never been self-employed rated independence most highly
- those who were currently self-employed opted most strongly for the economic security of a proven system (business format franchise)
- those with experience of being self-employed who were currently back in the labour market also tended to prefer a proven business system.
These results show that you can target prospective franchisees from each of these segments more accurately by using appropriate messages.
Getting Enquiries
The British Franchise Association annual survey showed that franchisees took a range of actions prior to acquiring a franchise. The three most popular were: The franchisor’s own website, purchasing the BFA franchisee information pack and attending a franchise exhibition.
Other actions included attending seminars and workshops, looking at more general franchise related websites and investigating a range of franchise options.
A small proportion (1-6 per cent) recommended:
- word of mouth
- customers
- local advertising
- direct mail
- out-placement courses
- employment and business transfer agencies.
