How should you look for the right franchise system?
What selection criteria are there in franchising?
The criteria which franchisors use to select their partners are as varied as the different business areas on offer. Some criteria are based on the special aspects of the business, others on the company philosophy. The criteria for selecting franchisees are above all based on:
The franchisee’s personal characteristics influence in many ways the atmosphere within his business and the contact of his employees to the customers. The worldwide success of the franchising philosophy can be put down to the specific cooperation between complementary strengths. As a result the personal characters of the people involved play a decisive role in the operational performance of the overall system as well as its success. In connection with this people are preferred who are able to make contacts, have a capacity for enthusiasm, are open, willing to learn, have their own initiative, are flexible, take pleasure in making decisions, who are strong leaders and possess staying power. The attitude of the potential franchisee’s family/partner is also of interest as franchisees need the understanding and sometimes even the active support of his family members, especially during the period when he is building up his business.
The professional requirements depend for the most part on the business activities of the franchisor. In distribution franchising commercial knowledge or experience is mostly expected whilst in service franchising craftsmanship and other practical abilities are of primary importance. Franchising also offers those people without management experience the opportunity of building up their own business. Special branch knowledge is not necessary if the franchisor offers an extensive training programme to train people entering a new branch. It is rare that specific qualifications in the form of a master craftsman’s diploma or degree are required.
New franchisees must have sufficient personal capital available to be able to finance the fixed and current assets as well as to cover the launching costs and entry fee. The personal capital share should as a rule not be less than a third of the total investment sum. There should be no grounds for a loan to cover the remaining balance to be refused. The creditworthiness of potential franchisees can be checked by franchisors.