There are numerous reasons why franchisee recruitment and processing is so challenging - we explore the most important ones:
- Poor lead management systems and time wasting - Because of the shear number of franchisee applications that need to be sifted through, most of whom are time wasters, the average franchisor does not have the time or expertise to sift through and select the right candidates.
- failure to incorporate a scientifically supported candidate profiling process - Many franchisors go on gut-feel or on selecting what seems at the time to be the best fit. There is no scientific system used.
- Most applicants are not the type of person that would fit with your franchise, or they do not have the necessary skills / training / experience.
- Contractual oversights - a mismatch between the franchisor and franchisee.
- Often insistent prospective franchisees are selected, because they are prepared to make a nuisance of themselves, often to the detriment of worthy candidates who are not as persistent but are better candidates.
- Inadequate entrepreneurial aptitude assessments and/or no personal profile audit. - This is a specialist skill and process which most franchisors and/or funders do not possess. Some franchisors rely on the funders to try and vet the potential franchisor in the assessment of their ability to run a franchise, which could be disastrous.
- Applicants may not be fully committed to a particular brand and may be simultaneously engaging in negotiations with multiple brands without disclosing this to the franchisor(s).
- Franchisors often lack the experience to collect the right information thus knowing the attributes of each applicant - eg: credit record, candidate lifestyle, nature of collateral or source and availability of own cash contributions, police & tax clearances, and whether these may cause an application to be rejected by funders.
- Delayed funding approvals - mainly because of the franchisee's bad credit record, or incomplete documents.
- When an applicant’s balance sheet suggests that procuring funding will not be problematic, declining a franchisee's application can be a very difficult decision for the franchisor. - Third party evaluations and recommendations provide a very useful independent view on key aspects relating to the suitability of a candidate franchisee.
- Difficulty in matching a viable opportunity or location to a suitable prospective candidate. - Franchisors are seldom prepared to explore locations and commit to landlords if there is not a ‘provisionally funded’ franchisee waiting in the wings. The challenge is that franchisees may have difficulty in securing funding.
- Should a funding application be rejected, the time, energy, commitment and patience invested by all parties, especially a landlord in particular, may create discomfort and potential reputational damage to the brand within the property fraternity which could negatively impact on the brand’s potential for securing prime locations in the future.
- Not knowing which advertising platforms to use, taking into account the number and quality of leads generated in relation to cost. Generally a franchisor’s lead management system is an Excel spreadsheet that fails to incorporate information as to the source or cost of the lead, or the reasons for non-conversion and as such does not serve to guide the franchisor very well in allocating future advertising spend. The internet is an extremely powerful lead generator but, because of the ease with which prospective franchisees can instantly enquire about multiple brands, this unquestionably dilutes the number of quality of leads and does not fully divulge the intent of enquirers.
- Franchisee expectation is not fully met, leading to their own frustration in the process of finding a franchise.
- Newly established franchisors are often at loggerheads, especially with some of their first franchisees, as a result of a number of challenges that can be easily avoided.
All these - and more - are common symptoms of an inadequate franchisee recruitment and an often rushed induction process. It is for this reason that some established franchisors are increasingly inclined towards multi-unit franchisee ownership (one franchisee owning a number of franchise sites, because then the franchisor does not have to deal with new franchisee applications with every new opportunity or location.