Mythbusters: Starting a Franchise Is Ultimately the Franchisee's Decision

Running a franchise successfully takes work on both ends, from franchisee and franchisor. It’s a cumulative, combined effort. Starting a franchise is the same, though some fail to recognise the franchisor’s role in the early stages.

What’s the best way to maximise your chances of franchise success? With hard work and the help of a supportive franchisor, of course. Franchising is successful if people work together, coming to agreements, making decisions, and respecting the important role of the other person. In this article, we’ll break down the evenly split responsibilities of starting a franchise, beginning with the franchisor...

The role of the franchisor in franchisee recruitment 

Any good franchisor should be hugely committed to partnering with the right franchisee. It’s a myth that a franchisee can decide to invest alone, without franchisor approval and sign-off, and it’s definitely a myth that any franchisee will be welcomed into a company without thorough vetting. If franchisors commit to an agreement with a franchisee that ends up underperforming in their role, they’ll risk:

• Decreased productivity and efficiency

• Damaged brand reputation (not confined to units connected with the franchisee)

• Financial issues and strain

• Damaged employee morale (among the employees of the franchisee’s unit, and among other franchisees in the network)

The decision to start a franchise should be made by both parties, beginning the ongoing franchisor/franchisee relationship on solid footing. The stronger this central relationship is, the more likely a franchise is to succeed. Luckily, the franchising industry is full of prevalently good relationships between franchisors and franchisees. A third of franchisees say they’re in contact with their franchisors most days, and 79% rate the support they receive from their franchisors as “Excellent” or “Good” [British Franchise Association]. 

Here are three franchisor tips for recruiting people that you can trust, rely on and grow with over the length of a successful business relationship:

• Market your franchise correctly - If you misrepresent what your business is all about, you’ll inevitably attract the wrong kinds of people to it.

• Hire with your values in mind - List your core values, and hire in a way that prioritises these values.

• Prepare (and ask) smart questions - Really get to know potential franchisees and employees as well as you can ahead of signing contracts and agreements.

• Complete the necessary checks and balances - Have you done a credit check? Will they need security clearance? Is every base covered, and are you confident in who you’re hiring?

A happy and successful franchise network is any franchise business’s biggest asset. However recruiting – and then retaining – the right franchisees to build the brand can be an absolute minefield [...] The most invaluable piece of advice that I could give to any emerging franchisor would be that, in terms of franchisee recruitment, the key really is quality over quantity!
— Fiona Simpson, Forbes 

The role of the potential franchisee 

We’ve now established the large role that the franchisor plays in the recruitment process, but of course, the franchisee is the flipside of that coin, and still has a massive part to play in getting to the point at which the agreement is signed and the partnership begins. When you sign that franchise agreement as a franchise, you’re tying yourself to the business for a number of years and committing to meeting certain requirements. 

Before doing any of this, franchisees must be sure they have the drive, the determination, the passion and the money to make it happen. Find the perfect franchise investment opportunity for you by answering each of the following questions:

1. What are your passions and interests?

2. What are your skills and abilities?

3. How much money do you have available to invest?

4. How much of the money do you want to invest?

5. How much time would you like to put in?

6. Which opportunities appeal to you based on the criteria determined above?

When you find the opportunity that seems perfect for you, and you narrow things down to the point where you’ll soon be signing the franchise agreement, do your due diligence, assess the opportunity, and be sure to speak with a legal professional prior to signing anything in order to ensure that the franchise agreement is above board and fair to both parties. Complete your due diligence by researching:

• The franchisor’s level of experience

• The financial viability of the business 

• The franchisor’s memberships (or lack thereof) to professional organisations like the British Franchise Association

• The initial training package

• The ongoing support package

• The level of demand for the franchise’s good/services

• The total cost of investment, from initial fees to ongoing fees

• The competitors to the franchise and the general market space

• The territory rights that you’ll be entitled to

• The specifics of the franchise agreement, like length of term, franchise sale rights and agreement renewal rights

[Choose the] franchise that suits your personality and approach to work – operating a fast food restaurant is a lot different from running a stage school for children. Choosing the wrong franchise can be a costly mistake, so it’s important to take the time to consider the factors that will make your business a success.
— British Business Bank

The process of starting a franchise is a two-way street

Is starting a franchise a decision that rests solely on the franchisee’s shoulders? Absolutely not. But can it be done without the express interest and approval of the franchisee? Also, absolutely not. Equal involvement from both sides is needed to ensure maximum success, happiness and profitability, both at the starting line and ten years in the future. Trust your gut, and get to know your counterpart. Get a feel for personality, culture and values, and determine whether you share the same goals, thoughts and attitudes. 

On the franchisor’s side, run checks, market your opportunity accurately, and don’t sign an agreement with a franchisee you can’t trust to perform. On the franchisee’s side, do your due diligence, find an opportunity that’s right for you on every level, and demonstrate your passion. Don’t sign an agreement with a franchise that you haven’t properly considered or vetted. For more tips and tricks, whether you’re a franchisor or a franchisee, browse Point Franchise’s range of articles.