As a franchise consultant, people often ask me “What are the common mistakes that Franchisors make when you franchise your business?” In last month’s Blog, we listed a number of errors that can negatively affect the Franchisor’s company when you franchise your business, including the following:
- Compromising on the site selection process
- Selling too many franchises too quickly when you first franchise your business
- Not requiring the Franchise Owner to complete the initial training program
- Picking the wrong person as a Franchise Owner when you franchise your business
- Compromising the brand’s trade name and logo
Also in last month’s Blog, we discussed the first three mistakes listed above. This blog will concentrate on mistakes numbers 4 and 5 when you franchise your business. Selecting the wrong person as the Franchise Owner is a serious mistake when you franchise your business.
Granting a franchise to someone who merely has the requisite financial resources but not the other qualities needed to operate the franchise can seriously harm your franchise system.
Some of the issues to consider in Franchise Owner selection when you franchise your business include the background of the potential Franchise Owner (age, family status, residence), education (college, post–graduate degrees, technical training), work history for at least the last five years, credit score, bankruptcies (if any), criminal background check for the previous ten years, personal and business references, personality and character, and a detailed review of the candidate’s assets and liabilities.
In order to avoid making a mistake in granting a franchise, we recommend that you prepare two application forms (a short application that doesn’t ask for detailed financial information and a large franchise application that covers a detailed history of the applicant, including financial). We also recommend that the applicant completes a monthly personal budget form. Further, when you franchise your business, do your best to get to know the candidate before making your decision.
Compromising the brand’s name and logo is another mistake when you franchise your business. Selling a franchise to the wrong person can affect the gross revenues not only at his/her franchise but also at other franchises. Operating a franchise in a sub-standard manner can diminish the value of your brand and reputation. Determine if the franchise candidate supports your company image and culture. When you franchise your business, be sure to check out carefully all franchise candidates in order to avoid potentially compromising your company’s brand and logo.
The five mistakes discussed in these two Blogs are intended to help a Franchisor get off to a fast start while avoiding pitfalls that could affect the overall success of your franchise program when you franchise your business.