Choosing franchisees
Franchisors are regularly forced to decline a potential franchisee’s application even though they meet financial requirements because the franchisee does not meet other criteria. Another challenge is meeting a prospective franchisee with more than adequate financial resources but does not meet the general criteria for the business. A clear set of guidelines of what the franchisor expects from prospective franchisees needs to be prepared. Slower development with good franchisees is better than rapid development with less than satisfactory franchisees. Several methods exist to recruit franchisees.
Advertising in one or more newspaper is a popular method, as is recruiting via a franchise directory or a franchise advice specialist. There have been instances where franchisors use more than one method to broaden their net and maximise the chance of recruiting good quality franchisees. Of course, franchisors may receive an extremely large number of applications from potential franchisees. Shrewd management of the applications is crucial for the franchisor to pick the good applicants from those who are not satisfactory. Normally, it may not be possible for the franchisor to see each and every applicant in person. What usually occurs is that the franchisor will make publicly available an overview of the franchise that anyone can access.
The franchisor will offer more in-depth and detailed information to those individuals who make a formal offer of interest. There have been instances where a fee is requested by the franchisor for each application. Prospective franchisees will naturally want to find out as much as they can about the franchise business. Also, the franchisor will ask the potential applicant many questions to gain a thorough understanding of the applicant’s financial circumstances, state of mind and overall suitability for the position.
The interview and selection process needs to be properly managed to avoid issues should an applicant not meet the franchisor’s guidelines.
The Franchise Association of India is the country peak industry body committed to strengthening and promoting the best practices in franchising. Franchise Association of India members are businesses and service providers united by their common concerns for the wellbeing of the franchise marketplace.
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