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Home > Franchisor > Franchisee Recruitment
Recruiting the right franchisees into your franchise business is essential.
Prior to commencing franchising, a business may be approached by customers or other interested parties seeking franchise rights to open outlets in other locations.
Such unsolicited requests can be very gratifying for a business owner as a form of recognition for the business they have developed, but can lead to poor choices of franchisees and unmanaged growth that may ultimately cause more problems that it solves.
Even in the early stages of franchising, such unsolicited requests can potentially pull a new franchisor off course in a direction it had not otherwise planned to go.
While this can lead to new opportunities, it can equally (and often does) lead to a drain on precious management resources that provides little or no net return to the franchise business.
The average term of a franchise agreement in Australia is currently five years according to our Franchising Australia 2008 research study.
Once a franchisee has been appointed, the franchisor can have an ongoing business relationship with that person for five years or longer, which means making the right selection at the outset is critically important.
Unlike an employment relationship, franchisors rarely apply a three month trial period.
Unlike some other commercial transactions, “try before you apply” or money-back guarantees rarely exist for franchise business sales.
Once a franchisee has bought a franchise business opportunity, both the franchisee and franchisor have entered a business relationship which is often considered to be a commercial marriage.
Entering such a marriage is often easier than leaving it.
The franchisee will have significant capital invested in the franchise business, and will want to see a return on that investment prior to moving on.
The franchisor will want the franchisee to also achieve a return on their investment, but also to operate their franchise business at it’s maximum potential and in compliance with the policies and procedures laid down by the franchisor at all times, as well as pay franchise fees to the franchisor.
The unique nature of the franchisor-franchisee relationship means selecting the right franchisee from the outset is in the best long-term commercial interests of both the franchisor and franchisee.
However for start-up and developing franchisors, franchisee selection criteria and recruitment processes are often not defined, or defined so broadly that unsuitable franchisee candidates will be allowed to join a franchise business.
The franchisor’s resources subsequently required to support unsuitable franchisees can outweigh the advantages to be gained by franchising, and may even contribute to the failure of the franchisor.
For these reasons, selecting the right franchisees at the outset is critical to the long-term success of a franchise business, and the nature of the franchise relationship itself.
Even established franchise business opportunities with business models proven over many years of trading continually refine and improve their franchisee selection criteria to account for changes in the franchisee business model and lessons learned.
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