Opening a franchise takes a heck of a lot of work. Considering that nearly 20 percent of franchise loans end in failure (and that number is expected to grow), you’ll want to make sure you’re strategically selecting partners. All too often, franchisors fail to vet franchisees, who then turn out to be ill-prepared for the hard work and dedication necessary for successfully running the business.
When we started our trampoline park franchise program, we sold a territory to someone who was not 100 percent committed. That was a mistake. The franchisee never looked for a location, and we never opened. It took too long to find a new buyer, and the competition eventually moved in, capturing our market share. It was a hard but important lesson to learn: A poorly vetted franchisee can wreak havoc on your business plans.
In the franchise world, money is made when the location is open and successful. If you sell territories without ensuring that the person you’ve selected to manage each one is a good fit, you may experience a short-term gain, but you’ll be hurting in the long run.
A location failing in Miami, for example, likely won’t affect locations in New York and San Francisco. But when you sell too many franchises to unfit partners, this can create a domino effect of multiple locations closing. Even the most veteran franchisor will feel the pain when that happens. Psychologically, it can feel like the brand is dying – not to mention the bad press that closures generate.
Instead, focus on selling to the right people who will help you operate successfully for years. You want franchisees who will fight alongside you in the good times and the bad.
Investing heavily in a franchisee and the location only to have it quickly fail represents a lot of wasted time, energy, resources, and money. Make your job as franchisor easier by doing the necessary legwork up front. Seek out franchisees who are wholly committed and who understand the work required to make the business a success. Start the vetting process by asking the following four questions.
With every new franchise location, you’re putting your brand in the hands of the franchisee you’ve selected to take the helm. You’ve lovingly and painstakingly built your business from the ground up, so why entrust it to anyone but the best? By properly vetting your franchisee partners, you’ll ensure the upward trajectory of your profits, your reputation, and your long-term success.
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