What Franchisors Look For In A Retail Franchisee

Last night, you and the family celebrated your birthday with dinner at your favorite sit-down restaurant, a well-known franchised brand. After the usual great meal -- including a hearty greeting from the host and the owner -- you stopped in at your favorite ice cream emporium, also a franchise. (We won't name names here; you know what you like!)

On the way home, your kids said they wanted you to own a restaurant and ice cream store "just like the ones we ate in tonight!" You laughed it off, but the next morning on the way to work, stuck in traffic, you began to wonder… "Wouldn't it be great to be in charge of my own business, serve great food, and become a place people love to come to for a good time? And think of all the money I could make! Is this something I should do?"

Yup, it all looks great from where you sit -- on the receiving end! What you (and most enthusiastic customers) don't know is what goes on behind the curtain. There's a world of difference (and, some say, a world of hurt) when you're on the other side of the counter in a retail business.

So what do franchisors, who know from experience what characteristics and traits make for a successful retail operator, look for in a franchisee candidate? Yes, enthusiasm for the product and the brand, along with being a "people person" are essential, whether the retail operation is food, a postal shipping store, a hair salon, a convenience store, a sign store, or a pet shop. So before jumping in, ask yourself the following:

  • Are you willing to work 60 to 80 hours a week for the first couple of years (or more)? If not, can you afford to hire a manager and operate at a deficit until your customer base and cash flow amply cover your expenses? And will you ever see your kids again, except for when they want ice cream?

  • Can you "follow the system" faithfully, 100 percent of the time, or are you an independent soul? Every franchisor has a well-honed, specific, detailed system you must follow (or risk breaching the franchise agreement you signed). No, you can't add your own special sauce. No, you can't "improve" on the uniforms. No, you can't set your own hours. If you're innovative and can't manage to color within the lines, it's best you support your brand (and your family life) by remaining a happy customer and keeping your day job.

  • Can you manage, delegate, and trust other people with your nest egg and livelihood? Can you hire and train employees, many of whom will be young people starting out in the job market? How do you retain them, when it's only a part-time job? What happens when your crew of young adults doesn't show up for work on a holiday weekend? Or call in sick 20 minutes into their shift? And how many burgers and fries will they give away to their friends?

  • Can you manage the business itself? Yes, franchisors provide training in point-of-sale systems, bookkeeping, inventory, hiring policies, etc. Are you detail-oriented enough to follow through on all the financial and legal requirements of owning a business? And if you aren't, can you afford to pay all the third parties you'll need to keep your business in compliance?


These are some of the questions you should ask yourself before filling in that online form to own a retail franchise business. Next week we'll take a look at what franchisors want, need, and expect in a successful retail franchisee.

Published: January 28th, 2010

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