Franchising: The recruitment process

Franchising is an industry that has come a long way in a short time. Today the franchise business model has been applied across a huge spectrum of businesses; from home-based dog walking, children’s coaching and mobile coffee vans, through to multinational retail businesses and some of the largest global brands.

If, after your research, you have found a franchise (or a few) that you are seriously considering, you then need to make sure that the business is what it says it is. The recruitment process is a valuable stage in gauging this.

Any decent franchisor will have a recruitment process which will allow you to interview the company as much as the company interviews you. It is the process to ensure that both parties fully understand each other and that you are happy with the commitments, systems, support and operations that you are signing up to.

What to look out for
Quality control: As a franchisee you will be operating under a common brand along with other franchisees. You want to ensure that the others are just as conscientious about the protection and growth of the brand as you are; therefore be wary of any franchise that doesn’t seem that worried about how suitable you are for the business. If all they want from their franchisees is a pulse and a cheque, walk away fast and don’t look back!

Company background: Every franchisor needs to start somewhere, but they should be honest about what their experience of franchising is. Ask about length of operation, what difficulties they have faced and how long they ran the business before they franchised it.

The people: You will have a close relationship with the franchisor and their staff – especially in the early days of getting your franchise operational. You want to be sure that you trust them and can work with them – it will make life a lot easier on both of you in the longer-term.

Recruitment rates: How many franchisees have they recruited in the last 12 months and how many are they looking to recruit in the next 12 months? What is important is whether you believe that they have the right level of support for the network, now and in the future.

Failure rates: Every network will get failures at some point – unfortunately franchising is not a guarantee. What is important is why franchisees fail. Is it because the market changed; is it because the support wasn’t there; is it because the system doesn’t work; or is it because the franchisee simply didn’t do the work?

Franchisees
Operating franchisees in the network are one of the best resources in your research. Speak to as many as possible and get a realistic view of what life is like in the network. Don’t accept just one handed to you by the franchisor – what’s to say that they aren’t the only successful franchisee? Ask for a full list and try to speak with a successful, middle and less successful franchisee if possible, to get a gauge of the brand and its franchise offering from every standpoint possible.

Their office: Meet the franchisor at the office, which could be anything from a home office to a large corporate HQ. Either way it will help better inform you about the business and whether it matches with what they have told you to date.

Legal document: You may be asked to sign a non-disclosure document, which is quite common. However, don’t sign it unless you have fully read and understood it. You will also get a Franchise Agreement, which is the contract which binds the franchisor and franchisee. Do not sign this until you have had it checked by a professional franchise solicitor. A UK-wide directory of these is available on the bfa website, www.thebfa.org. There is no franchise-specific legislation in the UK, making the sector a specialist and niche field of legal expertise in the context of general business law. Taking the wrong advice from an unsuitably experienced adviser can prove extremely expensive.

Deposits: You may be asked for a deposit. If they are a bfa member you can get this back if you decide not to sign the Agreement and pull out; however, the franchisor will be able to subtract a certain amount for costs they have incurred. Non-bfa members may take a very different approach.

Timescales: The entire recruitment process in franchising is never just an hour-long meeting in a coffee shop or pub – if it is, you’d better think twice before handing over any money or signing anything.

Depending on the network and date of enquiry the whole process could range from a couple of weeks, through to a year. If the process is lengthy and substantial try not to get frustrated. Instead, see it as a good quality check.

Take your time recruiting
Whether you choose to join a franchise or not, make sure that you take your time in the recruitment process. Be sure about what you want and don’t be afraid to ask difficult questions. Good franchisors will be encouraged if they see that you are taking this seriously and won’t want you to go any further if you don’t know what you are committing to. Franchising provides successful robust opportunities to run your own business with a tried and tested formula, upfront training and ongoing support. It has produced countless success stories, but all of these follow good levels of research and hard work.

About the bfa
Established in 1977, The British Franchise Association (bfa) aims is to promote ethical franchising practice in the UK. It does this with a self-regulatory, standards-based approach to membership. One of the bfa’s main jobs is to help potential franchisees recognise the good, the bad, and the ugly for what they are. Another is to help businesses involved in franchising to secure their own position amongst the good operators.

Franchisor members have to meet the standards set by the Association in order to establish that their franchise represents a fair, ethical and disclosed opportunity. The standards are adapted from the European Franchise Federation (EFF) Code of Ethics, with expansions for the UK market. The bfa continues to further develop its activities as an influential voice in parliament and to the general public.

Further information
To see which businesses have met the membership standards of the bfa, visit www.thebfa.org/members. Visit the bfa website for more resources: www.thebfa.org