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How do franchisors assess the suitability of franchisees?
It is essential that franchisors are extremely choosey about who they take on as a franchisee. If you are approaching a franchisor and you sense it is adopting an approach that could be likened to ‘does the prospective franchisee have a pulse and a cheque book?’, you need to walk away. As a rule of thumb, for every 100 applicants a franchisor receives only 10 meet its criteria, and of those 10 only one-two will be offered a franchise.As to the criteria, financial considerations are paramount. There really is no point in franchisors talking to anyone that has insufficient finance (or the ability to raise finance) to take the franchise in the first place. The franchisor then needs to assess the franchisee to establish whether they are the sort of person that would ‘bust a gut’ to develop their business.One of the major frustrations franchisors have is that franchisees often treat the franchise as a job - it is much more than that. It may well be that a franchisee simply cannot take holidays for the first few years of the franchise and may have to work weekends. The franchise business will be his and its success will depend on his contribution. At the same time, a franchisor needs to establish that the prospective franchisee will comply with its requirements. In other words, franchisees must be enthusiastic, but must also be prepared to follow instructions and not adopt an ‘I know better’ approach.There may also be specific criteria for franchisors depending on the particular franchise. For instance, franchisees operating a nursery franchise would be expected to like and get on with children.
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