DNA of a Successful Franchisee

Below are 10 traits that make up the DNA of a successful franchisee. These traits are universally required for a franchisee to be successful, regardless of the type of business.

The best way to assess whether a lead has the DNA of a successful franchisee is to think of the process as assessing how good a FIT this candidate is for this concept/system.

In other words, you want your owners to thrive in a franchise environment and to achieve their goals for their life and career  — this isn’t about right and wrong, it is about optimizing the likelihood of success for everyone involved. Once this is established, you can simply go through the bulleted points and questions below to learn more about your franchise candidates.

Financially Prepared

Often overlooked is the fact that, even though a franchise may be a proven concept, it still takes time to build a new location. Franchisees must budget for the working capital they will need while they are building up the business.

• The franchisor needs to be very clear about the amount of working capital the franchisee will need for at least the first 6 months (ideally 12 months)
• The franchisee should have a secondary income in the household (typically a spouse) and/or savings they can access if necessary
• The franchisee application should cover the financial picture, but be sure to also discuss this topic at length prior to signing an agreement
• Help the franchisee understand that you are looking out for them (i.e. you want them to be successful and not get roadblocked by lack of capital to pay for things like inventory, labor, marketing, etc.)

Systems-Oriented

People who gravitate towards following systems and processes are naturally going to thrive more in a franchise than those who prefer to be creative and frequently try something new. For example, veterans often have the DNA of a successful franchisee because they understand the necessity and value of following a system.

• Take a good look at their resume of experience and where they seemed to excel. Specifically, look to see if they excelled in an environment where they needed to follow systems such as a government job, middle management of a large corporation, or in an established retail or service environment (ex. Walmart or PetValue). Ask about the expectations in these roles and look for clues as to whether they thrived amongst systems or felt squeezed.
• Ask for examples in their past where they had to follow a system
• Dig as deep as possible to uncover whether it worked for them or made them uncomfortable
• Try to prompt them to share opportunities where they had to be creative and entrepreneurial – look for signs of whether they get excited to always find new ways to do things (this could be a red flag)
• Help them understand that this is not about what is right or wrong, it is about ensuring they will be happy and able to thrive and be profitable in a very system-oriented environment
• Throughout the recruitment process, if the candidate regularly asks questions about whether they can do things a different way, this is often a red flag (e.g. do we have to follow the company hours, do we have to use this décor, do we have to put the wrap on the car, purchase supplies from you, etc.)

Touch of Entrepreneurialism

By entrepreneurialism, we are talking about having a propensity to see where there can be improvements to make things more efficient and ultimately more profitable.

This kind of entrepreneurialism we’re looking for in the DNA of a successful franchisee can be closely tied to problem solving. People on the frontline often have the best ideas (e.g. the idea of the Big Mac came from a franchisee). 

We just need to make sure the franchisees understand that most modifications to the operational system need to be approved by the franchisor.

• Again, take a good look at their resume of experience and where they seemed to excel
• Give an example of a creative problem they may need to solve in your business and listen to how they would solve it
• Ask for an example(s) of when they had to follow a system but had some leeway for how to implement

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Brand Loyalty and Passion

If a franchisee doesn’t absolutely love the brand, it will make it hard for them to build and grow the business. Be leery of a franchisee who is shopping around for franchises primarily based on the potential ROI.

It will be a lot more challenging to attract customers/clients and to inspire employees if a franchisee is not excited and passionate about what they are offering.

• Ask what excites them about the brand and look for lukewarm answers
• Ask why the brand attracted them in the first place
• Get examples of their engagement with the brand (Are they currently a customer/client? When was their first interaction with the brand and why? Who do they see as the ideal customer?)

Family Support

Starting a new business, even one with proven systems, is a big deal for most franchisees; the opportunity can place a lot of weight on the franchisee’s shoulders. The long days, financial burden, and pressure to perform can all contribute to the stresses franchisees undergo. 

The most successful franchisees are those who have family members supporting them through the ups and downs of being a business owner. 

Family support can show up as anything from emotional support and pep talks, to financial security, to having family members who will jump in and do whatever it takes to keep the business stable and/or get the business growing.

• One of the best ways to assess whether the franchisee has family support is to simply ask them whether there is anyone else in the family who will be involved in the business. From there you can ask how involved that person will be and whether they are supportive at this point in the recruitment process.
• Note: If there is a family member who has strong influence with your candidate, be sure to include this person as early as possible in your franchise recruitment process, because there’s no point in getting all the way through to discovery day only to find out there is a family member who is not on board, and who may halt the agreement from moving forward.

Leadership Skills

It is important to recruit franchisees who have the ability to lead and inspire their frontline team. Franchisors will often assume that someone who thinks they can run a franchise will have the ability to attract, maintain, and motivate employees.

However, franchisees are often choosing to join a franchise because they are looking for support on things like leadership and managing entry-level staff.

• Find out what experience the candidate has as a leader in past career roles (managing people, running events, handling a department, past entrepreneurial experiences – but the latter may also be a red flag – dig deep into why they want to be in a franchise if they have an entrepreneurial spirit)
• Ask them what they think the ideal traits of a franchisee of your brand would be, as well as traits of an employee they would be looking for.
• Ask what they do in their spare time. Keep the question open-ended but some good signs include:
  • Community involvement (sitting on boards, attending networking events, etc.)
  • Volunteering on the parent advisory council at their kids’ school
  • Coaching a sports team
  • Starting something from scratch

Collaborative/Team-Oriented

Just like on a sports team, franchisees often need to accept decisions that are for the greater good of the overall company. 

Sometimes, franchisees will need to exercise patience. Things move much slower in a franchise system due to decisions affecting multiple business operators, all of whom have invested their life savings into the brand (i.e. their teammates). 

There is so much value in the collaborative opportunities in a franchise, as you have multiple business owners operating the same business. If they are not going to play by the team rules and they are not going to leverage the network of franchisees, they might as well go start their own small business.

• Find out if the candidate is more of an independent or collaborative decision maker
• “When you need to make a big decision, do you have a strong instinct or do you prefer to collaborate to figure out the best answer?”
• Ask them what it means to them to be on a team
• Ask what they like about being on teams
• Get examples of their experience in being on a team:
  • Past work experiences
  • Sports
  • Sorority/Fraternity
  • Extracurricular activities

Sales Oriented

This is a key trait in the DNA of a successful franchisee! Contrary to popular belief, franchising is not turnkey. The problem with calling a franchise “turnkey” is that it can set up a false expectation that the business is going to run and sales will come pouring in without much effort from the franchisee. In most franchises, the franchisee plays a key part in generating sales for his or her business. 

Franchisees may need to do anything from attending networking events in their local community to hosting a charity event in the hopes of generating business.

The most successful franchisees are the ones who take initiative to build business as opposed to expecting customers/clients to come flocking to them because of a few social media posts done by the franchisor with the group ad fund.

• Look for the traits of natural sales people:
  • Extroverted
  • Social
  • Dynamic
  • Energetic
  • Confident
  • Hard-working
  • Active listening skills
• Find out what experience they have had with generating sales or sales-type initiatives
• Ask what they envision doing to generate business both initially and on an ongoing basis
• Watch for any insecurity/shyness
• Note: there are other less obvious traits that can indicate a good salesperson, such as:
  • Quiet confidence
  • Good self-esteem
  • Genuine
  • Authentic

Community Oriented

Franchisees that are comfortable getting out into their community do a better job of maximizing their opportunity. This can be anything from calling in favours with media people they are connected with, to creating strategic partnerships with fellow local business owners who want to help each other get business.

• Ask what they do in their spare time – find out if they are involved in any groups or clubs
• Who do they know in their community that they may be able to leverage? (other business owners, media people, politicians, etc.)

GRIT!

At the end of the day, even in a franchise, a business owner will typically need to work long hours to get their business up and running, and to maintain a decent growth rate. This ties back to the myth-busting statement “Contrary to popular belief, franchising is not turnkey.” 

Having to work hard is commonly overlooked because people think that the proven systems are going to mean everything just flows. Whether a franchise or an independent small business, there will always be challenging times that require a ‘dig-in’ approach. Franchisees that don’t have grit tend to be the biggest complainers and drainers of resources on a franchise system.

• Find out what their 5-year vision would be if they become a franchisee (and assess whether it seems realistic)
• Find out how many hours they envision working weekly (initially and then longer term)
• Get examples of times or work experiences where the candidate had to put in above average effort, how it went and then read their reaction (e.g. “It was BRUTAL” or “I get bored when I’m not working hard”)
• Ensure they talk to other franchisees about the amount of work required to be successful

Do you have more questions about franchising? We discuss this and more in our free virtual AC Roundtables where franchisors gather on zoom to collaborate and problem-solve together.

The AC Roundtables are a free resource we offer franchisors seeking collaboration and peer-to-peer learning. We’ve been running these virtual roundtables since 2020 and we always love to have new franchisors join us!

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