Every year thousands of people make the decision to join a franchise network.

For many this will be the biggest emotional and financial decision of their lives, next to getting married.

People are willing to take these risks because franchising offers enormous potential benefits. It is a perfect way for franchisors and franchisees to share their knowledge and resources and gain a competitive edge.

The hidden costs of poor franchisee recruitment

Franchisors are literally putting their brands in the hands of their new franchisees. Consider that an ugly customer service incident can tarnish the reputation of a whole region, as can a renegade franchisee who decides to create their own operating standards.

And while no-one likes to talk about failure, a significant number of these new franchisees are going to perform poorly. Some are even going to fail. The financial and emotional costs of poor franchisee performance and failure do not just affect the franchisees in question. The franchisor will also suffer — far more than they may realise.

Now add the extra management resources needed to support a failing franchisee, and the local damage to the brand, not to mention the negative impact on the morale of franchisor staff and surrounding franchisees.

The fact is franchisee failure and under-performance is costly for everyone. So why do franchisees perform poorly, or fail? And what can be done about it?

New research provides clear answers for franchisors

Research suggests that, despite the high stakes involved, many franchisees, and franchisors, rely on emotion, gut feel and unsubstantiated assumptions to select their future franchise partners far more than they do on sound business judgment.

One study by Professor Lorelle Frazer from Griffith University concluded that inadequate franchisee selection procedures are the biggest single cause of franchisee failure.

The bottom line is that franchisee failure is costly to franchisors as well as franchisees. However the good news is that it can be reduced through improved franchisee selection practices.

Our own research at the Franchise Relationships Institute indicates that franchisors want to recruit candidates who are ready, willing and able to succeed. The difficulty has been that, up and until now, franchisors have not had a scientific system for doing this.

With this in mind our team of business psychologists has been conducting rigorous research with thousands of franchisees under the guidance of Greg Nathan, a leading franchising authority, to better understand why some franchisees perform better than others.

The good news is that, not only have we discovered the attributes that make a significant difference to franchisee performance, we have also developed a scientific and easy-to-use system for measuring these.

This system is called the Nathan Profiler and thanks to the Internet it is now readily available at an affordable price to franchisors around the world.

Defining and measuring the drivers of franchisee success

Before we explain how the system works, let’s define what we mean by a successful franchisee. We believe the role description of a franchisee can be broken down into three key areas.

Our research has shown that successful franchisees do these three things consistently and relentlessly:

Firstly they optimise the profit potential of their business, by maximizing sales and controlling costs. Secondly they focus on building a base of happy customers, ensuring that every customer has a great experience with your brand, everytime. And thirdly they are culturally in fit with the role of franchisee, supporting your franchise operating model and brand values.

All three of these areas are important. For instance a franchisee who is going to generate high sales at the expense of customer satisfaction or the integrity of your brand is not the sort of person you should be looking for. Nor do you want a pleasant,compliant person who is incapable of building a business.

The value of the Nathan Profiler franchisee selection system lies in its ability to define and measure the attributes franchisees need to succeed in these three areas. Remember that you cannot manage something you cannot measure. So if we can measure these things we can use this knowledge to better prepare franchisees for their path ahead.

Giving franchisors access to three best practice selection tools

At this point we need to be be clear that the Nathan Profiler is not just another pesonality test.

In fact personality tests have been found to be poor predictors of business performance because they do not measure important factors such as business acumen, family support and the expectations the franchisee has of the franchisor, all factors that will impact on success.

The beauty of the Nathan Profiler is that it measures attributes that have scientifically been shown to make a difference to success in a franchise business. Furthermore the Nathan Profiler uses not one, but three of the best and most efficient methods for measuring the suitability of franchisee candidates- a detailed online application form or what we call the Information Request, an online self-assessment profile and a scientifically designed interview process.

Provides you and your candidates the ultimate application form

The Information Request is completed by the candidate using a secure, password protected internet site. This site is branded with your company’s logo.

The Information Request is just one of the best practices franchisee selection tools incorporated into the Nathan Profiler. It collects important background information on the candidate such as their financial and lifestyle expectations of the business, their family situation, their work and business experience and their competence in areas likely to impact on their performance. It also contains a detailed financial capability statement which automatically calculates the candidate’s net worth.

This is valuable information that you need to know so you can make an informed decision on how to proceed with the candidate. The Information Request form gives you greater control over the recruitment process from the word go, helping to ensure there are no surprises later on. It even reformats the candidate’s information into an easy to read report that outlines their initial suitability and alerts you to any “red flags” which deserve closer attention. And better still, this information is available to you instantly. As soon as the candidate has completed the Information Request, the Nathan Profiler will automatically notify you so you can review this information. This keeps the recruitment process moving swiftly and smoothly.

Evaluates “psychological fit” by comparing candidates to a benchmark

If you wish to proceed further with the candidate you can then invite them to complete the Self-Assessment Profile, which is again accessed from a password protected internet site branded with your logo.

The Nathan Profiler instantly analyses and scores the candidate’s responses and produces a detailed Report comparing them to a benchmark of franchisees. It also provides details of their strengths, weaknesses and coaching needs. The Self-Assessment Profile even generates customised interview questions for you to ask the person.

Consider just how efficient this process is. By clicking a few buttons you have issued two user-friendly but highly scientific selection tools for your candidate to complete. And virtually instantly, you have at your fingertips a detailed profile of their career background, aspirations, competence, financial capability and psychological fit for franchising.

How the final check pulls it all together

There is one more extremely useful tool within the Nathan Profiler system. We call it the Final Check.

Remember you may not have yet even met the candidate. The Final Check provides you with a detailed, step by step, professional interview guide. The Final Check interview guide tells you exactly what to ask the candidate and what to look for in their responses.

The Final Check system also enables you to measure the candidate’s strengths and weaknesses using a scientific rating system called a behaviourally anchored rating scale. So you can be confident that your conclusions are based on evidence rather than just personal bias or gut feel.

Helping you to build a world-class franchise system

Our goal in developing the Nathan Profiler was to reduce the chances of unpleasant surprises surfacing about a franchisee once they are in your system.

Remember that franchisees are not your employees and you cannot just terminate your relationship if things are not working out for either of you. If what you have read here makes sense to you we hope you will contact us for a live demonstration of the Nathan Profiler.

Our mission at the Franchise Relationships Institute is to help franchisors to build world-class franchise systems where they and their franchisees succeed together. It all starts with quality franchisee selection.

Copyright © 2019 Franchise Relationships Pty Ltd • Contact Us Company Privacy Statement