Written by : Lori Karpman
By: Lori Karpman, CEO, Lori Karpman & Company, www.lorikarpman.com. firstname.lastname@example.org.
The beauty of the franchise business model is that no specific degree or prior industry knowledge is required to become a franchisee. Franchising is the world’s most successful business model because it takes people from all walks of life and gives them the tools they need to be entrepreneurs in specialized fields. There are thousands of franchise offerings for every taste and budget, and it’s important to choose one in an industry that you enjoy. The business model is designed such that the franchisee will work in the business as the manager, not hire one. Choose an industry that you are passionate about and investigate those opportunities. In fact, being passionate is even more important than your budget when making your initial choice because if you don’t enjoy the business, you will never make money at it. With over 4500 franchises operating in Canada, there is definitely something for everyone!
Franchisors advertise in an effort to generate leads or “prospects” who would like to buy one of their franchises. The majority of leads are generated online and are usually answered by the franchisor within 24-48 hours, by the sending out of a general information package. The package is followed up with a phone call a few days later. Only a minute percentage of these requests turn out to be “real” potential franchise prospects and from that, maybe one is a potential buyer. It can take 200 leads to make one sale. Franchisors want to be sure that they only grant franchise rights to individuals who will operate the franchised business to the best of their abilities and in accordance with all the system’s standards and procedures. While there is a complete training program given by the franchisor, it only covers how to operate the franchise and does not include the life or ‘soft skills’ that are required to be a success business owner. These skills are acquired via previous employment, education, local community involvement, general life experience and so on. The franchisor expects the franchisee to come to the table with these skills already formed. The franchisor can begin evaluating the candidate’s soft skill set by reviewing the candidate’s Application Form which is the first stage in the franchisee Qualification Process.
What does my Application Form tell a Franchisor?
The Qualification Process begins when a prospect completes the franchisor’s standard Application Form, which covers the employment, financial and personal history of the candidate. It’s very important that prospects complete the information fully and honestly because the franchisor considers what is best for the candidate in making a decision on their candidacy. At the qualification stage, the investigation of the candidate is very informal and limited to what is on the Application Form (and possibly a credit report). The franchisor does not call the bank or employer for references at this stage. These are only conducted later on in the sales process. Your Application Form will therefore answer all factual financial, employment and reference questions about you. This is all information that can be verified.
Reading between the Lines or What else does my Application Form say about me?
Actually, your Application says A LOT about you! By understanding your career path, your hobbies, the type of references you chose, any extra-curricular activities, charity work, responsibilities etc, allow the franchisor to assess the ‘soft skills’ you possess that are required to run a successful franchise. These are skills that you have would have acquired in your private or corporate life that are transferrable to the franchise setting and will assist you in developing, growing and managing your business. Some of these skills are be organizational, interpersonal, supervisory, management, administrative and the like. By looking at the positions you have held a franchisor can determine if you have managed a staff, (supervisory skills), done charity work (community service), or have team building skills (played competitive sports) to name a few. These are all essential business skills that can't be taught in the franchisor’s training program. Of all of them, the quintessential skill a franchisee must have is the ability to sell. In most businesses there is interaction with the customers, whether it is to get their business, make their experience with you wonderful, or keep their business loyal. Franchisors first and foremost are looking for candidates who are not afraid to approach strangers, ask for the sale and have no fear of being rejected.
All franchise prospects have transferable soft skills but don’t realize it. In order to best explain the type of skills that a franchisor is looking for, and that you probably already possess, let’s work with a fictional candidate. Meet Evan, from his Application I know that he went to public elementary and high school where he played on the basketball team. His superb court skills earned him a scholarship to the local University where he played basketball and studied business. He graduated with his business degree in finance and then went into the military for the next 10 years. In the military he was assigned to a management position in the foodservice department and was in charge of the main kitchen for the base. He had a staff of 20 people to manage. He was financially responsible for the results of the foodservice department including overall results and individual items such as inventory and food costs. He was required to prepare weekly and monthly reports and present the monthly ones to his supervisors. He was also the Captain of the military basketball team and worked at the local food shelter 1 weekend per month. Additionally he is taking courses on marketing, 2 nights per week. He left the military 6 months ago and has been staying home with his 1 year old daughter Bella and wife Stephanie while she works and he looks for a business. They have a small home with small debt. Since we are talking about skills, I have left out the financial elements and let’s assume he has the capital required. He is applying to buy a restaurant franchise.
From the example above we can see that a foodservice franchise seems like a great fit for Evan because he has already been exposed to the industry. While he does have extensive knowledge about the foodservice industry, he is still not able to operate a restaurant. Evan has been exposed to the intricacies of supply chain and inventory management, financial reporting, and accountability for financial results. Furthermore, he has developed managerial, administrative and supervisory skills having managed a team of 20 people. He is a responsible husband and father of 2 young children, carrying some debt on his home. He is community minded and this shows that he will be able to attract local business and be supported by local consumers. All of these elements, and those listed below, are essential to the success of Evan’s business. There are 10 Categories of Transferrable Skills that are transferrable to the franchise forum, and are the traits that franchisors look for the most in candidates. These cannot be taught; the candidate has to come to the table with them already developed and the more the better.
The 10 Categories of Transferrable Skills are: (not in any particular order)
1. Organizational Skills: As a franchisee you must be able to multi-task, manage multiple projects, deadlines, and meetings and the only way to do that is to be organized. This is an innate skill. It is likely that the franchisor has some form of organizational system built in for its own purposes but this would only cover what is necessary to operate the franchise. In order to be sure that nothing falls through the cracks, the franchisee must be able to keep track of everything that needs to be done, find information easily and meet deadlines for advertising and payments for example. Evan certainly gained this skill in the military where he managed the entire foodservice program. He had to be organized to manage his staff, ensure that the inventory levels were correct, and prepare financial reports. All these different responsibilities required access to different information and delegation of tasks to different staff members. Without organization Evan would never be able to manage all of this responsibility.
2. Supervisory Skills: Evan managed a group of 20 people, using both his organizational and supervisory skills. A franchisee must be able to properly supervise, manage and motivate a team of others in order to achieve positive financial results. In restaurant franchises labour cost is one of the most important (the other being food cost) and most difficult costs to control. For example, the franchisee must be comfortable cutting the hours of an employee who is no longer required due to a slow business period. It’s a hard thing to do. Evan, who was responsible for the financial performance of his department, would certainly have made that cut. Being part of the military would likely take his personal feelings out of the decision making process.
3. Interpersonal Skills: Evan had to deal with many levels of personnel to complete his duties, including subordinates, superiors, colleagues and suppliers. He learned to effectively and appropriately communicate to persons at all levels. This is an important skill for an executive, leader or business owner. This is truly innate and it is never more obvious as when dealing with an unhappy customer. How these situations are resolved will determine whether a business gets to keep or lose a customer, and her family and friends and their family and friends.... .and so on. Evan definitely learned about respect in the military which is premised upon people at all different levels working together. Interpersonal skills most definitely cannot be taught and is one of the most important factors that a franchisor looks for in a qualified candidate. Given that the franchisee is going to have to sell in order to develop the franchised business, great interpersonal skills are essential. Being able to network, ask for the sale, and not be afraid of rejection are high on the franchisor’s wish list.
4. Initiative/Entrepreneurship: While franchisees are bound by the ‘system’, franchisors still look for individuals who can add value to it by making suggestions on how to improve elements of it. Many excellent ideas have come from the front line franchisees. The problem comes up when the franchisee implements an idea prior to having obtained permission from the franchisor. Franchise ownership is not for the ‘true’ entrepreneur, who will never be able to stay within the rules of the system. But it is excellent for those who are intelligent and have ideas to bring to the table, but understand that there is a process on how to do that and use it. Do not buy a franchise if you think that you will be able to change things once you have your own store. In the case of Evan, he showed his entrepreneurialism by taking the course on marketing to improve his skill set.
5. Respect (for the System): In this case because Evan came for the military there is no doubt that he will follow the rules and procedures of any franchise system. Being from a military background also taught him discipline and attention to detail. The number ONE rule for franchise success is simple - Follow the System. Prospects buy a franchise because of the fact that a system for success exists. Yes, it is bought because of the fact that there is a system. Inevitably franchisees find a way (or think they have), to do something better, cheaper or faster, than the way of the franchisor and stop following the system that they bought. The day that a franchisee stops following the system, (especially in buying approved food products), is the day that their financial result will begin to plummet. Franchisees somehow forget that they bought the franchise because it was a “system” and the secret to success is to follow it.
6. Leadership/Team Building Skills: Evan played competitive sports since a young age so he is comfortable working as part of a team. He later went on to be the Captain of his basketball team where he was able to hone his leadership, team building and motivating skills. Professionally, Evan managed a team of 20 and therefore has the skill set to manage and motivate a large restaurant staff. A franchisee must be able to manage the team in a way that is respectful and motivating and where the staff wants to perform well. Any form of recognition program, such as employee of the month for example, goes a long way to keeping the staff motivated to excel.
7. Community Service: You may not be involved in any local charity at the time of your Application but you should get involved once your business is open. Evan is involved in a charity that feeds the homeless, a perfect fit for a restaurant franchise. Your charity of choice should match your business’s target market in some fashion and be local. Through community service your business is generating brand awareness and goodwill for the brand but more specifically, your store. This is outstanding because being a good corporate citizen is one of the most highly rated ways to generate sales for your business. People like to buy from local businesses that support the community. It also shows that the franchisee is human, generous and interested in things other than financial success.
8. Responsibility for Financial Results and Reporting: Under the Franchise Agreement, franchisees are required to report various sales figures to the franchisor on a weekly, monthly and/or annual basis. In Evan’s case, he reported weekly and monthly so he is used to having to provide financial information on a regular basis and being accountable for the results. Evan’s background in finance surely assisted him in understanding and managing the financial results of the business. His educational background has also allowed him to understand and implement important financial principles, such as the “first in, first out” method of accounting for inventory so that inventory which is a very seasonal variable cost is properly and efficiently managed. Franchisees can be trained to provide the information on a timely basis and are accountable to more than just the franchisor; they are accountable to themselves for the financial results. Unless you are very good at bookkeeping, it is recommended to hire a bookkeeper/accountant.
9. Personal Development: Evan is taking evening classes on marketing which will be essential to generating and increasing his gross sales. It will also allow him to keep current with respect to business polices procedures as well as new marketing initiatives, along with other developments related to the restaurant industry. To a franchisor the desire for personal development is a positive quality and can only result in positive effects for the business. In Evan’s case, marketing was the perfect subject for him to be learning about.
10. Family (Life) Responsibility: By having a family and dependants, the candidate is viewed as being more responsible, stable, and most likely to work hard to achieve promotions and higher financial rewards. The more personal responsibilities the franchisee has, the more likely they are to follow the rules and procedures as well as use their best efforts in developing and sustaining their customer base. Evan still has some debt to pay off on his home and has 2 dependants, a wife Stephanie and 6 month old Bella. He is a very stable and hard-working husband and father who wants to support his family and be in his own business.
A fictional candidate like Evan, who possesses all 10 of the Skills outlined above, and has a passion for the foodservice industry is an excellent restaurant franchise candidate. Even if you took away all of Evan’s foodservice industry experience, say he was in the equipment supply department instead, he’d still come to the table with a ‘toolbox’ full of skills that would make any franchisor happy. Not every candidate possesses all 10 Skills but that’s ok, since they aren’t always all needed.
The formula for a successful franchised business is to add the franchisee’s existing soft skill set to the franchisor’s tried and tested systems and procedures and together create a profitable franchised business.
Thinking of buying a franchise? Reconsider yourself in light of your talents, skills and life experience; you’ve probably got a lot to be confident about as you prepare for your franchise journey.
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