The goal of any business is to grow and be profitable. Franchising previously had a reputation that a unit would be awarded to anyone with enough money to open the doors. Fortunately, franchising is taking a new approach to awarding franchise units, one that Rebecca Monet, a behavioral scientist has been spearheading for over 20 years.
The franchise community is recognizing that a franchise should be awarded based on compatibility instead of solely awarding based on finances and availability of territory. A franchisee that has the cash to buy into a system does not mean long term success or satisfaction. In fact, the temporary boost in franchise fees can end in costly litigation and damage to brand equity.
Steve Olson, author of Grow to Greatness: How to Build a World-Class Franchise System Faster says it best “never compromise your values or long-term goals by making knee-jerk franchisee selection decisions. Want to grow fast? Want long-term success? Then be discerning when awarding franchises. Those first few franchisees will determine your long-term success.”
Every franchise system has unique traits that create the business model. A business that is right for one person isn’t going to be right for the next. At Zoracle Profiles, a psychometric firm headquartered in San Diego, we specialize in assessing franchise systems as well as prospects to ensure they are a good fit for each other. Our SpotOn! Profile assesses what we refer to as the 3 C’s: compatibility, competencies and capacity.
Compatibility
The franchisee-franchisor relationship is like a marriage – so you want the franchisee to be compatible with you, right? There are three major components for compatibility: values, stage of franchise growth and culture. Because these 3 components have a direct correlation to franchisee validation, satisfaction, retention and performance we encourage franchisors to select franchisees that mirror their compatibility markers.
Values are what drive us to make decisions in life, and influence our behaviors and even impact which type of messaging in marketing we respond to. If we value growth, innovation and quality, it only makes sense that you select franchisees that share those values.
Stages of growth might sound like a foreign combination of words, but it’s something we have all experienced. As franchisors you need to find franchisees that fit your system growth cycle (find out more, here). Is your system focused on product? Are systems and processes still being developed? Then you are likely an early stage franchise system. You’d want to select franchisees that are comfortable operating within dynamic systems and willing to share best practices. You wouldn’t want to select a franchisee that needs button-down processes and systems to feel safe or perform. Selecting franchisees that don’t fit in your stage of growth will likely drain your resources and cause validation issues. We want to select franchisees that will grow with the system.
Culture seems to be the current buzz word, but it’s a buzz word for a reason. Culture matters. Culture shows itself in the motivations, values, behaviors and best practices of a franchise organization. We’ve all seen the frustration someone faces when they part of an organization where they are a cultural misfit. Making sure your franchisees fit in the company’s culture is critical for their ultimate satisfaction and performance.
Competencies
This is where you want to find a franchisee that “balances the scales”. Selecting franchisees that have complimentary competencies to the franchise system will reduce redundancies make a wiser use of resources, increase value and increase performance. Let’s say your company has strong market recognition and back-office systems thus you will need franchisees with feet on the ground to provide sales and customer service to the end-user. You wouldn’t want franchisees with the same competencies as you – you can see how limiting that would be.
On a side note, but equally worth mentioning, competencies can be taught. Keith Mathias, a 30-year franchise development veteran and Zoracle client said: “If a candidate’s SpotOn! Comparison report shows he or she is compatible with our system but they lack a bit in certain competencies compared to our top performers then we emphasize those areas in training and support.
Capacity
Every business requires sales to some degree. The question is which type of sales does your system require for the franchisee to be successful? Does your brand require relational sales (think insurance), consultative (educating or advising), or competitive (willing to take business from your rivals). Make sure to choose a franchisee that naturally functions in your systems sales style. When people are functioning in their natural states it increases trust from the consumer and an air of authenticity.
Another element of capacity is your franchise systems growth model. Are you planning to grow market share by single-unit sales, multi-unit sales or regional development opportunities? It’s important that you attract people that will be successful in your growth model. Not everyone is wired to be a multi-unit operator, and if that’s all your system has to offer it’s better to pass on that prospect than try to fit a square peg in a round hole.
Bringing a prospect into your franchise system is a long-term commitment. While it’s as much their responsibility to research concepts, it’s a shared responsibility to the franchisor as well. If you’re going to be working with someone for a decade let’s make sure they will be a good fit beyond the honeymoon stage.