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PLAYLive Lesson: Vetting Franchisees

Vetting Franchisees

The key to building a prosperous franchise is to place quality franchisees at the helm of your business. As a long-time franchise lawyer and part franchise owner, I cannot stress enough how essential this is for long-term franchise success. As we continue to grow PLAYLive, we have been continuously refining how we attract and screen potential franchisees.

With 54 units sold, we have added several different identifiers that we look for. In some cases, it is expanding on existing elements, such as a financial buffer. Other times, it has been introducing new components. For example, we now evaluate for culture fit.

Here is an overview of our vetting process, including some of the new measures we have added since we started.

Screening Basics

When an inquiry comes in, we start with an initial screening questionnaire. This is regardless of whether a broker brings in a potential candidate or we field an inquiry internally. This survey outlines their financial situation, identifies their current life status, and starts to narrow in on their motivations for purchasing our franchise.

An inquiry isn’t a guarantee that the individual will invest in the model. This means that we need to simultaneously identify if they are a good fit and sell the model. Because of this, we also work to hone in on the communication style the applicant best responds to. Understanding if they respond better to straight facts or to a more emotional component helps us to tailor our communication to better relate and communicate our message to the prospective franchisee.

Connecting in Person

A template survey will never fully be able to give us a complete picture of an applicant. That’s why we have several interview stages prior to an onsite interview. Here we can really dig into their motivations and goals.

During our phone call interviews, we work to expand our understanding of their current situation. Are they hoping to retire in 10 years? If they have kids, are college expenses on the horizon? Is purchasing a franchise part of their plan to pay off credit card debt?

The more we understand each individual as a person and their unique situation, the better we can evaluate how well our model aligns with their goals and capabilities. Our ultimate goal is to position franchisees to succeed.

If the applicant moves forward through the phone interviews, we have an onsite interview. This is an opportunity for potential franchisees to see the inner workings of the business model. For us, the onsite interview gives us the chance to answer any lingering questions about motivation and situation. This is really our opportunity to assess culture fit.

Defining Culture Fit

I see a lot of emphasis on determining financial capital in vetting prospective buyers. Obviously this is crucial. If a franchisee does not have the capital to get the franchise off the ground, it will never be a successful partnership.

The other key aspect is ensuring the candidate fits the culture and will work within your franchise model. One of the things I’ve started to look for is if they trust the system and are willing to execute the model as is. When purchasing a franchise, the franchisee is acquiring a proven model that has been tried and true. As a franchisor, I don’t want an individual who is going to come in and question every aspect of our proven model.

The other nuances will be more specific to each franchise. At PLAYLive for example, if the franchisee will be the onsite manager, we will want them to be gregarious. The more that onsite manager can activate and engage individuals in the game, the better set up for success that location would be.

Determining culture fit also ties into to understanding goals. If the franchisee plans to be an absentee owner and hire a manager, that will be a different conversation.

Understanding all of the nuances at the beginning will be difficult. There will be some that you learn over time. When franchisors are starting out and unsure of what some of these characteristics might be, I recommend they sit down with all the stakeholders in the business. Together, they can start to compile a profile of an ideal candidate and start to identify the idiosyncrasies that make the business work.

Tailoring Qualifications

As I mentioned at the start, we continually refine our vetting and screening process. The biggest adjustment is ensuring they have enough capital to sustain them and their families during the time it takes to get operational.

Particularly in competitive real estate markets, several of our franchisees have taken upwards of nine to twelve months to become operational. Securing a lease with Wi-Fi capabilities proves to be much harder than anticipated in some cities.

So if a prospect approaches us about opening a franchise that is currently unemployed, we know that they will need to have enough funds to sustain themselves and their family for up to twelve months before they are able to start seeing a salary from PLAYLive. This is in addition to the capital necessary to purchase the franchise.

First and foremost, we always want this franchisor–franchisee relationship to be a win-win. That’s why we will continue to build out our screening process.

Turning Down Leads

Not everyone is a fit for our model. This doesn’t always boil down to financial situation either. We have decided not to move forward with applicants based on not fitting the characteristics necessary to succeed with the PLAYLive business model.

For example, we had a gentleman who wanted to purchase a unit for his seventy-year-old father. When we got to know the father, who would be the primary day-to-day manager on site, we learned that he wasn’t fond of the PLAYLive music genre and preferred to work in environments with soft music playing.

Part of the components that have made PLAYLive successful is that we have the presentation down to a science. This includes having music playing at a certain decibel. We pick music that appeals to an audience ages ten through forty. Prospects who are unwilling to or would struggle to adapt to the components that make PLAYLive so attractive will not work out long term. It’s better for both parties if we stop the proceedings right there.

Are You Ready to Move Forward with Your Franchise?

By working with me, you can use my extensive franchise legal background to ensure you have a solid foundation for your business. Furthermore, you can leverage my experience franchising to help set your franchise up for sustainable growth and navigate other areas of owning a franchise.

In addition to being a co-franchise owner with PLAYLive and continuing my franchise law practice, I am also working with several other franchises to develop unique partnership relationships. I will have more updates as these partnerships develop throughout 2016.

Contact me today to set up an appointment to review where your business is on the road to franchising.

Published: May 20, 2016
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Source: Legal Matters LLP

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Robert Steinberger

Robert Steinberger, who often goes by Bob, is a founding partner of the Law Offices of Soden & Steinberger, LLP. He is adept at both creating the best legal structure for enterprises as well as setting the foundations for franchise owners and buyers. While Bob’s practice focuses on both business entity formation and litigation, his specialty is franchise law. As a part owner of a franchise, he brings a unique perspective to navigating the franchise landscape. His free Franchisor Workbook gives a head start on expanding a business empire.

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