Franchise Buying Guide

Are You Franchisee Material?

We asked franchisors what they want in franchisees, and 4 qualities rose to the top. Find out if they're looking for you.
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

Ever wish you could sit down with the leading U.S. franchisors and simply ask, "What are you looking for in a franchisee?" Or better yet, "What do I need to succeed as a franchisee?" Wish no more. We got the answers for you by asking the franchisors who submitted applications for this year's Franchise 500® what they consider the keys to franchisee success.

The collected results of our exclusive survey offer a most interesting insight into the mind-sets of the people who run the nation's great franchise systems. If you can master the valuable skills and qualities they're looking for, you'll certainly have a leg up when you apply for a franchise.

Are You a People Person?
The biggest key to success as a franchisee? Fully 94 percent of franchisors that responded said "good people skills" are either important or very important for prospective franchisees.

If you're at all familiar with franchising, this should come as no surprise. One of the joys of owning a franchise is direct contact with your customers, vendors, employees and franchisor. You are the hub, and a big part of your role as a franchisee is to give guidance, direction, advice, leadership and inspiration to all these groups, showing a somewhat different face to each. You need the skills to sweet-talk your vendors into terms that lean in your favor as much as possible, and you must be able to greet your customers effectively-and sell them on your products and services-day in and day out, motivating them to come back to you with more business. Your success hinges on your people skills and your abilities to communicate, convey your vision and set the right tone in your organization.

In other words, if you're a weak communicator, this is a skill you absolutely must develop before buying a franchise.

Are you shy and retiring? Consider taking a public speaking course or joining a Toastmasters club. If you feel intimidated by others, take a leadership course, and if you find negotiating uncomfortable, take a negotiation course. These skills can be learned, and the effort to master them will be highly valued by franchisors.

Put Me In, Coach
The second most important key to franchisee success is the "ability to be coached"-87 percent of surveyed franchisors ranked it important or very important. Of all the rankings of desirable traits, this one offers the most useful insight into the motives and frustrations of franchisors.

Let's take a step back: Franchising is one of the greatest systematic transfers of know-how in the business world. A good franchise program is designed to take people without experience in a specific business and teach them how to run a successful operation following a detailed formula. New franchisees are successful only if they can learn to follow the system. The franchisor expects you, as a new franchisee, to be flexible, eager to learn and determined to "get it." A big frustration franchisors face is handling an owner who wants to change the system, stubbornly make his or her own decisions about the features of the standard business operation, or single-handedly "improve" the franchise program against the wishes of the franchisor. Such a trainee may be uncoachable or too much of a fiercely independent entrepreneur-someone who perhaps is not cut out to be a franchise owner.

Don't misunderstand. An "entrepreneurial mind-set" is also highly valued by franchisors (76 percent of them ranked it as important or very important). Owning a franchise business, even though it must follow a formula, takes soaring creativity, dogged persistence and business drive. Successful franchisees must learn to balance the entrepreneurial mind-set with the ability to follow the franchise system.

An international franchise leader in the sandwich shop business once told me a great indicator of success in his franchise system is whether a new franchisee is willing to get behind the counter during training and "put his hands in the tuna fish." That means the new owner is willing to become intimately involved in the business, learn it inside and out-as this franchisor pointed out, "That is how they're ultimately going to be successful."

Owning a franchise is not like holding a job in most corporate organizations, where it's possible to work for years without seeing where the business actually makes a sale-without getting your hands in the tuna fish. Being a franchisee is at the other end of the business experience spectrum; the only way to success is intimate involvement with every aspect of the business.

Most franchisors will tell you they're not interested in the investment of absentee owners; they want people who are directly and enthusiastically involved on a full-time basis in all aspects of the business. That is the essential element of the "ability to be coached," and learning it can be tough. You may want to locate and learn from a mentor with a solid track record of success.

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This article was originally published in the January 2007 print edition of Entrepreneur with the headline: Are You Franchisee Material?.

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