Ask the Insiders

What franchisors want, common mistakes and the skinny on multiunit options: Our panel of experts tells all.

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Wondering where to start on your franchise journey? Well, you've come to the right place. Our resident expert, franchise attorney Andrew A. Caffey, assembled a panel of some of the most esteemed insiders in the business to help you buy the right kind of franchise--and be the right kind of franchisee. Meet Linda Burzynski, president and CEO of Liberty Fitness, who has previously served as the head of successful franchises CMIT Solutions and Molly Maid; Don Fertman, who, as director of development for Subway, sets the tone for how franchisees will be accepted into the number-one franchise system in the nation; and Andrew C. Selden, a franchise attorney with Briggs & Morgan in Minneapolis and former chair of the American Bar Association Forum on Franchising. These experts' opinions and insights can help you navigate your way to a fruitful franchise future.

Andrew Caffey: What do you look for when evaluating a prospective franchisee?

Linda Burzynski: Financial qualifications come first, I suppose, but I'm really looking for candidates with people skills, because I've never been in a franchise business that didn't require getting along with people. In addition, and equally important, I look for a track record of high integrity and character. A track record of leadership tells me a person can build rela-tionships. Getting results with people, getting along with others--these are strong indicators of success.

Caffey: I imagine you would evalu-ate leadership skills and integrity in an interview process?

Burzynski: Absolutely. I firmly believe in spending a lot of time with candidates. We also review personal and professional references--not just one or two, and not just pro forma. We ask the references to provide more in-depth information about the character, leader-ship and integrity of our candidates.

Don Fertman: I agree with Linda's comments about integrity, communication skills and the ability to interact with the public. We evaluate candidates in two different phases: One is basic skills. We give people math, English and basic communication skills tests, just to get a sense of what they can do when dealing with people face to face. Then on a more complex, subjective level, do these folks have the ability to think outside the box? Being a successful franchisee is a balancing act. You have to be able to stay within the box, so to speak-work within the operations manual and follow the system, have the characteristics of somebody who will follow a system-but at the same time have enough ability to think outside the box so you can run a successful business and troubleshoot when necessary. We're always looking for hands-on owner-operators. Will the folks be involved in the business on a day-to-day basis? Will they get behind the counter? Will they put their hands in the tuna fish? Will they really get to know the business inside out? Because that's how they're ultimately going to be successful. We're not looking for absentee investors who want to plunk down some money and make a quick buck, because that isn't what franchising is all about.

Caffey: Andrew, you've represented numerous franchisors and numerous franchisee associations. What sort of guidance do you give to a prospective franchisee who comes to you?

Andrew Selden: It's almost impossible to get too much information before you make your first investment in a franchise. You have to wade through the Uniform Franchise Offering Circular line by line to begin the information-gathering process, but I would counsel a pro-spective investor to look at a couple of issues you aren't going to find in the UFOC. The first is the soundness of the underlying business proposition. You could have a UFOC that describes a perfectly structured, perfectly financed, well-managed vacuum tube dealership--even if the franchise is perfect, if the underlying business is weak, that's not a good investment proposition. Second, talk to existing franchisees in that system to determine whether the franchisees have an active and meaningful participation in system decision making, or if the system is more dic-tatorial. There are many large, successful, market-dominant franchise systems in different industries that have taken the partnership rhetoric to heart. They've said, "Look, we've got a lot of equity investors in this system--let's learn from their experience and their entrepreneurialism."

Caffey: Are franchisors using psychological testing or profiling in the evalu-ation process when they look at prospective franchisees?

Fertman: We use something called a "predictive index test." We don't necessarily use it for every prospect; in some international markets, we find a different mind-set that limits the test's usefulness. The predictive index test gives us a sense of how people behave in certain situations: Are they outgoing? Are they go-getters? Are they motivated? Do they have a strong sense of urgency? Those indicators can help the evaluation process.

Burzynski: We use a DiSC personality profile [which tests a person's domi-nance, influence, steadiness and conscientiousness; see www.inspiring]. We use the test once a candidate becomes a franchise owner so we have a good idea of how to work with them and coach them. We are now considering administering that test as part of our application process.

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This article was originally published in the January 2006 print edition of Entrepreneur with the headline: Ask the Insiders.

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