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Making the Cut

Jimmy John's believes having high standards for franchisees equals success.

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If you want to be a Jimmy John'sfranchisee, you have to submit your forms, visit the company and be given the OK before meeting with founder Jimmy John Liautaud. Of the people who make it this far, only 35 percent actually get Liautaud's approval to become a franchisee for his submarine sandwich chain.

Rejecting 65 percent of your franchise prospects may seem a little harsh, but Liautaud believes it's necessary to ensure the success of his Chicago-based company. Franchise Zone spoke with Liautaud about his selection criteria for franchisees.

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Franchise Zone: Why does Jimmy John's reject so many applicants?

Jimmy John Liataud: The restaurant business is very fickle, and if people simply want to throw money at my system and open up a bunch of stores as an investment, I don't want them in my system. They have to be passionate, caring people who want to serve their customers.

We look for smart, sophisticated businesspeople who can execute and operate our business model in the most effective way. We refuse 65 percent, because we get many [investors] who have saved enough money to go into business but who don't understand what business is.

Are you looking for people with prior restaurant experience or any kind of business experience?

We prefer successful existing multiunit restaurant [owners].

Do they need to be from quick-service or could they be from full-service restaurants?

It doesn't matter, as long as they understand how to operate multiple units, and they're in the top of their segment. When I visit their operations, if I feel they're strong, I'll give them a chance. I'm very, very picky, because the restaurant business is very, very fickle. And I can afford to be picky--I own 100 percent of the company and have no debt. I've been doing it for 20 years and we're a significant company.

Do you personally hand-select your franchisees?

All franchisees are hand-selected and personally interviewed by me. Once they qualify, once everything is in place and has been approved, they have a personal visit with me. Then I'm the one who makes the determination if it's a go or no-go.

I've had many situations where it's really difficult for me to make the decision. I've had families who are really, really bright, who put it all together and really want to do this deal and they don't just quite have it, and they're so disappointed when they get turned down. It's a tough deal. I have to maintain my company's integrity, so we turn down quite a few of them--not because we're arrogant; we just know how difficult the industry is. To operate successfully in this day and age, you've got to have people who are going to execute accurately, quickly and efficiently.