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The Pogo Stick Test: Picking the Perfect Franchisee Diana Nelson of Kazoo Toys has an unusual way of fielding franchise applicants. Why it pays to be so picky.

By Tracy Stapp Herold

When meeting with her first prospective franchisees, Diana Nelson of specialty toy store Kazoo Toys in Denver handed the two couples pogo sticks and asked them to use them. And they did. "They looked at me afterwards and asked, 'Did we pass the interview?'" Nelson recounts with a laugh. "I said, 'Absolutely!'"

Silly as it may seem, Nelson's story illustrates an important point that all new franchisors should keep in mind: Know what you want in your franchisees.

That might sound obvious enough, but it's all too tempting to compromise -- especially early on. Other new franchisors I interviewed for Entrepreneur's September issue (please read "Slow Build: Established Companies Try Franchising") say they felt like they lacked leverage when getting their first franchisees signed on.

"A lot of folks were interested but did not want to be the first one coming in," says Henrik Stepanyan, chief operating officer of Barbeques Galore, a barbecue manufacturer headquartered in Irvine, Calif. "They wanted to see other franchisees first."

Related: The Danger of Being Franchisee No. 1

Robert Ahrens, owner of Kolache Creations in Austin, Texas, has faced similar hurdles with finding his first franchisees. "A handful of folks have done everything but pull the trigger," he says.

Given the challenges, it's understandable that some new franchisors settle for anyone willing to write a check. But that's not wise. Franchising isn't just a business transaction-- it's a relationship. And a relationship requires compatibility.

The experts always caution that potential franchisees need to do due diligence when researching franchise opportunities. Franchisors need to be just as careful. That means new franchisors should know their company culture and what backgrounds and personality traits will best fit -- and be willing to say no if someone doesn't fit that criteria, even if they meet the financial requirements.

Related: The Man Who Owns (Almost) All the Burger Kings

Prospective franchisees should look for that choosiness in the franchisors they research, too. A franchisor willing to let anyone and everyone be a part of their system is bound to run into problems, and one bad franchisee can ruin the reputation of an entire brand-- and the business of every other franchisee.

Diana Nelson has the right idea. She knew from the start what she wanted in her franchisees-- and what she didn't. "I want smart business people who are looking at this as a business, not as a hobby. You don't want somebody just to make an investment and then lose it," she says. "But not only do you have to be a smart business person, you have to be a child at heart."

Hence the pogo sticks.

Tracy Stapp Herold

Entrepreneur Staff

Tracy Stapp Herold is the special projects editor at Entrepreneur magazine. She works on franchise and business opportunity stories and listings, including the annual Franchise 500.

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