These days, the franchise sector faces major challenges relative to recruiting franchisees, partly because of the mass exodus of the baby-boomers and the difficulty in attracting members of newer generations, who are not solely interested in how famous a brand is, but also in the values it conveys.
In the larger networks, many franchisees are on the verge of retiring, thus creating a large inventory of businesses for sale. Yet the succession for these franchises is far from guaranteed: there are more entrepreneurs seeking successors than people looking for business opportunities. And more often than not, young entrepreneurs prefer to create their own business. The pool of potential entrepreneurs interested in buying a franchise is therefore significantly reduced.
And even if you have a fantastic succession plan, it can only be successful if it involves a good buyer for the franchise. For several years now, franchise networks have noted how difficult it is to identify candidates who meet all the criteria needed for success. The candidate's interest, experience and financial means are no longer enough to achieve success in the franchise world. And choosing the wrong franchisee can hurt the development of a network.
Identifying the Ideal Candidate
There are many businesses for sale, but because finding a successor is an obstacle, many entrepreneurs decide to simply close up shop. In the case of a franchise, the task of identifying a successor often falls to the franchisor.
Choosing a franchisee is a difficult and delicate mission: franchisees must be entrepreneurs and demonstrate leadership that can grow the business while accepting the franchisor's framework, that is to say, they must follow the recipe and adapt to the processes and standards in force. Determining the ideal franchisee for the network and rethinking the franchisee selection process will be essential going forward, because the way things have been done for the past 10-15 years is no longer enough.
Taking over an existing franchise does not pose the same challenges as starting a new one. As well as meeting the same selection criteria as the other franchisees, new owners must also have skills in change management. While learning the rudiments of their franchise, they will need to adjust to the employees, suppliers and customers. In fact, franchises in operation have usually reached a certain level of profitability, which sometimes involves more complex management. In short, the challenge and stress involved in taking over an existing franchise are greater, and this factor must be taken into consideration when selecting franchise buyers.
FlagFranchise is a tool that helps franchisors determine their ideal franchisee profile, position themselves, and promote themselves to prospective franchisees. The algorithm automatically determines the benefits of each franchise network and presents such benefits to potential franchisees based on their priorities. For example, it could showcase the geographical location of a franchise that is close to the candidate's home or build on possible strong affinities (values and interests) that are shared by the franchisor and prospective franchisee. Simply put, regardless of the size and reputation of the network, the strengths of each franchisor are presented according to rational facts that are based on the following satisfaction criteria specific to each prospective franchisee:
- Budget for initial franchise fees, start-up costs, and working capital;
- Expectations of support to be provided by the franchisor;
- Management-related and other skills and experience;
- Similar values to those of the network, and strengths that correspond to requirements;
- Entrepreneur profile: the right amount of entrepreneurship for your brand;
- Desired lifestyle; and
- Desired location.
The flexibility of the tool lets you precisely target potential franchisees, thus ensuring better recruitment and therefore optimizing the performance of the network. And even though FlagFranchise offers several innovative features, its prices are comparable to those of most traditional directories, in addition to offering a range of additional tools including the best selection practices.