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The right affiliates will get you; the wrong affiliates will sink you. Perhaps one of the most daunting aspects of becoming a franchisor is selecting franchisees who will grow your brand. The right people do the right thing: they choose the right locations, hire and motivate the right teams, maintain the highest standards and always invest in growth. The wrong people do the wrong thing: they choose the wrong location, hire the wrong people, motivate their teams the wrong way, take shortcuts, ignore standards, etc.
Related: Considering Franchise Ownership? Get started today and find your personalized list of franchises that match your lifestyle, interests and budget.
Affiliates with multiple units
The point of owning a franchise is to get rich, and you do this by owning multiple units. The most successful affiliates are large affiliates with multiple units that make you richer because they do it well. They pay you more in commissions, they refer other affiliates to you, they even have ideas that can improve everyone’s business.
It takes a unique mindset to be successful in franchising: just because someone was successful in a previous life doesn’t mean they will be a successful franchisee. Franchising is a kind of entrepreneurship: owners invest and take on the risks involved in starting a new business, but that business follows someone else’s agenda. They have to believe and want to continue investing in that program.
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The Playbook
This scheme is what makes the franchisor rich: you can only be successful if the franchisees are successful. Affiliates pay you upfront to join your system, then continue to pay you to stay and demonstrate your brand in increasingly diverse markets. As they grow, economies of scale give you more purchasing power for greater profits. The result is a skyrocketing business value that you can one day sell for life-changing money.
Besides the obvious (honesty, stability, solid finances, etc.) here’s what to look for when interviewing your ideal affiliate:
- Curiosity. Is your interviewee asking you questions about your brand? If they are, this demonstrates a passion for your business that will translate into success.
- Ambition. Your highest performing affiliates will want to grow their business to develop generational wealth themselves. They want to be successful and leverage that success to open more units, which pays you more royalties and makes your business more attractive.
- Independence (more or less). The ideal affiliate follows the program – they are there for a reason and consistency is vital to the brand. But you also don’t want to spend all your time micromanaging. Find people who are willing to pick up the ball, run with it, and call you once or twice a year (one of which could be your birthday).
- Collaborative and cooperative. You want a team player who can share their ideas and experiences with you, their staff, and their colleagues in your other units. Do you know why Five Guys sells milkshakes? An affiliate suggested it. The Big Mac was invented by a franchisee. Thousands of people got rich.
- Positivity. You will have bad days, weeks, even months. People who remain positive about their business and brand are critical to their success and your sanity.
- Accept and offer feedback. As a franchisor, it is your job to ensure that all of your franchisees are excellent representatives of your brand. You have provided the services and materials to make them successful, but you should be available for advice and to check on how the business is doing, especially in the early days.
- Helpful under pressure. You need people to support each other and come up with ideas during an inevitable difficult time. When Covid hit, Firehouse Subs suspended royalties to help their franchisees. Franchisees have worked with their landlords to defer rent. You have to be the person other people want to work with.
Related: Do you want to become a franchise? Go through this checklist first.
What you don’t want
Just as important as finding those exceptional candidates who are committed to following the playbook, being a team player and adhering to brand standards is avoiding other types of potential affiliates:
- A single unit operator. The purpose of franchising is not to buy a job. Someone who is only interested in buying a job should stay in the corporate world. The purpose of a franchise is to open another and another until you accumulate generational wealth.
- A tight thing. The saying “Save a dime, lose a dollar” really applies here. A cheaper location may save on rent but will require significantly more marketing costs. Save on paying employees and high turnover and lost productivity will cost you more in the long run. It might even destroy your brand. An extreme, but true example: I once interviewed a potential franchisee for Halal Guys who asked him if he really should serve halal chicken instead of cheaper generic poultry. (Seriously? It’s in the name.) Guess who didn’t get the franchise?
- Someone who doesn’t listen. You have developed the system that creates a successful business. People who don’t accept your feedback not only deplete your time and resources, but also your energy and the value of your brand. The only answer is to terminate when you can.
- A backstabber. As I said, you will go through a difficult time. But positive people come together to help each other. In another true story, a franchisor customer got wind of a private chat channel between some franchisees talking bad about companies, individuals and more. At the next franchise meeting, he called them out publicly and then bought them. We all have to go in the same direction, otherwise we’re going nowhere.
It takes time and research to find the right people, but it’s the key to building a business that will be successful not only for you, but for affiliates and the people they serve.