The FranchiZe Predictor

Our long running franchisee profile has proven ability to predict a candidate’s future performance across the seven dimensions critical for franchisee success. It includes a comprehensive profile report with detailed commentary and clear scores measured against benchmarks.

Our research has consistently shown that all successful franchisees have 7 core values and attitudes in common regardless of age, race, personality, gender, industry or geography. Have you ever known a “nice guy” that, no matter what you do, just can’t succeed as a franchisee? The “nice guy” part is the individual’s personality. The actual “succeeding as a franchisee” part is what The FranchiZe Profile measures.

By using The FranchiZe Profile you’ll know whether the candidate has the seven core values and attitudes for franchisee success:

1. Treat employees well and understand they are a valuable resource rather than an expense

Successful franchisees generally:

• Really believe that employees are a valuable asset to the business rather than an expense,
• Prefer to manage using participative rather than autocratic decision making styles,
• Believe that employees are an integral part of the business, and
• Believe staff should be treated with respect.
• They understand the huge benefits of treating staff well.

Franchisees with these beliefs generally tend to have:

• Lower staff turnover rates.
• A more enjoyable work environment.
• Lower hiring expenses.
• Happier employees
• More loyal customers

As a consequence, profit levels are enhanced. Intuitively, we all know this is true. You know that if you treat your employees right, your employees will tend to treat customers right.

This is the most important of our core values. Our sales performance prediction equation and our overall performance prediction both give “Attitude Towards Employee Involvement” a weighting of 22%.

2. Have a positive attitude for success Franchisees with these beliefs generally tend to have:

How important is it?

Consider this, when predicting “How Likely to Meet A Location’s Sales Potential” positive attitude had a weighting of 21%. When giving an overall recommendation, it has a weighting of 18%. Compare that to the weighting of 22% for “Attitude Towards Employee Involvement” in both equations.

We all know people who have all the opportunity in the world with a poor attitude and a tendency to always see the clouds rather than the silver lining. Not surprisingly, reality ends up matching their expectations and they do poorly.

The importance of believing you will be successful:

People with negative attitudes are forever looking for reasons that things won’t work out rather than looking for ways to make them work. People with negative attitudes do not accept responsibility for their own successes or failures. It’s always somebody else’s fault, and that usually translates into the blame being placed squarely on the shoulders of the franchisor.

When you think of it, in a way, they’re right. If the franchisor had made sure that the franchise candidate had the right attitude when they were sold the franchise, the franchisee would not be in the situation they are in.

A shocking finding

Combining the weightings of the two predictors we have discussed so far, we come up with a combined weighting of 40% to 43%. This is an astounding number.

Consider this. You can leave out every other core value and personality characteristic in the selection process. If you only explore the candidate’s attitude towards employees and whether the candidate has a positive outlook you will *still* have a 40% to 43% chance of selecting a good franchisee. Never mind whether they have a strong work ethic, or follow your system or even treat customers right.

3. Follow your system

Quite often you hear people talking about franchisees as entrepreneurs. They are wrong! True entrepreneurs will die of frustration in a franchise system because they want to do everything their own way.

If you really look at the type of person it takes to be successful in most franchise situations, what is really needed is an intrepreneur.

Entrepreneurs tend to be highly independent. They take a lot of risks and don’t need anyone to motivate them. Intrepreneurs are self-managers as well. One huge difference though is that they like to work within guidelines in concert with other people. Intrepreneurs can be creative within a structure. The entrepreneur needs to create his or her own structure.

Entrepreneurs get bored quickly. Usually within a year or so they will attempt to find excuses to get out of the system. Or even worse, they stay and start changing your system. These people can cause substantial disruption. They believe that they know better than you do how to run your business.

Of course, the more units the franchisee owns, the more entrepreneurial the franchisee needs to be. However, there are still limits. The individual must still feel comfortable working within the system. The last thing you want is for someone who owns 10 or more locations to suddenly veer off in a direction totally different from the rest of the company.

Going too far the other way is even worse. Selecting people that are not entrepreneurial enough can be a huge drain on your company’s resources. They like to be in constant contact with head office and seek approval for every little change they are contemplating.

Here’s an analogy

We use this analogy to help describe the three different levels of independence. Imagine you have just hired an individual and are showing them their office.

The employee type… You take them to the office, open the door to their work area and everything is laid out for them. You tell them not to move things around at all and they go in and do the job and they are happy.

The intrepreneur… You take them to the office, walk them down the hall to a pile of furniture and supplies piled up outside the door. Unlock the door and tell them to go in and set things up the way they want. To use some creativity within the structure and they are happy.

The entrepreneur…You walk them over to your vacant lot and tell them to build the office building and they are happy.

Franchisors who want their company to grow need all three.

For the first 15 to 20 outlets the franchisor needs entrepreneurs, aggressive sellers and risk takers to build the business. Once systems are worked out and are up and running, intrepreneurs should be targeted. This is the time that entrepreneurs will likely move on (voluntarily or otherwise) to new challenges.

We’ve seen some retail store franchises get to 15 to 20 stores and then growth stalls. Rather than modifying their selection criteria, the franchisor continues with what worked in the past. They keep looking for more entrepreneurs. To cut down on franchisee turnovers, the selection criteria should be modified to target intrepreneurs instead.

With large franchises with hundreds of outlets the employee type of franchisee tends to work out best. Everything is laid out and there is no room for creativity. Everyone in the system knows exactly how many seconds it takes to “flip the burger”.

Just how important is independence in a franchisee?

Our research has shown that when predicting sales volume, the candidate’s independence level has a weighting of 9%. When giving on an overall recommendation, the weighting jumps to 16%.

This apparent low predictive value may very well be the result of the non-linear relationship between independence and performance. Unlike the linear relationships between performance and the other core values we identified, “Independence” had a curvilinear relationship.

In other words, a medium level of independence turned out to be the third best predictor of franchising success. Both low and high independence ratings corresponded with lower sales and poorer franchisee performance. Successful franchisees have a strong drive for success without this need for independence.

4. Treat customers well

Customer Responsiveness is unimportant!

“What?” You say! “Customer Responsiveness is unimportant?” Well, yes. This does seem to fly in the face of logic. But, take a minute here to think about this a bit more. Look at all the other core values we have explored in this series. Compare the importance of customer service to each of the others.

Compare Employee Involvement with Customer Responsiveness. Remember that one of the attitudes that Employee Involvement measures is whether the candidate treats others with respect and trust. We ask you, if a franchisee does not treat people with respect, how important is Customer Responsiveness really? Will they truly listen to the customer and be attuned to their needs at all times? We think not. So, treating others with respect and trust is a pre-requisite to dealing well with customers.

Second, compare Positive Attitude for Success and Responsiveness to Customers. Again, if a franchisee has no expectation of being successful how, or even why, would they respond to your customer’s needs?

Ever wish they would just go away?

Third, take Independence. If the franchisee does not follow your system, does it really matter how they respond to the customer? For your purposes, they are not successful. In fact, we’re sure you would prefer they just “went away” and did their own thing on their own time.

So you see, Responsiveness to Customers is important. But, without the other attitudes in place first, it’s importance becomes negligible.

It’s the employees that deliver great service.

Here’s another reason. Typically it is not the franchisee who deals with the customers on a continuous basis. It is the employees. Sure, the franchisee needs to have that initial respect for the customer, but dealing with customers properly is really more of an employee training issue. If the franchisee does not appreciate the importance of being polite, friendly, courteous, and attuned to the customer at all times, then they will not have a grasp of the importance of properly training their employees in this critical function.

Plus, the franchisee more often acts as a role model. If they are surly and treat customers poorly, how can anyone expect their employees to react to customers any differently?

OK, so how important is “Responsiveness to Customers”?

When predicting whether the candidate will meet the site’s sales potential, our study showed it should have a weighting of 15%. The study also showed that a weighting of 12% in the “Overall Recommendation” equation is appropriate. So you see that “Responsiveness to Customers” is important. But it needs to be considered in association with the other core values to give an accurate prediction of performance.

5. Be comfortable dealing with people

Extrovert or Introvert?

Social Orientation explores how comfortable the candidate is when dealing with a lot of people on a regular basis. Or, you could say we are assessing whether the candidate is an introvert or an extrovert.

This scale is one of the very few personality characteristics that our research showed has any relationship with success as a franchisee.

You would think that it was easy to identify if a candidate was an extrovert or not, wouldn’t you? Well, guess what? It is very easy to be fooled by a candidate during the interview process.

Here’s what we mean. Consider the case of a salesperson. Does a salesperson need to be an extrovert? We don’t mean sales staff in a retail environment. But salespeople that go out and visit clients and prospects. Even ones that sell door-to-door.

“Fake it till you make it”

Would you be surprised if we told you that there has never been a demonstrated correlation between success as a salesperson and being an extrovert? You see, salespeople know that they are “on-stage” when they are selling. So it is easy for the good ones to fake being an extrovert. At least for the hour or so that they spend in front of a client or prospect. There is even a saying about it – “Fake it till you make it”.

Now, how difficult do you think it would be for someone that really wants to buy your franchise to fake it for the short amount of time they have to spend in interviews with you and your staff? Chances are if they want the franchise bad enough, they will work extremely hard at fooling you.

One Client’s Experience

For example, a number of years ago one of our clients told us of a candidate under consideration. They were concerned about the discrepancy between what the FranchiZe Profile told them and what their interviews revealed. After further interviews based on our conversation with the client, the candidate admitted that he had already approached four other franchisors and was turned down by each of them.

Of course, after going through four sets of interviews, this candidate knew exactly what a franchisor wanted to hear. The candidate was so intent on buying a franchise – any franchise – they would say anything so they could actually get accepted. Fortunately, our client “passed” on him.

You have to be “on-stage” all the time

Sometimes, even the candidate is not aware that they would not be suited to working in a franchise environment. Many people simply do not understand that when you are on the shop floor dealing with customers, you can’t simply escape and take some time to re-group before you see the next potential customer. You have to be “on-stage” all the time.

If the franchisee needs to take time to re-group and is not suited to this constant interaction with customers, they get stressed. When people get stressed, they often become rude and impatient. If you are an introvert working on a shop floor it can be a very uncomfortable and stressful situation.

So, now that we have established the importance of sales staff being extroverts, why do franchisees need to be extroverts as well? As you know, leading by example is the most effective way of training staff in the right way of doing things.

The franchisee as role model

When the franchisee or retail manager is not an extrovert they have difficulty dealing with customers and often become rude and impatient with customers. That is not the proper role model a franchisee should give staff. Because we guarantee the floor staff will treat customers exactly the same as the franchisee would.

Too much of a good thing?

Of course, it is possible to be too outgoing – but the penalties of being too introverted are too great to make worrying about a candidate who is too gregarious of much concern. It is far better to select someone who loves to talk with everyone than someone who needs a lot of quiet time.

One caveat though; when selecting candidates who are introverted, it is sometimes possible to compensate for this by making sure that their partner (or future employees) complement them and take over the role of dealing with customers and/or employees the majority of the time.

Success Predictions

When predicting success of franchisees, Social Orientation has a weighting of 15% when predicting how likely the candidate will meet the location’s sales potential. It accounts for 13% of our overall recommendation.

6. Be comfortable with local marketing

Successful Franchisees Make It Happen

The results of our studies quite clearly show that successful franchisees tended to feel comfortable selling and marketing their products and services. They did not simply wait for business to magically appear. Or, wait for the franchisor to somehow drive business to them.

The top rated franchisees in the study were open to exploring new ways of marketing their products or services in the community. They were generally active in promoting their business through community events whenever possible. Of course with the proviso that their methods of marketing met with approval from head office.

Franchisees performing at the top levels were not generally hard-core salespeople. One that really loves going out and selling door-to-door or any other kind of competitive selling. Rather, they enjoyed simply talking to strangers about their business and products in their normal day-to-day life, both inside their business and outside.

Manager or Co-Worker?

In addition, the best performing franchisees saw their role not simply as a manager but as an integral part of the sales team. They enjoyed taking time to talk to customers.

The best performing franchisees understand, and are able to communicate to their employees, the importance of recommending new products to customers.

The Importance of “Sales Orientation”

So how important is “Sales Orientation” to franchisee success? When we studied the relative importance of “Sales Orientation” in terms of predicting eventual sales levels and an overall recommendation, we found that it to have a weighting of 17% in the resulting prediction equation.

7. Have a strong work ethic

Work Ethic or Retirement Ethic?

This is a core value that is often readily apparent simply by looking at a candidate’s work history. However, it is not unusual to run across a candidate that has, in the past, put in a lot of effort, but has now decided for one reason or another that it is time to simply “stop and smell the roses”. So, they decide to buy a franchise and are under the impression (no matter how much you may tell them otherwise) that what they are doing is buying themselves an investment. One that will require little or no effort on their part because they intend to hire good staff to run the business.

As you know, the candidate needs to have a strong drive or work ethic level. After all, how successful can they be if they can’t even get out of bed in the morning? On the other hand, we have all heard of people with high drive levels that end up going nowhere. That’s because although they put in the initial effort that’s needed to become successful, they just end up alienating their employees, customers and friends because they are always pushing others to keep up with them.

Prediction Weighting

In our prediction equations, when assessing how likely the candidate will meet the location’s sales potential Drive has a weighting of only 1 percent. In the Overall Recommendation equation, it has a weighting of only 2 percent.

You may be wondering why this core value plays such a small role in predicting franchisee performance. There are several reasons.

First, because this core value can often be assessed using proper interviewing techniques and by looking at the candidate’s background, it is fairly easy to weed out those candidates without the proper levels of drive.

People Matter Most!

Second, without the moderating influence of believing that customers and employees are critically important in their own right and that they all have important things to contribute to the business owner’s success, all the drive in the world won’t take them where they are going. These are the people who need to learn something extremely important, and that is – People Matter Most! No matter what business you are in or what products or services you sell, without treating people with the respect and trust that they deserve, long-term success will be a very elusive thing.

When assessing a candidate for drive levels, try to zero in on characteristics such as need to achieve and work ethic. Find out how the candidate feels about how to approach life. Does he/she have a strong need to “make things happen” or does he/she prefer to simply “stop and smell the roses.”