Sorry. Your Application Has Been Rejected!

We regret to inform you that your request for consideration to become a franchisee with XYZ Franchise has been rejected. What? How can that be? I meet the financial requirements. I know I’d succeed because I’ve been successful at whatever I’ve done before. And I’ve already found a great location!

This scenario is unfolding more and more as franchisors are focusing on finding the right candidates for their franchise. Processes have evolved from just an application and financial qualification to an evaluation of whether the candidate is right for the franchise system, and with where the system is today. So, how do you know you’re ‘right’ for a specific franchise?

A statement being heard frequently today is, the franchise relationship is interdependent. It implies that both parties to the agreement are dependent upon each other. Your success is our success, and our success is your success. Franchisors are emphasizing strong foundational components of a relationship built upon open, two-way communications as opposed to what has become a cliché of being in business for yourself but not by yourself. Many are referring to the franchise relationship as being akin to a marriage complete with very similar steps leading up to BOTH parties saying, I do.

Of late, I’ve been seeing candidates pushing through the process entirely focused on whether the opportunity is right for them and giving little to no thought about the franchisor perspective. Many believe they are the only ones making a big commitment as they are ‘buying’ the franchise and as such, believe the franchisor should be grateful, never giving thought to what the franchisor is bringing to the table, to the relationship.

Allow me to share a story…

Several individuals inquired together about a franchise opportunity with a fast-growing emerging brand we had been representing for a year or so. The candidates were financially qualified not only for one location but for several, if not more. They had visited one of the locations for lunch and decided to request information.

We had multiple calls including an FDD Review Call and on every call their focus was on location and getting started ASAP. Despite their aggressive nature we kept them on course taking them through the process all the way to Discovery Day. During Discovery Day they met the founders for the first time. At this point things went south, and fast.

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You see, the candidates, now five of them kept themselves busy talking to each other. They spent more time scribbling notes, running numbers, talking about location… all amongst themselves. No effort was made to talk with the founders, ask them questions or even interact at all. All they did was to tell the founders how they should change this or revise that and how they’d like to do so when they opened their business.

Seeing how quickly this meeting was going off course, we tried to create interaction between the parties. Engagement? Hardly the case at all. The founders also worked hard to engage with the candidates, asking questions, trying to determine if there was a fit. One of the founders even asked, what do you like about the brand and why this brand? The response was along the lines of, we know we can make money and when we do, we’ll commit to other locations.

The meeting ended with me telling the candidates we would be in touch with founders’ decision and if favorable, next steps in the process. Well, a day later I received a call from the primary candidate I had been working with to inform me… yes, inform me they had signed a Letter of Intent on a location, had gotten a cashier check for the Franchise Fee and were ready to sign the Franchise Agreement and wanted to do so that day.

I informed the Franchisor and was promptly told; we are not approving them because they did not believe these individuals would follow the processes and procedures the founders had meticulously and diligently developed and invested in over eight years to that point. A system the founders knew was working quite well as evident by high customer satisfaction, great unit economics including excellent profit margins.

More so, the founders knew these candidates were not a right fit for the brand citing the franchise relationship being a marriage of sorts and this was a relationship they were not interested in pursuing. The founders believed the values they worked so hard to build throughout the brand and that their franchisees were making sure lived every day, would ultimately be missing under these candidates’ management. The franchisor was unwilling to compromise the system at any cost as evident by staying the course despite the candidates’ subsequent offer to remit franchise fees upfront for five locations.

Franchise Ownership – Can I qualify?