I have been amazed over the last few years on how many franchisors are willing to partner with a franchisee without checking who they are ‘getting in to bed with’.
When selecting a franchisee there are lots of things to be considered, such as location, potential growth, franchise experience, business acumen, people management, culture fit and business plan assessment. However, once that has all been completed and you feel comfortable with the potential franchisee it is so important to carry out Background/CRB checks before you sign up to a legal agreement with them for 5, 10 or maybe 20+ years.
In any other walk of life, such as getting a mortgage, buying a phone or signing up to TV subscriptions, you will go through financial checks as the company wants to look after their interests and minimise any risk – and that’s on low-investment items. The same should go for franchising. You are about to put your brand in their hands which means putting the destiny of your product and customer with someone else in charge of it.
Background checks will find out if someone is trustworthy, how they have performed – both from a finical point of view but also longevity – in other businesses, what other (potentially competing or conflict of interest) business shareholdings they have and credit scoring, all very important to know before you set off on the partnership road together.
Finding the right partners is hard, especially when you have difficult to source locations or competing brands chasing the same prospect. However, you are better to be disappointed now by not signing someone up than you are with the potential months of non-core, business distracting, management you are going to have to get involved with when things go wrong later down the line.
Look after yourself, your brand, your customers and your fellow franchise partners – background check new recruits so you can all sleep easy!