When a reality show about her business called The Cupcake Girls aired on the W Network in 2009, Lori Joyce was thrilled to find fans lining up at Cupcakes by Heather and Lori locations across Canada. That is until she found out that one franchisee wasn't up to the task.
"There was a franchisee sitting in her car calling me because she has 100 potential customers lined up ready to buy a cupcake, and she couldn't handle it," said Ms. Joyce. "That was a really big eye opener for me, because it was a really big missed opportunity for us."
After that incident Ms. Joyce decided to change her franchise partner screening process, switching her focus from finding talented bakers to finding talented leaders that emanate the company's culture.
"Everyone can do a good interview… they know what I want to hear," she said, adding that she's conducted approximately 100 for each of her 11 franchise locations. "We have six weeks of training, but they behave completely differently once they're in their environment, so it's really tricky, and as a result my training really heavily emphasizes cultural fit."
Finding the right franchisee is vital for the development of any small businesses. While a strong and honest leader can help shape and grow the organization, a poor fit can do costly damage to an established company.
"I used to think looking for a franchisee was like dating, but it's not like that at all, because when you date you can do a whole lot to get to know each other before you get married," said Ms. Joyce. "But with franchising you literally sign a franchise agreement, receive a deposit and build out a store. It's a significant jump and a major test of trust entering that partnership with someone before seeing them perform."
Like a strong marriage, franchisors and franchisees need to enter a symbiotic relationship built on common goals, explains Lorraine McLachlan, president and CEO of the Canadian Franchise Association. She therefore believes that it's just as important for the franchisee to vet their prospective franchisor before entering such a long-term relationship.
"Just as its true in a personal relationship, if they're rude to you when you're dating, can you imagine what they'll be like when you're married?" she said. "It's equally as important for both parties to be vetting, evaluating, and paying attention to any warning flags they get from either side."
Ms. McLachlan adds that franchisors like Ms. Joyce can take what they've learned from the successes and failures of past partnerships, but first-time franchisors need to be more diligent in taking on those vital first partners.
New franchisors instead need to take the lessons of their presumably successful corporate location to determine what challenges they've had to overcome, and what skill sets franchisees will require when facing similar obstacles. First time franchisers can also work with a franchise consultant to devise a profile based on industry norms. Ms. McLachlan adds that there are a variety of resources for first-time franchisors and franchisees available on the CFA's website, lookforafranchise.ca.
The process gets easier over time, however, not only because franchisors become better practiced at vetting potential franchisees, but because their first few franchisors can act as an advisory board moving forward.
"The first franchise partner was very instrumental in helping Brian (Scudamore, founder and CEO of 1800-GOT-JUNK?) build the business and the franchise system," said Erik Church, COO of O2E Brands, which include 1-800-GOT-JUNK?, You Move Me, and Wow 1 Day Painting. "They helped create something that Brain couldn't have created on his own, so if you're looking for your first franchise partners, think of them that way."
Mr. Church oversees 216 franchises across O2E's three brands, and is also the Toronto franchise partner of You Move Me. When it comes to finding the right franchise partner, Mr. Church uses a very straightforward method.
"The one litmus test that's held true for us is, 'would I want to invite this person over to my house for a barbecue over the weekend?'" he said. "If the answer is 'no' to that, chances are you're not going to want to spend a lot of time with them during the day working through challenging business problems."
Mr. Church adds that much of the O2E Brands' success has resulted from its franchise structure. While managers in a corporate structure might see their position as short term and their relationship with superiors as highly formalized, franchisees buy into the business with a longer-term focus, and are therefore more vested in the success of the business.
"There are so many more upsides to having a franchise partner than having a corporate setup, but with that comes a more intensive relationship," he said. "It's not a relationship between a VP and an operations manager, it's a partnership. It's a much more difficult relationship, but it bares much more fruit when managed well."