The short answer
Good franchisors are selective. The four most common reasons a candidate is not awarded a franchise are not enough capital, too little leadership or business experience, not enough time availability, and a negative attitude. Treat the process like a job interview: you are evaluating the brand, and it is evaluating you.
This is a recap of my column on Entrepreneur. Read the full column on Entrepreneur.
Key takeaways
- Every franchise sets minimum liquid capital and net worth requirements, and wants you to have reserves for ramp-up and living expenses.
- Industry experience is rarely required, but leadership and management experience usually is.
- There is no truly passive franchise. Even semi-active models need you available to your manager.
- Franchisors look for resilience and an entrepreneurial mindset. Candidates can be turned down at Discovery Day.
Why franchisors turn candidates down
A brand is only as strong as its franchisees, so good franchisors build a profile of who succeeds in their system and screen for it. Expect them to ask as many questions about you as you ask about them.
The four most common reasons
- Not enough capital. Brands want to see their minimum liquidity and net worth, plus reserves to cover working capital and your living expenses while the business ramps up.
- Limited business experience. You do not need industry experience, but you should be able to lead a team and be a good partner.
- Not enough availability. Many brands require full-time owners. Semi-active brands allow you to keep your job, but you still need flexibility during the workday.
- A negative attitude. Starting a business is hard. Franchisors want candidates with the resilience to work through setbacks.
A warning sign in reverse
If a franchisor will award a franchise to anyone who can pay the fee, be cautious. Strong brands protect their system by being selective. How much money you need to buy a franchise.
Frequently asked questions
Can a franchisor turn me down?
Yes. Franchisors award franchises only to candidates who meet their capital, experience, availability and mindset criteria. Some candidates are turned down as late as Discovery Day.
What do franchisors look for in a franchisee?
Enough capital and reserves, leadership and management experience, the time the model requires, and a resilient, positive approach to running a business.
Read the full column on Entrepreneur · More franchise guides
David Busker is the Founder of FranchiseVision and a senior consultant with FranChoice, the premier national network of franchise consultants. David helps candidates exploring franchise ownership to set their criteria and matches them with the perfect franchise, then supports and guides them through due diligence and franchise signing. You can learn more about David at FranchiseVision.
