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Your franchisees can make or break your franchise, so finding the best candidates is crucial for running a successful operation. But, first, you need to have a clear idea of the kinds of franchisees you want and what your franchise can offer them against your competitors. This article will provide some background on this matter and explain how you can find franchisees as a franchisor.

Setting Up Your Franchise Successfully

Before looking for suitable franchisees, you need to ensure you have a suitable franchise model. If your franchise business is not already established with a sustainable premise that franchisees can replicate, not only will you not find prospective franchisees, but your franchise business may fail as well.

A functional franchise needs:

  • a successful pilot operation;
  • something that franchisees can replicate and grow;
  • robust contracts and documentation;
  • potential locations for growth; 
  • a proven track record; and
  • a way for providing support for your franchisees.

Your Role as the Franchisor

As the franchisor, you manage the overarching business. Your franchisees will run their own installations of your business in different locations, managing the day-to-day operations. Thus, you will need to provide support for them to do so, which includes:

  • training;
  • resources and information networks;
  • trade marks and branding;
  • operating systems;
  • promotional and marketing strategies;
  • co-ordination of group purchases;
  • location scouting; and
  • other elements you deem necessary for franchisee success.

In return, franchisees will pay startup and ongoing fees. Crucially, you should set all of this out using appropriate documentation, including your:

  • franchise agreement;
  • training program;
  • franchise disclosure document; and
  • operations manual.

In New Zealand, there are no franchise-specific laws that govern this area, outside of general commercial law that all businesses have to abide by. However, if you decide to join the Franchise Association of New Zealand (FANZ), they have various guidelines that you will need to follow.

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How Can I Find Franchisees?

There are many ways to find franchisees for your business, both formal and informal. Some options include:

  • advertising in newspapers or community boards;
  • using franchise referral consultants or brokers;
  • organic referrals, such as those from family, friends, colleagues, or customers;
  • finding franchisees from franchise expos and trade shows; or
  • marketing online through franchise websites, email, or social media.

The method you use to find franchises will affect the kinds of franchisees you encounter.

For instance, if you find franchisees through franchise expos, these will be people that are actively looking for opportunities and may already have industry experience. However, franchisees that you source through social media or the newspaper may be just as enthusiastic but lack the specific skills you are looking for.

Choosing the Right Franchisees

Therefore, you must have a clear idea in mind of the kinds of franchisees you want. To do this, you could create a list of values or skills you desire and use these to evaluate the profiles of potential franchisees. These will ultimately depend on the kind of franchise you want to run and the nature of your business. 

For example, some franchisors look for franchisee candidates with proven commercial or industry knowledge. They may do so because they do not want to include such training in their setup process. However, your franchise may not want franchisees with industry knowledge as they may already have a set way of doing things, whereas you want to establish new practices within your franchise.

Ultimately, you will generally want someone who:

  • understands how franchising works;
  • will comply with the rules of your franchise; and
  • has an interest in the shared success of your franchise.

Providing For Your Franchisees

On top of this, you also need to consider what makes your franchise attractive to franchisees. Be sure to provide potential applicants with an information pack that outlines important details about your franchise system. This pack may include a franchise disclosure document, which can include information about your:

If you are a member of FANZ, you must provide a franchise disclosure document to potential franchisees.

Franchisees want a franchise with a proven track record to generate a good income if they join. They may be looking for specific benefits, so it is essential to outline what makes your franchise different from your competitors. Such benefits may include:

  • a sustainable work/life balance;
  • a good franchise culture;
  • varied locations to choose from;
  • ongoing support for franchisee enrichment and growth; and
  • a strong dispute management system.

Whenever engaging with potential and current franchisees, you must maintain confidentiality and protect their privacy where necessary.

Key Takeaways

There are various ways that you can find franchisees. However, the method you choose will likely influence the kinds of candidates you find. Therefore, you need to have a clear idea of the kind of person or business you are looking for.

If you need help with finding franchisees for your franchise, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

What is a franchisee?

A franchise is a business model that you may use to grow your business. You, as the franchisor, allow other parties, the franchisees, to replicate your business operations to create their own success. In return, you grow your brand and receive various fees or royalties.

How can I find franchisees?

You can find franchisees through various channels, such as advertising online or through trade shows and franchise expos. The key to this process is having a clear idea of the kind of franchisee you are looking for.

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

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