Imagine What A Judge Would Do

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Judge ruling about an unsuitable franchise candidate wanting to buy a franchisee

In these days of “lawsuit madness”, I’ve lately been hearing franchisors express a concern about the possible legal ramifications of not accepting a candidate as a franchisee.

The concern? The franchisor doesn’t want to run the risk of being taken to court for not awarding a franchise to a candidate. Even though the candidate may be unsuitable.

I can understand the concern about lawsuits. They’re horrendously expensive and distract everyone from running the business. However, I think the threat of a lawsuit is given far more consideration than it deserves. If, by some weird confluence of events, a lawsuit is filed by a candidate that wants a franchise so desperately, is it really possible that a judge would hear the argument?

Sure, there may be “discrimination” issues that are raised, but if the franchisor honestly is not discriminating then on what grounds could a judge possibly rule in the candidate’s favor?


Can’t you just see the ruling now? Judge – “Although the franchisor has proven that the plaintiff does not have the characteristics which are required to be a successful franchisee, I rule in the plaintiff’s favor. The defendant has made it abundantly clear that they want to purchase a franchise from the franchisor. Therefore, the defendant (the franchisor) must award a franchise to the plaintiff and take the plaintiff’s money.”

Sorry, it simply isn’t going to happen. If it ever does, then I think it’ll be time for all of us to get out of the franchising business (and possibly any business of any sort) immediately. Who among us would put the entire franchise system at risk because some judge has decided so?

A ruling like this would be completely against the interests of the candidate and it just doesn’t make sense. Especially with the current bias of judges in favor of franchisees or franchise candidates.


In my opinion, instead of holding you back from weeding out unsuitable candidates, the number of people filing frivolous lawsuits should be an even more powerful reason to develop and implement a formalized and structured franchisee selection process.

Formalizing the selection process helps you treat all franchise candidates equally. It’s much easier to prove your case that no discrimination exists when you can prove that you treat all franchise candidates the same. You examine each of them with the same questions using the same selection tools for everyone.

Since the selection tool you’re using has been validated, you’ll have proof that it can accurately predict how well a franchise candidate will perform. No judge will rule that you must award a franchise to an unqualified individual. Just as they would never rule that you must sell a franchise to a candidate that was not financially qualified.


Speaking of selection tools, many terrific franchisors use our FranchiZe Profile because it predicts how a franchise candidate will perform. It gives them an unbiased, objective read on whether the candidate has what it takes to be successful.

When you have a formal selection process in place, arguing that a candidate does not meet your minimum requirements and therefore does not qualify for a franchise is really no different than the argument that every candidate needs to meet a minimum threshold for available cash-on-hand and financing.

Similarly, if you:

1) have a selection system in place that clearly specifies that a candidate must have a certain set of characteristics, beliefs or core values,

2) can prove that these have been found to be essential to the success of your franchisees and

3) measure all candidates on these characteristics.

You’re on safe ground.

Just one more reason to develop a structured interview process consisting of:

  1. A set of interview questions you ask every candidate,
  2. A selection rater to help rate each candidate and
  3. Including a validated profile in the mix.

So don’t take the concern about a lawsuit as a reason to accept anyone with the funding. Instead, take it as motivation to improve your selection process. You’ll rest easier, and your current franchisees will thank you for it.


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