The Franchise Dating Game

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The Franchise Dating Game

When you’re harried and under pressure to sell as many franchises as possible, do you use the “cash and fog a mirror approach”? In other words, do you award a franchise to someone that has the financing and can fog the mirror? If you use this approach, you’ll regret it for years to come.

Quite often, franchisors that use the “cash and fog a mirror approach” also tend not to delve too deeply into whether the candidate is really suited to run a franchise. Instead of taking the time to find out the probability of the candidate’s success, franchisors go with the interview process which happens to have the least chance of predicting success of the candidate….  an informal and unstructured interview. You know the kind I mean. One where you ask the candidate what they thought of (insert your favorite sport/movie here). It’s really a “get-to-know-you” session.

The Interviewer’s Thoughts

The interviewer thinks: “I get along great with him/her. I think they’ll make a great franchisee.” That’s great! But it doesn’t get you any closer to finding out if this is a suitable candidate for your opportunity. It would be nice if you could make a decision based on personality but, unfortunately, unstructured interviews really can’t tell you very much other than your ability to get along with the person and are not very reliable at predicting performance, no matter what job you’re hiring for or franchise you’re selling.

Heck, we all use this kind of decision making process when deciding whether to date someone. But how often do successful long term relationships result? Most dates never develop into long-term relationships so what’s the rationale for basing a business decision on the same flawed process?

Whenever we meet and speak to someone new, each of us makes a different judgment of the same person. This also applies to interviews. When a franchise candidate is being interviewed, the interviewer’s judgment is colored, often unconsciously, by factors like whether the personalities of the interviewer and candidate are similar (for instance, entrepreneurs relate well other entrepreneurs), both have similar ethnic backgrounds, whether the candidate is perceived by the interviewer as attractive, etc..

Let’s say you decide to sell a franchise to someone based on the fact that you have a rapport with the candidate. That’s all well and good, but if you’re the one that sells the franchise, what about the other people that have to deal with the person that you’ve accepted into the system? What are the chances that they’ll have good rapport as well?

In a nutshell, awarding a franchise using an unstructured interview is akin to bringing the candidate on-board because of a “cultural fit” rather than business sense which is not a viable long term solution. It’s actually an issue that will cost you in the long run.

Avoiding Lawsuits

Here’s an example that a lot of franchisors are all too familiar with. Lawsuits that claim discrimination. Maybe the franchisee wasn’t successful. I bet that instead of blaming themselves, they’ll find another scapegoat – the franchisor. Without a well-documented structured selection process in place it will be very difficult to defend. Using the methods and comparing the candidate to a group of set criteria is the only way you’ll be able to cut those lawsuits off at the knees.

We’ve been helping franchisors select the best franchisees since 1988 and since then, whenever a franchisee or candidate has threatened to file a suit, all our clients did was show their attorney a copy of the FranchiZe Predictor report. That was the end of the lawsuit. Since we have such strong data supporting the effectiveness of our assessment tool, there was really no sense in continuing. This saved the franchisor 10s of thousands of dollars right there.

An assessment tool is nothing more than a structured interview in a different format. But beware! It has to be proven to be job-relevant. Without that, there’s still a possibility of the suit by the franchisee/candidate being ruled in their favor. See 1971 Griggs v. Duke Power Company and others.

In a couple of weeks I’ll post some tips on developing your own non-discriminatory selection process that doesn’t break the bank and will help you sell more franchises to better franchisees.

The Pros and Cons

To sum up, here’s the Pros and Cons of using unstructured interviews.

Pros

  • Inexpensive.
  • Easy to implement.

Cons

  • Not legally defensible.
  • Interview Bias – Judgments Get Clouded – Entrepreneurs Like Entrepreneurs.
  • Lack of consistent criteria to rate applicants – No standard questions and scoring ratings.
  • Interviewer hearing only what they want to hear.
  • Rarely predicts performance.

With so many counts against it and so little going for it, unstructured interviews are a disaster waiting to happening.

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