How to fix money-bleeding franchisees

How to fix money-bleeding franchisees

If you franchise your business, knowing the franchisees are upholding the image of your brand is a constant worry. In the worst-case scenario, what can you do when you realise a franchisee is doing more harm to the brand than good?

Business owners want the best people to work for them, and will go to great lengths to find the cream of the crop. Sometimes, however, an employee will slip through the cracks, or will appear impressive at first, but may turn out to not be a good fit.

While a normal business can seek to replace this employee, there is a lot more riding on how a franchisee behaves for a franchisor.

Luke Baylis, SumoSalad CEO and co-founder, says that franchisors need to be prioritising the quality of the franchisee over trying to make quick money.

A businessman wrapped in caution tape holding his hand out to shake“Don't franchise to people that aren't the right fit; it's not worth the growth,” Luke says.

“Take your time, grow in the right way with the right partners, and don't rush your growth. Make sure you select your partners very well and make sure there is a very, very strong alignment there because it will only come back and cause you problems down the track.

“To any business owner [who's] looking to franchise, I think [that] a very, very important aspect of it is the franchisee selection, if not the most important.”

In order to best identify potentially unfit franchisees, Luke says that franchisors need to be hiring based on whether that person fits within a business’ values and culture.

“If you understand your values and your culture, and you also have a greater purpose, then it's quite easy to use that as the litmus test to see whether they fit the mould or not,” he says.

“I would strongly encourage any business owner to take some time to thoroughly understand those aspects of their business before they go and franchise and recruit partners because without understanding that, you could be guiding the business in the wrong way without actually understanding what the long-term ramifications are.”

In the absolute worst-case scenario of a franchisee not working out, Luke suggests to turn it into an opportunity of turning that franchisee around.

“The first thing to do is to be honest and upfront, and tell them your concerns, and give them a fair opportunity to address those concerns,” Luke says.

“If you can overcome those concerns, then typically you might go on to have a very bright future together. But I think the key to it is just to sit down and be honest with each other, and [let] that be the basis for any conversation in which you have – good, bad, ugly or indifferent.

“Then that sets the tone for how you determine your future engagement with that partner.”

If there is no sign of improvement, Luke then says the conversation should shift to the franchisor looking to part ways with the franchisee.

Hear more insights from Luke about the secret to corporate social responsibility, finding the right franchisee and more now on the My Business Podcast!

How to fix money-bleeding franchisees
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