The process for finding master franchisees is pretty similar anywhere in the world but the detail of how to do it will change with the available media and the stage of development that franchising has reached in a particular region. It starts with building a profile of the ideal candidate, which typically involves a long list of qualities in the left-hand column then a further four columns headed Must Have, Nice To Have, OK to Have and Must Not Have. These qualities, and their relevance, will vary from franchise to franchise but the generic Must Have is the capital to finance the acquisition of the master rights in the first place, then the working capital to develop the first outlets before embarking on finding and recruiting their own sub-franchisees. Without the money this is going nowhere.
Having established the profile – and we’ll consider what some of the relevant qualities might be in a moment – you will then need some local advice on where potential candidates might be found, i.e. what magazines they might read, what exhibitions they might attend, what databases they might be on, which associations they might be members of, and so on. Equally importantly, find out who are the best franchise brokers in the region or country which you are targeting, then establish a marketing budget to generate enough enquiries to give you a good percentage chance of finding a qualified candidate.
In my experience, this local advice will most easily be available from an international franchise consultant based in your home market. International franchising has grown considerably over the last ten years but there are still very few experienced advisors. Those that there are will have built up a network of trusted contacts around the world with whom they do reciprocal business passing brands between countries. These contacts will be able to provide information and costs for their markets which your local consultant or broker can collate before passing on to you.
Your final choice before launching your marketing campaign is to decide how to deal with the enquiries that you generate, the basic choice being whether to process them in-house or to outsource to the local consultant. Bear in mind that you may be generating enquiries from several parts of the world at the same time and complications such as time differences and local languages come into play. Unless you have a very experienced, possibly multi-lingual, person on your staff I would always recommend the use of local brokers. Be aware that most of the enquiries you get will be from totally unqualified candidates and it takes a long time to sort the wheat from the chaff. Your local consultant can do this much more quickly and efficiently, eventually introducing to you only candidates who meet all the relevant criteria and who are ready to commit to visiting your home market office for serious discussions.
Let’s now look at what some of those criteria might be, remembering that every franchisor’s criteria will be different and some will be more important than others to different businesses.
- Knowledge of the business sector.
If your franchise is in, say, the food and beverage sector, you may decide that you’d prefer to take on an experienced food service operator rather than a business that knows nothing about it. Yes, you will train them in operating your system but if they already know about recruiting staff and ensuring they deliver good service then their business will grow more quickly.
- Knowledge of franchising.
Once they’ve run pilot outlets to establish that the system works in their country, the master franchisee’s job is to effectively become a franchisor. That means recruiting, training, monitoring and motivating franchisees. If they’ve run other franchises or are already operating one or more systems they will more quickly build the network.
- Knowledge of real estate.
It can be notoriously difficult to find properties for retail franchises in some markets. If the candidate can demonstrate the ability to locate, acquire and convert suitable locations, maybe in some cases even already owning them or the malls in which they are located, this will give them a flying start.
- An experienced management team.
Master franchisees are rarely individuals even though the principal of an organisation may be the person with whom you initially have most contact. The availability of a management team with a track record and experience of the sector, franchising or even just successfully building businesses is usually desirable, if not essential.
- Familiarity with local laws and customs.
No two countries are exactly the same when it comes to laws, regulations, common practices, traditions, and customs. Local knowledge of ‘how things are done here’ can be a vital attribute.
- Ability to negotiate.
There may be very valid reasons why parts of a franchisor’s system need to be changed and adapted in a particular market. The master franchisee needs to be able to explain and demonstrate why this is so and to stick to his guns when necessary.
- Production of a business development plan.
The master franchise candidate needs to demonstrate their understanding of how both the sector and franchising operate in their country and therefore how quickly the business is likely to grow. This then forms the agreed development schedule which will become part of the franchise agreement.
- A legal advisor who understands franchising.
Franchising often operates differently to other businesses. A good franchising lawyer will know why the agreement and manuals say the things they say. An inexperienced lawyer will waste everyone’s time and money, and may even scupper the deal, asking irrelevant questions.
- A similar type of business.
Entrepreneur and family-run businesses operate very differently to large corporate entities. Employed executives and business-owners have trouble understanding each other’s ethos and culture. Corporate franchisors should seek corporate master franchisees; owner-operated franchisors should find owner-operated master franchisees.
- Will we get on?
Last but by no means least, ask yourself if you’re likely to be able to sustain a long-term relationship. It’s not just selling a system and walking away. There will be many phone calls and visits to provide support and to check operating standards, so they ought to be likely to be as amicable, indeed pleasurable, as possible.