I really like the straight-forward way you approached the topic. The simple answer is that no business can survive without passionate people who are willing to work hard. I work for two blogs that discuss franchising for a nation-wide, in-home care organization called right at home and we often discuss how to select franchises and what research potential franchisees need to do.

If you are interested I hope that you will check out our advice on (so you don’t get mules).

Keep up the great posts,
Bill

It can be scary for a young or over-controlling franchisor to sign thoroughbreds to the team, so they gravitate toward picking mules. Or sometimes, they think so highly of their concept, marketing programs or support that they are truly convinced that they can make the mules (losers) successful. Or worst: they pick losers because cash flow makes them do it– franchise fees are keeping the franchisor afloat. All candidates accepted! Yikes.

For better or worse, franchising is subject to a term that I borrowed from economics: the multiplier effect. Think of every output from the franchisor being multiplied throughout the franchise system. Smart output, such as time spent supporting winners, multiplies as a worthwhile investment that pays many times over for the life of every good franchisee. It’s a virtuous circle. Isn’t that the idea of franchising in the first place? Scaling up a huge operation from a relatively small initial investment and each subsequent reinvestment through marketing and support programs.

However, the losers don’t just drag on the system, their effects multiply, too. Attitudes, cynicism, poor brand representation, low revenues, poor validation, expensive support that doesn’t produce…

No system can grow this way because you can’t scale a business on losers. They give the franchisor no leverage because they don’t add to the resource pool– they drain it!

Time and money spent on franchise selection with many built-in safety valves to screen them out before, during and even after training is crucial to keeping the losers from adding up. Too often, I was personally charged with pushing losers through training or spending extra resources to support them, despite my better judgment. With deadly precision, they wasted all of the time and money that flowed their way. When is that magical moment when the loser finally sees? What amount of support finally creates an effective franchisee? None.

Franchisors don’t make good franchisees– they merely enable them.

Winners showed their value not because they always require less initial support, but because they “Get It!” Sometimes, they demand much more than the losers, but the difference is that they make the system better for it. They raise standards, problem-solve creatively, and make more money for everyone. They also happen to make business fun!