Franchisee Recruitment Best Practices: Insights from FANZ Session

Franchisee recruitment is a crucial process for any franchisor aiming to grow and maintain a thriving business. During a recent session hosted by Franchise Association New Zealand (FANZ), franchise sector experts shared valuable insights on the best practices for attracting and selecting the right franchisees. Here’s a breakdown of the key takeaways:

1. The Importance of Providing Information Upfront

Both Meredith from Iridium Partners, and Nick Stevens from Link stressed the importance of providing detailed information early in the recruitment process. The more accessible and transparent the information, the more likely potential franchisees will engage with the brand. James from ABC Business Sales added it’s often very difficult with a new or greenfield as there is no historical data, this re-enforces the key role that benchmarking plays in providing information to potential franchisees.

For example, Hire a Hubby has developed an online portal where candidates can access information about the brand before even meeting with the franchisor. This proactive approach helps filter candidates who are genuinely interested and aligned with the brand’s values.

Meredith emphasized the need to understand the brand and its culture to accurately match candidates with the right fit. 

2.Understanding the Role of Online Platforms and Referrals

Franchisors agree that online platforms and referrals are two major drivers for franchisee recruitment. Online platforms offer a wide-reaching space for potential franchisees to explore opportunities, while referrals often lead to the most successful franchisees. 

Referrals from existing franchisees or other trusted sources carry weight, as they tend to bring in candidates who align better with the brand’s culture and values. Callum Floyd from Franchize Consultants shared insights from the U.S. where there is a growing trend, with more franchises relying on referrals from trusted networks or industry connections to bring in high-quality candidates. Some systems in New Zealand are running similar programs.  Nathan Bonney from Iridium Partners encouraged franchisors looking at such programs to consult with the solicitors and ensure their practises are within REAA guidelines.

3. Tackling Financial Barriers

A common perception in franchisee recruitment is that finance can be a significant roadblock. This is particularly true for new franchisees who may struggle with securing funding from traditional lenders. To mitigate this, some brands are now leveraging vendor finance—a system where the franchisor provides financial assistance to new or reselling franchisees. This approach helps overcome financial barriers by offering alternative financing options. However, vendor finance usually sits behind bank funding, meaning franchisors must adopt a long-term view and understand the implications of this financial model.

Meredith suggested that working with specialist lenders and building accreditation with banks can make a significant difference in securing funding for franchisees. Additionally, bank guarantees can sometimes be a challenge, especially when they are left in place with new owners. Franchisors should be prepared to navigate these complexities and ensure proper financial frameworks are in place.

4. The Role of Psychometric Profiling

Meredith spoke to the invaluable role that profiling plays in recruitment as well as understanding it’s just part of the recruitment process. Many franchisors use psychometric profiling tools, such as FranchiseLab, to assess the suitability of candidates. While profiling tools can provide helpful insights into a candidate’s characteristics, it was generally agreed that it should not be the sole determinant in recruitment decisions, while profiling is useful for understanding how candidates might behave in certain situations, it doesn’t guarantee success. Brett from Hire a Hubby uses profiling results to help construct interview questions and gain a better understanding of how to relate to franchisees once they join the brand.

Ruan van Eeden from The Coffee Club also stressed that while profiling can assist in recruitment, there are limitations, and it’s difficult to truly understand how a candidate will perform until they are fully immersed in the brand.

5. Franchisee Journey: The Process of Discovery

Sally Knight from Franchise New Zealand Media provided insights that the average franchisee journey lasts between 9 to 18 months. During this time, candidates start with a broad view and gradually narrow their options. Providing continuous, informative touch points is essential to keep candidates engaged throughout their journey. This means ensuring they have access to key materials about the brand as they move through the decision-making process. Often, potential franchisees remain “invisible” until they are ready to make a commitment, so it’s crucial to have information readily available when they are prepared to engage.

6. Keeping the Process Simple

One key piece of advice shared by Ruan was to keep the recruitment process simple. Overcomplicating the process can turn potential candidates away. It’s important to ensure the process is straightforward and easy to follow, allowing candidates to make their decisions without unnecessary hurdles.

7. Patience and Preparation

Recruiting the right franchisee takes time, and Nick from Link estimated that it’s reasonable to secure 1-2 franchisees in a new brand per year in the current market. Meredith echoed this sentiment, emphasizing that good candidates are often the result of careful alignment between the brand, the individual, and the timing. It’s not a quick process, but with patience and the right approach, franchisors can find franchisees who are the best fit for their business.

Summary

Franchisee recruitment is an evolving process that requires a combination of traditional and innovative strategies. By leveraging online platforms, providing comprehensive information early, and using tools like personality profiling and vendor financing, franchisors can improve their recruitment efforts. However, it’s also essential to be patient and take a long-term approach to ensure the right fit for both the franchisor and the franchisee. Ultimately, a simple, transparent, and well-supported recruitment process will lead to the best candidates who will help drive the success of the franchise system.

Our Industry panel was:

James Sheppard – General Manager ABC Business Sales

Meredith Taylor – Director Iridium Partners

Nick Stevens – Director Link Business

Brett Denis – Franchise Business Manager, Hire a Hubby

Ruan van Eeden – General Manager, The Coffee Club

Moderated by Jason Hill – General Manager at Green Acres and Hire a Hubby

Commentary added by

Sally Knight – General Manager New Zealand Franchise Media

Callum Floyd – Managing Director Franchize Consultants

Nathan Bonney – Director Iridium Partners