Before Starting Your Franchise Have Your Team Ready to Go
by Ed Teixeira
A successful franchise operation requires more than one person to manage the
business. There are a number of reasons why itís important for a new franchisee
to have their team in place before the franchise is off and running. First, the
franchisor needs to know how the franchisee intends to operate their franchise
before completing the franchise transaction. Here are some reasons why both the
franchisee and franchisor need to have answers to this particular question.
As a prospective franchisee goes through the process of purchasing a new
franchise and gets closer to signing the franchise agreement, key questions need
to be answered and plans put in place. One area that requires a great deal of
thought and planning is who the franchisee will rely upon to help manage the new
franchise. Iíve seen instances where a new franchisee had planned on having a
particular person to work in the franchise and the person had a last second
change of heart. Iíve also witnessed firsthand, instances where a franchisee
hired new employees who literally stood around and were on the payroll before
the franchise was up and running.
Carefully screening, hiring and deploying the individuals who will help the
new franchisee operate their new business and gain a
their investment is an important component of a successful franchise.
Franchisors should also take note of the following when qualifying and
meeting with potential franchisees.
Here are some suggestions for franchisees regarding their key team members:
1. Identify the key functions and
responsibilities that need to be performed. Before determining who youíll need
on your team, you will need to know what needs to be done. The franchisor should
have employee profiles and job descriptions to provide guidance. In selecting
the right employees. This is another reason why a prospective franchisee needs
to fully understand how the franchise is operated. Also, be sure to identify the
hiring sequence. What position is most crucial to starting up the franchise? For
example, do you need one highly qualified person or two people with fewer
2. Once the responsibilities and positions have
been identified, the next step is to plan how youíll recruit. Do you have anyone
in mind? Will you need to advertise the positions? Is a spouse of family member
working in the franchise? Do you plan on networking to find someone?
3. Identify the timing of your hires. You donít
want to bring staff on too early and pay unnecessary payroll. Conversely, if you
delay bringing the right staff on the franchise operation could be more
difficult to manage. Be sure to
your break-even analysis to serve as a guide.
4. Determine how the key staff will be
compensated. Consider using bonuses and incentives that are performance based.
This approach could help preserve valuable working capital during the start-up
phase of the franchise. It may also help attract motivated and confident
individuals who have the self confidence to perform well. Avoid granting equity
in the franchise except to an investor. So called ďsweatĒ equity, which provides
some ownership in a business based upon performance can be tricky and may lead
to legal problems if not properly designed.
5. Have a contingency plan for replacing
someone who drops out or has to leave after working in the franchise. The
smaller the business, the more valuable employees can be to the franchise and
the more difficult it can be to replace them. This is another reason why itís
important to carefully plan your staffing and thoroughly evaluate their
qualifications. Be sure to have a back-up plan, so youíre not left shorthanded.
Individuals considering the purchase of a franchise need to carefully plan
and identify the key members of their staff. Waiting until the franchise is
ready to open is too late to have a staffing plan in place.
Before a franchisor grants a franchise they should question the prospective
franchise about their staffing plans. Their response could serve as an indicator
as to their qualifications to be a successful franchisee.
© 2010 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at