Rigorous selection processes benefit franchisors and franchisees alike

I had lunch with a potential investor on Friday. He was remarking how high he thought our franchise fee was given the age of our franchise product and how quickly we’d recruited our first 20-30 franchisees.

Now, before you think we are getting £50k a franchise, we aren’t. Ours now start from £19,998 for pretty big geographical areas. He was right in the sense that our initial investment has increased substantially since we launched but our product and service offering to our franchises is much better now than when we started over two years ago. We also think a higher starting point filters out people who, quite frankly, can’t afford to adequately capitalise the venture or maybe aren’t that serious about their own sustainability. So a higher starting point acts as a very useful filter.

And the triple price increase has not slowed our recruitment. It has just resulted in a higher calibre of franchisee – people serious about building the kind of business that is reflective of our premium brand in what can often be seen as a commoditised market.

It also got me to thinking about how different our recruitment process is now. Once upon a time we had a one page application form, a quick interview and then due diligence before we made an offer. Now it’s a qualifying call; an application and non-disclosure agreement; a call with me in the initial stages; a full application form of ten plus pages; a formal interview at Diamond HQ; a vetting call from one of our top franchises so the network gets to check who is joining them and give their approval; and a site visit to either their home or the potential new premises. Only then is the application put forward to our board for final approval. All these layers of filtration mean the franchise applicant has to really want to be part of Diamond because there are quite a lot of stages for them to negotiate.

We don’t even have a standard lead capture page on our website; this means that anyone just enquiring has to give up quite a lot of information. Our theory is that if they cannot be bothered at that stage to commit to disclosure, then they are not our kind of franchise because everyone we recruit is joining our network. They all have to be 100% reflective of our brand and we want them to last because our profits are not secured on the franchise sale. We invest 100% of that initial figure in the marketing, setup and training of their depot. Our profits come from the long-term revenue of the franchise in that depot and our ability to sell services in that area once their depot is established. We select franchises that are going to last so making it harder to get in makes it more likely they will stick it out in our tough world of logistics.

And this is a very important point for potential franchisees to consider. Trust me, there are quite a few crappy franchises out there and a huge warning sign should be if they are just after your money. With very little due diligence or a lightweight application process, it means they are probably more interested in the franchise fee and not your long-term longevity. If their application form might as well have been written on the back of a cereal packet, they will snatch your money, constantly chase your application or – and I have seen this happen – they’ll take your £50k off you on their stall at the NEC without giving a damn about your longevity.

I’d obviously recommend looking at the long-term business plans, the validity of the market, the accounts and the CVs of the key players in your new franchise team. Search your soul and make sure you like them – after all you are building a partnership here. And here’s something I didn’t think I’d say – as I like to be somewhat non-conformist – but they must have professional accreditation. The bfa process makes franchisors jump through more hoops than you could individually, including evaluating the business model and speaking to existing franchises. So if there’s bfa accreditation then it’s far more likely your franchise is going to be a good, long-term bet. And it’s not cheap either – so if your franchisor wants to invest in their professional accreditation you know they are taking their business seriously too.

For franchisees and franchisors alike, a protracted selection process with a good price tag is a good thing. It filters out the crap, makes sure the partners are committed to each other and increases the odds on the longevity and sustainability of the franchise business that both parties are investing into. After all, this whole franchise thing is about partnerships and you know what they say: marry in haste, repent at leisure. Or maybe that’s just me!

Take your time, be suspicious of those who are overly keen on either side and then, hopefully, enjoy a longer, sustainable and mutually beneficial relationship as you, together, build your business.”