Selecting franchisees: how to assess your first candidates

Selecting your first franchisees is not simply about finding people who can afford to open an outlet. It means choosing partners who can put the business model into practice, understand its risks and contribute to a developing franchise network. Before advertising the opportunity, establish a documented selection process with verifiable criteria and room to reject unsuitable applications.

1. Turn your ideal profile into observable criteria

Phrases such as “entrepreneurial spirit” and “affinity with the brand” offer little help unless they specify what will be assessed. Start with real situations in your business: handling complaints, managing finances, monitoring performance indicators and applying operating standards.

For each situation, define a competency and the evidence that could demonstrate it. If the outlet requires people management, for example, ask for concrete examples of recruiting, guiding staff and resolving team problems. Previous experience as a business owner can be useful, but it should not replace an assessment of the skills required.

Organise an assessment form into three categories:

• Essential requirements: conditions without which the candidate cannot take on the business, such as a qualification required for a particular activity.
• Skills that can be developed: knowledge that can be acquired through training and ongoing support.
• Signs of incompatibility: unwillingness to follow standards, contradictory information or an expectation of guaranteed returns.

Separate operational needs from personal preferences. Liking the product does not demonstrate management ability; nor does getting on well with the founder. Consistent criteria help prevent decisions driven by enthusiasm or pressure to open quickly.

2. Align selection with Brazil’s Franchise Law

In Brazil, Law No. 13,966/2019 governs business franchising and replaced Law No. 8,955/1994. Article 2 requires the Franchise Disclosure Document, known locally as the Circular de Oferta de Franquia (COF), to describe the ideal franchisee’s previous experience, educational background and other mandatory or desirable characteristics.

This means the profile description should not be a mere formality. It must reflect the criteria the company actually uses. If the COF lists particular experience as mandatory, approving someone without it calls for a review, with legal advice, of the consistency between the process and the documentation—not simply ignoring the requirement.

The law also requires information about the franchisee’s direct involvement in operations and management. Although this should be defined before selection begins, recruitment must check that the candidate understands the commitment described.

The COF must be provided at least ten days before the franchise agreement or preliminary agreement is signed, or before any fee is paid to the franchisor or a person or company connected with it. Approval of a candidate does not remove this waiting period. Do not use a supposed “reservation of the opportunity” to collect an advance payment that breaches the legal requirement.

3. Use structured interviews and practical scenarios

Use a consistent interview guide for all candidates. Comparable questions help distinguish evidence from personal impressions. Rather than asking whether someone knows how to deal with customers, ask them to describe a difficult complaint, the decision they made and the outcome.

Include questions such as:

• How did you respond when you had to follow a procedure you disagreed with?
• What information do you usually review before cutting costs?
• How do you identify and correct a recurring customer service mistake?
• What would you do if initial performance fell short of expectations?

Then set a simple exercise based on the existing operation. This could be a simulated complaint or a fictional financial statement from which the candidate must identify priorities. Do not expect knowledge of internal methods that have not yet been taught: assess reasoning, the ability to ask questions and willingness to learn.

The candidate’s financial assessment also needs to be objective. Check the availability of the necessary funds and the extent of reliance on borrowing, using proportionate checks and handling personal data appropriately. Distinguish between the candidate’s own funds, credit that has not yet been approved and money committed to other obligations. This assessment does not guarantee success.

4. Record the decision and allow candidates to withdraw on an informed basis

Bring the evidence together in a short assessment: requirements met, outstanding questions, development needs and the reason for the decision. Wherever possible, involve someone other than the person responsible for the sale in the final approval.

Do not let an overall score automatically offset a fundamental incompatibility. Good communication, for example, does not cancel out an explicit refusal to follow standards. Where significant doubts remain, seek clarification before proceeding.

The assessment should work both ways. Give candidates room to ask about risks, responsibilities and the limits of the support offered. An informed decision to withdraw can prevent an unsuitable partnership for both parties.

Putting it into practice: before advertising your franchise, prepare an assessment form, an interview guide and an operational exercise. Check that they are consistent with the COF, and only approve candidates where there is sufficient evidence of suitability.