Selecting Franchisees in Croatia: Assessing Candidates

When preparing an existing business for franchising, the first interested candidate is not necessarily the right partner. Having capital available is not enough if the person does not understand the day-to-day work or expects more freedom than your concept allows. To build a sustainable franchise network, introduce a clear selection process: consistent criteria, comparable evidence and a documented decision before either side makes commitments.

1. First, define the partner your business needs

Base your ideal franchisee profile on the actual work involved in running your own outlet, rather than broad qualities such as entrepreneurial spirit and motivation. List the decisions the person in charge makes every day: organising shifts, monitoring stock, speaking to customers, controlling costs or managing sales. Then establish what candidates need to know beforehand and what they can realistically learn through your training.

In particular, clarify whether you require a hands-on owner or will accept an investor who employs a manager. If your existing model succeeds because of the owner's daily involvement, do not assume without checking that it will work equally well with an investor who is only occasionally present.

Divide your criteria into three groups:

• Essential requirements: sufficient time, a viable funding plan and a willingness to work to shared standards.
• Advantages: experience of managing people, knowledge of local customers or experience in a similar sector.
• Gaps that can be addressed: unfamiliarity with a particular tool or procedure that you can reliably teach.

For each essential requirement, set out how you will check it. “Good customer relations” is not a verifiable criterion until you define a specific question, example of behaviour or practical task. Criteria should relate to the business, not to how much the candidate resembles the founder personally.

2. Structure interviews around real business situations

Candidates may speak convincingly about their motivation yet still misunderstand the franchisee's role. Ask all candidates the same core questions and request examples from their previous experience.

Ask how they have dealt with staff absences, dissatisfied customers or periods of weaker sales. If they have no such experience, describe a situation from your own outlet without including customers' or employees' personal data. Assess their reasoning, ability to identify risks and willingness to seek help, rather than simply whether their answer matches yours.

An exercise on compliance with standards is also useful. For example, a candidate believes that a cheaper substitute product would increase profits, but it has not been approved. Ask what they would do before making the change. Their answer will show whether they understand the difference between entrepreneurial initiative and unilaterally departing from the agreed system.

Arrange a structured visit to an outlet while protecting confidential information. Show the demanding aspects of the work, not just the customer-facing area at its best. The visit is an opportunity to learn about the business; do not turn it into informal unpaid work for the candidate.

After the interview, record specific evidence. A note saying “good impression” is less useful than an account of how the candidate explained a staff rota or their approach to handling a complaint.

3. Check financial viability, not just the initial sum

Assessing a candidate's finances is not about setting the franchise fee. The purpose is to check whether they can fund the entire start-up phase, including fitting out the premises, stock, staffing and the period before cash inflows become more stable.

Request an overview of funding sources and distinguish between funds already available and loans or other sources that still require approval. A verbal expectation of funding is not the same as confirmed access to money. Do not set a universal threshold without reference to the specific concept and location.

Work through a delayed opening or slower sales growth scenario with the candidate. Who would cover the rent and wages in those circumstances? Would the owner need to draw money from the business immediately to meet personal living costs? These questions reveal weaknesses that the total investment figure may conceal.

Restrict access to sensitive supporting documents and request only what is necessary for the assessment. Advise candidates to review their financial plan with their own accountant or financial adviser. Your internal assessment is not a guarantee of their future earnings.

4. Make a reasoned decision and establish data-handling procedures

Croatia has no specific franchise law or dedicated statutory requirement for a pre-contractual franchise disclosure document. Negotiations and contractual relationships are governed by the Civil Obligations Act, including the principle of good faith and fair dealing. Depending on the nature of the relationship, the Competition Act and the Trade Mark Act may also be relevant.

The General Data Protection Regulation (GDPR) and Croatia's Act on the Implementation of the General Data Protection Regulation apply when processing candidates' personal data. Define the purpose and legal basis for processing, inform candidates, and establish who can access documents and how long they will be retained. Do not collect sensitive or irrelevant data simply because it might be interesting.

The final decision may be acceptance, further assessment subject to clearly stated conditions, or rejection. Document the reasons against the criteria established in advance. Explain to the candidate that acceptance through the selection process is neither permission to operate nor a substitute for a contract or compliance with the legal requirements for running the business.

Practical takeaway: before the first interview, prepare a partner profile, a standard questionnaire and a decision form. Choose candidates on the evidence of their ability to run the business, not on how quickly they are willing to pay.