Franchising in Denmark: Use Consistent Criteria to Select Franchisees

When turning your existing business into a franchise network, an interested candidate is not necessarily the right partner. A sound selection process examines whether the candidate can run the outlet, understand the finances and work within the franchise concept. Consistent criteria make the decision less dependent on personal chemistry and more dependent on documented evidence of suitability.

1. Turn operational needs into a clear requirements profile

Start with the work involved in your existing business, rather than a wish list of personality traits. Which tasks must franchisees be able to handle themselves? Which skills can they learn, and which must they have from the outset?

Divide the requirements profile into three categories:

• Non-negotiable requirements: For example, the ability to take an active role in day-to-day operations, a necessary professional qualification or evidence of funding.
• Skills to assess: For example, staff management, local sales activity, planning and an understanding of business finances.
• Skills that can be developed: For example, using the franchise’s systems and carrying out specific working procedures.

Describe each requirement in terms of observable behaviour. Replace “good with people” with “can explain how they would handle an employee who repeatedly fails to follow a working procedure”.

Clarify the ownership role too. Are you looking for an owner-manager who is present every day, or an investor who employs a manager? These require different selection criteria. If your existing operation only works with an engaged owner on site, you should not simply recruit passive owners for the same model.

2. Use the same assessment process for every candidate

A simple, consistent process makes candidates easier to compare. It also reduces the risk of a persuasive presentation overshadowing gaps in their suitability.

Start with an initial conversation about motivation, experience and expectations of the ownership role. Then move on to a structured interview, asking every candidate the same core questions. Ask for specific examples from previous work rather than general assurances of commitment.

Supplement the interview with a short, hypothetical operational exercise. For example, give the candidate a weekly schedule involving staff sickness, a delayed delivery and unhappy customers. Ask them to prioritise their actions and explain their choices. The exercise should reveal their judgement, not test their knowledge of internal procedures they have yet to learn.

A financial exercise can establish whether the candidate distinguishes between turnover, profit and cash flow. The aim is not to demand accountancy skills, but to find out whether they understand the consequences of their decisions and know when to seek help.

Use an assessment sheet with ratings such as “met”, “needs clarification” and “not met”. Record the reasoning under each point. Where possible, have two people assess the candidate independently before discussing the result. This forces you to distinguish between observations and gut feelings.

3. Check financial readiness and expectations

A candidate may have enough money to join the network without having a realistic financial basis for running the business afterwards. Ask for a financing plan that distinguishes between start-up costs, working capital and the candidate’s personal living expenses.

Clarify which funds are actually available, which depend on loan approval and what assumptions underpin the plan. Limit the documentation to what is necessary; you do not automatically need full access to every aspect of their personal finances.

At the same time, explore their expectations of the working relationship:

• What support does the candidate expect from the franchisor?
• Which tasks do they expect to handle themselves?
• How would they manage a period of lower-than-expected sales?
• Can they follow shared standards while taking responsibility for their own business?

Any significant gap in expectations should be resolved before making an offer. Do not promise extra support simply to secure an attractive candidate unless you can actually provide it and are prepared to set out the commitment clearly.

4. Document the decision in line with Danish rules

Denmark has no specific franchise law and no dedicated registration scheme for franchisors or franchise agreements. Nor is there a statutory, franchise-specific disclosure document. This does not mean that selection takes place outside a legal framework.

The Danish Contracts Act and general principles of contract law apply, including the importance of accurate information and good-faith conduct before entering into an agreement. The Danish Marketing Practices Act also applies to how the offer is presented. Material information must not be withheld simply because the candidate passes your internal assessment. The Danish Competition Act and relevant EU competition rules also govern the subsequent agreement.

Candidate information must be handled in accordance with data protection rules, including the General Data Protection Regulation (GDPR) and the Danish Data Protection Act. Define the purpose and lawful basis for processing, inform the candidate about how their data will be used, restrict access and set retention periods. Agree with the candidate whom you will contact for references, and keep the questions relevant to the ownership role.

Conclude the assessment with a brief decision: approved, pending specific clarification or rejected. Record the objective reasons and any outstanding matters. Internal approval should not be worded as an unconditional promise of a franchise agreement.

Practical takeaway: Prepare your requirements profile, interview questions and assessment sheet before meeting the next candidate. Choose the partner who can demonstrate that they meet the necessary requirements — not simply the one who is quickest to sign.