Franchising: how to select your first franchisees

When you turn an existing business into a franchise network, your first franchisees should not simply be the first applicants willing to invest. You need entrepreneurs suited to the actual work your business model demands. A structured selection process helps you distinguish enthusiasm from operational ability and assess whether applicants can sustain their commitment, without confusing access to funds with suitability to run an outlet.

1. Define the profile around day-to-day work

Before advertising, describe what the future franchisee will actually need to do. Start with the business you already run: what decisions do you make every day? Which problems require someone on site? How important is the ability to manage people, sell or maintain relationships with business customers?

Turn these observations into a profile with three categories:

• Essential requirements: conditions an applicant must meet to proceed, such as being available to run the business directly where the model requires it.
• Skills that can be learnt: abilities that can be developed through the training and hands-on support you provide.
• Desirable attributes: useful experience that is not essential to joining the network.

Avoid generic descriptions such as “a dynamic, motivated person”. If the role involves organising shifts, ask for evidence of previous organisational responsibilities. If the business requires active customer acquisition, assess applicants’ willingness to seek out customers, not just their ability to welcome them.

Also distinguish between prospective owner-operators and investors. If the model requires a hands-on owner, someone who intends to fund the business and delegate everything is not automatically a good fit. Any proposed operations manager must be identified and assessed, rather than left as a future promise.

2. Check resources and expectations without promising results

Financial screening is not just about asking whether applicants can pay the initial franchise fee. You need to establish whether they have the resources to cover the full start-up phase and cope if early trading is less favourable than expected.

Ask applicants to distinguish between their own capital, approved finance and funding they merely hope to obtain. A submitted loan application is not the same as available cash. Similarly, funds committed to other needs should not be treated as freely available.

For each applicant, record at least:

• the source and actual availability of the funds declared;
• whether they need to draw an income from the business immediately;
• the time they can devote to running the business;
• any conditions on which their decision to proceed depends.

Do not turn this assessment into an investigation into their private life. Collect only relevant information and, when requesting financial documents, explain why you need them and how they will be used. Personal data must be processed in accordance with Regulation (EU) 2016/679, including the principles of data minimisation and storage limitation.

If a gap emerges between an applicant’s expectations and what the franchise model offers, address it before negotiations progress. A need for an immediate salary, for example, cannot be resolved through unfounded sales assurances.

3. Use consistent interviews and realistic exercises

Prepare a common interview framework for all applicants. Different questions and undocumented impressions make it difficult to explain why one applicant was accepted and another rejected.

Ask for concrete examples: a difficult customer situation, a financial mistake they corrected or a challenging working relationship. Explore what the applicant personally did and what outcome they observed. Abstract answers about motivation tell you less than descriptions of actual behaviour.

Add a short simulation relevant to the business. You could present a scenario involving an unexpected staff absence during a shift or a dissatisfied customer, and ask how they would organise a response. Use fictional cases, without personal data or unnecessary confidential information.

Focus particularly on their ability to listen, identify priorities and ask for support. Do not expect applicants to know procedures you have not yet taught them. The exercise should assess the abilities needed at entry, not replace training or become unpaid work in your outlet.

Conclude each meeting with a brief assessment record: positive evidence, concerns to clarify and conditions still to be verified. Where possible, have a second person review the assessment.

4. Formalise the decision while respecting the negotiation process

In Italy, franchising is governed by Law No. 129 of 6 May 2004. Article 6 requires loyalty, fairness and good faith during the pre-contractual phase. Prospective franchisees must also promptly provide information and data necessary or relevant to entering into the agreement, even if not expressly requested.

This obligation does not justify indiscriminate requests: link every check to the future business relationship. Also distinguish internal approval of an applicant from entering into the agreement. Selection does not replace the obligation under Article 4 to provide the complete agreement and the required documentation at least thirty days before signing.

Allow for three outcomes: approved, on hold pending further checks, or unsuitable. Document the reasons internally using relevant facts and avoiding personal judgements. Do not waive essential requirements simply to meet an outlet-opening target.

In practice: before looking for your next franchisee, prepare a franchisee profile, an interview framework and an assessment record. A network grows more successfully when joining is an informed choice for both parties.