Does Your Application Process Confirm the Financial Capabilities and Character of Your Candidate?
The success of your franchise depends on a number of factors, one of the most important being the people that represent your brand. Recruiting the best franchisee for your operation is critical to the success and reputation of your organization.
As a franchisor, you have invested in developing a business model that will attract only the best franchisees and the steps taken in the selection process are essential to positive results. Your preliminary interviews and behavioural profiling are solid tools and will provide you with a sense of whether or not the prospective franchisee has a good understanding of your organization’s goals and expectations as well as the experience they bring to managing one of your franchises.
However, what is crucial is confirming the financial credibility and character of a prospective franchisee. Ensure you have the sources available to conduct effective due diligence that includes financial background screening as a key resource in your final decision in order to bring an applicant under your umbrella.
Your ultimate objective is the protection of your Brand’s good reputation and that positive growth of the Brand is maintained and developed. A financial screening background report will confirm your applicant’s financial stability, credit history, and negative, delinquent or criminal activity, all of which are vital pieces of information when making such a significant business choice for your franchise operation. The cost of implementing a good franchisee screening process is very low, especially when compared to the harm that could result from an ill-informed decision.
Ask yourself the following questions to determine if your current qualification process can verify your candidate’s financial capabilities, credit history and character.
1. Has your candidate been truthful on their franchise application?
Honesty is the best policy and believing that your candidate is being truthful is an admirable quality, but unfortunately not everyone is as trustworthy as we would like. That is why verifying information using enhanced screening methods is critical to your assessment. It will help you confirm the reliability of the information you receive and uncover any negative information or media that may have otherwise remained hidden.
2. Is the individual financially capable to maintain the franchise?
Doing a financial analysis is part of most well-designed franchise application processes, but do you take the time to validate the information you receive regarding your applicant’s financial records? Have you confirmed the candidate’s reported assets, including bank account balances, investments and real estate? Have you confirmed all outstanding liabilities, including mortgages and credit cards? Does your applicant have the funds for the start up and to endure harder times during economic downturns?
Conducting a thorough review of your prospective franchisee’s financial situation not only ensures they can afford the upfront costs of owning one of your franchises but can also expose patterns of financial hardship or an inability to meet obligations in a timely manner.
3. Has your applicant had other failed business ventures?
Failure isn’t something that most people would disclose, so it is understandable why prospective franchisees may leave these details out of their application. Unfortunately, knowing whether your applicant has failed business ventures and understanding why they failed, if they do exist, is critical to making the best decision possible.
4. Does your applicant have a history of delinquent payments, legal actions, tax liens or judgments?
Knowing whether your franchisee is able to meet obligations in a timely matter is an important factor when selecting the right franchisee. By conducting a thorough background check, you can discover whether or not there is a history of delinquent payments, legal actions, bankruptcy, judgments or tax liens.
5. Does your candidate have negative media or criminal records?
It’s all about brand reputation and the quickest way to tarnish the reputation you worked so hard to build is by choosing a franchisee that already has negative media, criminal records or is on a terrorist/fraud watchlist. By opting for enhanced screening methods, you can increase the likelihood that this information is revealed.