A perenial problem

I was asked to compare two franchisees and offer an opinion about who I thought would do better.

Let me give you some information about each and then you can choose who you think would come out on top.

First the franchise:

It’s a management franchise, providing business to business services. Franchisees have to invest a fair amount, both in terms of the franchise fee and working capital to get going.

Okay, here’s a sketch of the first franchisee. He’s fifty eight years old and made a lot of money with his previous business, which he recently sold. Not ready to retire, he didn’t want to start from scratch again. He saw the franchise, liked it, mainly because he has plenty of experience in the same field, and bought it the same week. There was no need for him to borrow money from the bank. F1, as I like to call him, certainly has plenty to offer.

Franchisee number two (F2), is a different proposition. He’s thirty two and just been made redundant. He’s worked in the same field as the franchise before, so he’s well capable of doing the job. He scraped together enough money to buy in has just about enough working capital to see him through. He had three meetings with the franchisor before making up his mind to join.

Which one would you take? F1 or F2?

For me I would take F2, every single time for three very good reasons.

Firstly, as a franchisor you need your franchisees who will follow your system to the letter, not question it every step of the way. Now, I’m not saying that F1 will question the system, he’ll just ignore it if he wants to. Or he’ll go for customers he thinks are right, not necessarily the franchisor’s preferred target market.

Secondly, the decision cost F1 very little. He didn’t have to go to the bank and it’s a bit of a punt. F2 was very careful in his decision making and this means that, now he has made the decision he’ll be fully committed to it… he’ll be entirely bought into the franchise and the process.

Finally, for F2, this is an all or nothing decision. He has to make it work otherwise he and his family are in real trouble. He has drive, determination and hunger. For F1, it’s a punt, a roll of the dice. If it doesn’t work, it doesn’t matter.

Of course, the ideal solution would be to have both franchisees and use the relative strengths of both to enhance the network, but if I had to choose one… it’s F2 for me.

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