You might not be aware that not just anyone can own a franchise. There is actually an application process that a prospective franchisee must go through before being permitted to open their own business that carries the name of the parent company.
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Many people might wonder why someone with money can’t just go out and open their own franchise. This is a legitimate question, and the question revolves around reputation and image. Parent franchises want to safeguard their image, not only for their own sake but also for the sake of the sometimes thousands of franchisees already operating around the country. For this reason, they are looking for the ideal franchisee. Just who is an ideal franchisee? Consider the following three points a starting point.
As a prospective franchisee, you will need to show that you have the resources necessary to not only open the business but to sustain it as well. This is particularly important in the early stages when there are some considerable expenses involved. Consider KFC as one example. They will be looking for a franchisee to have a minimum credit score of 700 and a total net worth of at least $1.5 million, $750,000 of which must be liquid. Not all franchises will be that expensive. Consider Jamba Juice as another example. They will be looking for a franchisee who has at least $80,000-$100,000 in liquid assets for each store that is opened. Cinnabon puts that number at $120,000 and a total net worth of $400,000.
Franchisees should also possess a certain level of business acumen. For KFC, this would involve having a proven track record at running a restaurant or hospitality oriented business. The ideal franchisee will have experience in the quick-service restaurant industry. They will also be looking for someone who has previously owned a successful business. For Jamba Juice, the requirements would be less stringent. They are looking for a franchisee that has some proven level of retail or restaurant operation experience, and who understands the local market well.
3. Personal Considerations
When applying for a franchise, the franchisee will also have to reveal a great deal about their personal life. This can mean different things depending on the type of business being considered. For KFC, they will not even consider a franchisee who has a criminal history, past bankruptcy, or a history of litigation. They will also want an exhaustive list of personal references, a business history, and a solid reputation that is beyond reproach. Jamba Juice has as their only personal requirement that the franchisee be passionate about the Jamba brand. Cinnabon has a similar requirement, but they go a bit beyond that and state that their ideal franchisee also enjoy giving back to the local community in some way.
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This is by no means an exhaustive list, but it does give a sense of who the ideal franchisee is. You want to be someone who has good credit, some liquid assets behind your name, and who is passionate about the brand itself.