What does your chief development officer need to know about potential franchisees in today’s market? That’s a question that franchises across every industry are constantly asking themselves. Growing your franchise requires more than just growing in numbers; you’re in search of truly exceptional talent to bring your brand to new locations and connect with new communities.
As you strategize for the most effective ways to grow your franchise, these three factors can help you identify the most promising entrepreneurs – and support them to do their best work.
A Rise in Wellbeing
One of the factors driving interest in business ownership, entrepreneurship, and franchising is an interest in a “better life,” both in terms of wellness and wealth.
Research from Gallup reveals that owner-employers, like franchise owners, tend to excel in both aspects. The median net worth for owner-employers is $670,000, compared to about $90,000 for non-employer owners and $38,000 for employees. Likewise, owner-employers have the highest median income, at $120,000, with the next-highest group (employees who also have other work arrangements) coming in at $76,000.
Also worth noting: in the same study, 71% of owner-employers report thriving in terms of well-being, compared to just 60% of non-employer owners and 52% of employees. Being a franchisee, however, doesn’t guarantee well-being; it depends on how the overall company handles its franchising. A 2024 academic study uncovered a few key findings that can help organizations support franchisees and drive better results:
- Franchisees who self-identify as entrepreneurial, and those who are granted more autonomy, suffer less emotional exhaustion.
- A strong entrepreneurial identity may help franchisees mitigate the frustrations of being “hemmed in” as part of a franchise organization.
- Franchisees in systems with strong operating routines also experience less exhaustion. Clear routines may help provide direction and set boundaries, reducing the feeling of overwhelm while still allowing a fair degree of autonomous decision-making.
For chief development officers, the lesson is twofold. First, evaluate your value proposition to potential franchisees by looking closely at the type of support and guidance given to each individual unit. Second, prioritize identifying and recruiting franchisees with ambition, an entrepreneurial mindset, and an ability to balance a decent degree of autonomy with adherence to core brand guidelines.
Persistence Is Key
Lots of people are interested in franchising; few choose to or are able to stick around. Gallup’s survey found that just 64% of owner-employers retained that status a year later. This drop-off was particularly pronounced among Black and Hispanic respondents: just 41% remained a year later, compared to 68% of their White counterparts and 71% of multiracial or other ethnic groups.
Persistence doesn’t come down to just a few demographic factors. Franchise development leaders, for instance, can look to a history of strong management practices and knowledge to find prospects more likely to succeed long-term. Gallup’s research found that owners in the top 20% of management practices were more likely to remain as owner-employers; likewise, 66% with excellent credit managed to keep their businesses going, compared with 46% with lower credit. And, unsurprisingly, those with positive revenue growth were much more likely to remain.
Look for would-be franchisees with a true commitment to persistence. This might be demonstrated in their work history or clearly shown elsewhere. Combine that with a strong grasp of best practices in business, management, and the individual franchise’s industry.
Look to Younger Generations
Another source of promising talent that franchise development leaders should be looking at? Ambitious entrepreneurs in younger generations. As of 2021, Millennials began to outnumber Boomers in franchising interest, while 62% of Gen Z say they have started or plan to start a business. That’s a deep pool of up-and-coming talent who are ready to bring their perspectives and their ambitions to your franchise.
Younger generations have grown up with a very entrepreneurial mindset. Everyone has a “side hustle” or an extra gig that they try to parlay into a bigger business. At the same time, they’re looking for ways to make a positive impact on their communities and to do work that has real meaning. Half of current Gen Z small business owners say “social good” is one of their top three business priorities, so appealing to younger would-be franchisees can focus on opportunities to make a difference.
When it comes to growing your franchise brand, it’s critical to have great leadership in place who can identify promising opportunities and connect with would-be franchisees. If you’re in the process of hiring a new franchise development leader, talk to Blue Rock Search to learn how our tailored search solutions can help you hire the leadership you need to take your brand to the next level.