January 2009 Franchising World

A top racehorse driven by the right jockey can be slowed down enough and trained enough to win races.

By Herbert Greenberg, Ph.D. 
     
Having worked with the franchise industry for many years, we   have conducted thousands of evaluations of prospective and existing sales and management personnel for countless franchises. We have also worked with a number of   franchisors in helping them to achieve a better approach to the dilemma of “To whom should I award a franchise?”
  
There are few meetings that have not included the admonition “Don’t award a franchise just to collect the fee!” I’m sure every franchisor reading this article would agree that awarding a franchise to the wrong franchisee invariably costs a great deal more than the fees collected, often including the costs of litigation.  
  
However, the need to scientifically evaluate what it takes to be an effective franchisor has not been met. That is why we undertook a study of franchisees in an effort to achieve some answers to the important question, “What makes a winning franchisee?”   
  
The Findings
Five large franchise organizations, representing a cross-section of franchising services were involved in this study. A full and rigorous, scientific validation study was conducted for each of the five franchises. Individual franchisees representing the full range of performance levels completed the Caliper Profile, our proprietary, in-depth personality assessment, which, for nearly a half-century has been used to assess over two and a half million applicants and   employees. The results of the profile were correlated with the individual performance metrics and those traits that distinguish top performers were identified.
  
Overall, 356 franchisees completed the profile. Franchisors were asked to provide performance data of each individual, and these data were correlated with key qualities assessed by the profile, such as urgency, persuasive motivation and the ability to understand where others are coming from.
  
The data was analyzed in two ways. First, as indicated above, performance data was correlated with all of the qualities assessed by the profile, and thus, for example, high-to-low assertiveness related to a high-to-low level of performance.
  
The other means of treating the data was to compare those overall qualities that correlated with performance with the levels of these qualities achieved by lower performers. What is interesting is that while the data which will be presented below clearly describes the top-performing franchisees, it should be noted that differences would be even more striking if we included those franchisees who failed. In this study, even the lowest performers were at least adequate enough to still be in the system. Yet, the differences are statistically significant at a high level and are important if the goal is to select the best. 
   
The research shows that individuals who were matched to the franchisee role based on their profile results tend to perform above average and significantly better than those who are not matched to the role.
   • Assertiveness
   • Aggressiveness
   • Ego-Drive
   • Risk Taking
   • Urgency       
Let’s examine each of these in turn.
  
Assertive people strongly express ideas and opinions. They are able to push for their point of view, strongly express their ideas and convey the notion that they are right in their beliefs.
  
Aggressive people will push hard, often too hard, to achieve their goals. Overly-aggressive individuals may tend to literally push people out of their way to achieve their goals. Assertive people push for their point of view and overlyaggressive people may literally push an individual in the process.

Balance here is extremely important. Simply put, ego-drive is the need to get the “yes.” An individual with egodrive wants the “yes” as a key means of gaining personal gratification. “Yes” can involve a commission, but can also involve: “I’ll go out with you,” “I’ll join your club,” or “I’ll vote for your candidate.” It is hearing that “yes” that makes the individual with ego-drive feel good about themselves. The individual with strong ego-drive persuasively sells ideas   to gain support and buy-in; they are typically effective closers. 
  
The effective franchisee is also a risk taker, the opposite of being risk-averse. They are willing to take reasonable risks to achieve their goals. They will make decisions, even if there is a possibility of failure, but their ego-strength allows them to bounce back from any initial   failure and go on to achieve. 
  
In addition, the successful franchisee has a strong sense of urgency. Typically, they would rather be told “no” than “I’ll think about it.” They need to accomplish things now, and as a consequence, may lack patience. Again, balance is required, but the successful franchisee wants to get it done now and will resist efforts to slow them down. 
  
So these five qualities––assertiveness, aggressiveness. ego-drive, risk taking and urgency––are essential for a franchisee to succeed. Without high levels of each of these qualities, success is unlikely. With them, success is much more likely.  
  
Entrepreneur–Yes or No? 
There have been arguments within the industry as to whether a franchisee should or should not be a real entrepreneur. A franchisee does need to conform to franchise structure, and cannot be the total maverick. Yet, what is interesting is that the pattern of the highly-successful entrepreneur almost matches entirely the pattern of top leaders, developed in all of our studies of entrepreneurs and even many successful athletes have demonstrated leadership ability in their sport. What is also interesting here is that the truly successful franchisee, while being controlled enough to fundamentally adhere to the rules of the franchise, will nevertheless be open and strong enough   to have his or her leadership positively affect the success of the franchise. In fact, the truly top franchisees, because of their entrepreneurial qualities, can positively impact the entire system because of their willingness to put forward their ideas, and perhaps in some cases, have their ideas positively influence the overall structure.
  
An additional, very important point that needs to be made here is that there are, in fact, three qualities that are characteristic of the lower-producing franchisees. They are, first, an overconcern with rules, depending totally on the external structure. Second, being overly-accommodating, needing people’s approval too much and so not being able to make those tough decisions. And finally, so skeptical, so closed to new ideas, that “innovation” becomes a bad word. In addition, the less-effective franchisees are somewhat less assertive, less aggressive, less egodriven, more risk-adverse and possess a lower sense of urgency than their more productive competitors.  
  
There is certainly validity to the notion that a franchisee has to be part of the franchise team, and fundamentally adhere to the franchise structure. Yet if choices must be made in the effort to select the best franchisee, the franchisee that will expand and grow your franchise system, must be an entrepreneur. He or she must be the individual with the five qualities best identifying an entrepreneur. These are the people that should be sought and selected. Put perhaps in simplistic terms, a top racehorse driven by the right jockey can be slowed down enough and trained enough to win races. A donkey, no matter how much they are kicked and prodded will never win a race. The franchisor who is willing to accept the challenge of offering franchises to a racehorse—an entrepreneur—will make an impact on his or her franchise. These are the franchisors who will grow, offer to people who will become master franchisors, and, in short, will be the kind of people we all want around us to help us grow and enjoy the work we do.  

Herbert Greenberg, Ph.D., is president and CEO of Caliper. He can be reached at 609-524-1200 or  hgreenberg@calipercorp.com  . 

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