Franchises Study Buyers' Personal Lives
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By Neil Parmar Franchisers have always taken a close look at buyers' finances. Now they're peering deeper into their personal lives, too.Many chains are using tools like online personality assessments to get a picture of what these aspiring franchisees are like and how strong they'd be as owners. They're scrutinizing candidates' social-media presence to see what kinds of things they post. And they're putting them through digital tutorials that teach them about the company—while quizzing them along the way.Fun Brands, a chain of party and play outlets for children, puts prospective buyers through an online course where they look over texts and videos about Fun's franchising procedures. The company can see how long people spend reviewing the information, ask personal questions and see how well they're absorbing the material.For instance, after many sections of the tutorial the system asks, on a scale of absolutely to doubtful, "Is this opportunity right for you?" and requires written feedback. In the marketing portion, the program asks, "Would you consider yourself adaptable to new technologies that will enhance your marketing efforts?" and calls for a list of organizations, schools and charities that the candidate currently interacts with.Fun Brands also scans social-media profiles to see if people's updates focus on nonfamily themes, which could be red flags that a candidate isn't the best match for a child-focused company. "We don't see anything as a silver bullet—just pieces to a puzzle," says Sean Bock, vice president of development and real estate at the Tempe, Ariz., chain.Some franchises have used tests in the past to gauge people's fitness. But the tools they're using now are much more streamlined and collect a lot more data than pen-and-paper tests. What's more, the companies say, the need for the tools is much greater. For one, since the recession, they've been flooded with potential candidates, so they need ways to sift through applications quickly. Chains are also more focused on finding owners who are capable of weathering downturns, since many units foundered during the recession and needed help to stay afloat, franchise experts say.Meanwhile, the downturn has made banks much stricter about lending, and franchises that don't have a stringent selection process are at a big disadvantage, says Darrell Johnson, president and chief executive officer of FRANdata, a consulting firm.For an idea of the lengths some chains go to, consider ZIPS Dry Cleaners, of Greenbelt, Md. Until recently, ZIPS had to review each application manually, but now candidates can use an online portal that ranks them on how closely they meet ZIPS' criteria. Along with financial questions, the company asks about details such as whether people's family would support this venture and why they want to get into the business. "We were asking those kinds of questions before, but we ask in much greater detail now because it's so important for us to find the right fit," says Andy Cucchiara, vice president of franchise operations at ZIPS.ZIPS has also turned to Facebook and LinkedIn to see which associations candidates are involved in and glean other details about them. The strongest-ranking candidates tend to have already owned a business and post about their family—"a measure of integrity regardless of what business you're in," says Mr. Cucchiara.The company also positively ranks candidates who post about technological changes that have revolutionized or disrupted their industry. "They're nonstop obsessing about their business," he says. "The reality is we have to obsess about ours."When candidates get through all those hoops, they must demonstrate their commitment by picking up the travel costs for a trip to headquarters for an interview. And they must bring their spouse along. The company says that ensures that spouses will be supportive of the venture—and lessen the chances ZIPS will have to find a new operator to take over down the road.Still, some in the industry say franchisers should tread lightly when digging into personal information—in particular, things people post on social media. "In this day and age, you need to do as much due diligence as possible that's appropriate," says Steve Caldeira, president and CEO of the International Franchise Association. While franchisees also need to be careful about what they post online, he says, "companies need to be more mindful of not overstepping their bounds to gain information that may enter the category of 'too much information.' " Mr. Parmar is managing editor for WSJ.Money magazine. He can be reached at neil.parmar@dowjones.com .