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How to Properly Vet International Franchise Applicants

How to Properly Vet International Franchise Applicants

Every year businesses have the expectation to grow. Franchises are not the exception. In fact, the franchise business is thriving in categories like beauty and grooming, breakfast-focused restaurants, childcare and children entertainment, fitness and pets. Right now, there are untold numbers of entrepreneurs who have decided that this is “the year” to finally become a franchise business owner, and franchisors are eager to expand their business. But wait! International private investigators advise that not everyone will be the perfect fit for your franchise, so it is important to vet the applicants and make sure the franchisees are worthy of your brand, and worth the risk.

Investigating while making a smart use of your resources

Franchisors know they will have to invest in thorough investigations in order to keep the business safe. However, it isn’t necessary to start with international due diligence right away. Having reliable evidence is very important, but using your resources wisely is as important too.

The first step is to request all the basic and necessary information from the applicant. The applicants must comply with certain qualifications that every franchise requests (a minimum net worth, background in the field, ID or passport, etc.). Once the applicant has provided the basics and the initial assessment has been completed in-house, the next step is to hire a private investigation firm to conduct an international background check or due diligence investigation to verify those claims. This initial part of the process should include verifying the identity of the applicant, employment and education claims that support their claimed experience in the field, reference checks to make sure the applicant is a good and responsible business partner, and their criminal and court records (if any) to understand where they stand in the legal field, and to verify the reputation, identity and background.

The outcome of this background check will be decisive in whether or not it’s worth to continue with any further negotiations.  It is a wise insurance policy to protect your brand.

Diving deep to find the perfect fit

Once an applicant has been cleared by a thorough a proper background check investigation or professional due diligence, it may be time for further international due diligence or you may have sufficient evidence to determine the candidate is the right fit, or he or she should be disqualified.  Each situation, company, case and country is different. Because of the risks in international franchisee applications, due diligence needs to be conducted by a reputable international investigation firm with local investigators in the country or countries where you need them.

Due diligence is by default a thorough and comprehensive investigation, so  it is important to make sure that what you hire is comprehensive enough. There are no rules for how much investigating needs to be done, but it is clear that the investigation needs to cover your main concerns. Are the assets the applicant claimed to have real? Are there other companies registered and in good standing with the national laws that apply? Are there any records of corruption, bribery, money laundering or other red flags? What other people are involved in business with them, are there any references of these people? Are there patents or intellectual property rights that need to be verified?  What about reputation?  There are a number of questions that a franchisor will need to answer, which is why having the opportunity to customize the investigation is crucial to obtaining evidence you need.

If you are in the franchise business, let us help you a achieve a great year in your international expansion goals. Contact us for a free quote to vet your applicants and meet your goals.

C. Wright
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