Before a franchisor enters into an agreement with a franchisee, he
should know more than just the person’s financial capabilities. A
person could have money, but not the skills or knowledge needed to
fund a business. I spoke about this recently with Audrey Duncan, a business advisor who specializes in francises.
Duncan recommends screening candidates to find out if they have owned
other businesses and if there have been any civil suits, liens or
judgments against them. Duncan adds that a comprehensive report can
also tell a franchisor how much and what type of support the franchisee
will need to make his business succeed.
Duncan said she worked with one company that planned to promote an
assistant manager when the current manager left. After Duncan convinced the owners to check out the employee before automatically
promoting him, they discovered that he had three convictions for
credit card fraud and had been playing his “trade” at his current
job.
“The upfront costs to investigate potential franchisees is worth it
down the line, if it can keep a franchisor’s reputation sterling and
deliver him from court. It allows the franchisor to spend time building
up the company rather than shoring up weak spots,” adds Duncan. The
other franchisees in the system also benefit from that sterling reputation.
Duncan says that the
character of potential franchisees is critical to the franchisor who
is in essence selling him his name. “Anything a franchisee does could
come back to you (the franchisor),” adds Duncan. The franchisor isn’t
the only concern. Franchisees who have already bought into the system
also need to have their investments protected.
In their eagerness to expand their chain rapidly, franchisors will
often neglect to check out franchisees as thoroughly as they should,
said Duncan. It has been his experience,
that “if you cut a corner (early on), it will cost you somewhere down
the line in that relationship.”
“Background screening isn’t a one-way street, Franchisees should be
just as diligent in their check of the franchisor’s background,”
Duncan said. There is no such thing as too much information when a
person’s life work is being decided.
Who’s Vulnerable?
While it’s wise to screen all applicants to some degree, there are
a few professions where background checks should be routine. For
example:
* Employes who have access to people’s homes or private offices,
such as maid service and maintenance workers or real estate agents;
* Men and women who work with children;
* Employees who will be working with limited supervision and who
have access to cash or other monetary sources;
* People who greet the public, such as receptionists or fast food
counter workers. (They give clients or customers their fist
impression of your business.);
* Anyone who deals with clients or customers on a regular basis;
* Franchisees who are entrusted with the parent company’s name and
logo.
What To Check For
The following are what most background screenings check and what
they are looking for:
* Criminal history–checking to see if a candidate has a criminal
record can eliminate potential problems such as hiring a child care
worker only to discover later that he has a history of child
molestation, or hiring an accounting supervisor who has been convicted of embezzlement.
* Financial information: A credit report reveals several things
about a person’s character. It will warn an employer if a person
is deeply in debt. Someone who is bowled over by debt may not be a
wise choice to entrust with company funds or expensive equipment.
The report also shows whether a person takes responsibility for
his personal obligations.
* Department of Motor Vehicle (DMV) check–A person’s driving record
will list arrests for driving under the influence (DUIs) and
reckless driving tickets. If the applicant’s job description
includes driving, a DMV check is important for liability reasons
and to ensure that the insurance company for the business will
provide coverage. It also verifies the person’s social security
number and residence.
* Employment verification–Verifying a person’s former or present
employer provides his work record, including attendance, skill level
and attitude. It will also confirm the dates of employment.
* Education–Checking a candidate’s education background confirms the
dates of attendance and the degrees earned. A candidate’s transcripts
also can be requested.
* Professional licenses–The media is full of spectacular cases of
people practicing medicine or law without the benefit of a license.
Employers should verify that the applicant has a current license in
the field, whether it’s a CPA or a child care worker.
* Judgments: Judgments or tax liens will be listed as public records
information. Sexual harassment judgments may surface here as well.
* Social Security Number Search–This check will verify the person’s
name and previous addresses. Since a social security number is a
basic piece of information, it will paint a picture of where a
person has been living and working for the past 10 years.
* Worker’s compensation history–This information can only be sought
once a job offer has been made, since the Americans with Disability
Act prohibits discrimination based on disabilities. The information
is still valuable, because if the person has not filed a claim, it
could signal a safety-conscious worker who would be an asset. On
the other hand, if a person has filed several claims, it may indicate
that he is an unsafe worker, who could take advantage of the system
and subsequently raise workers’ comp costs.
* Past and present residence information–Duncan considers this one of
the most important pieces of information. If the applicant gives one
address for 20 years, all the checks will be done in that jurisdiction.
However, he may have lived in other areas of the country where a
check could turn up information he may not want known.
* Drug screening–A company cannot randomly screen candidates for sub-
stance abuse based on appearance or race, and therefore, must have
drug testing policies in place. Although all applicants should be
tested, it is imperative to screen those in safety-sensitive positions, such as those operating heavy equipment, driving or working
with hazardous materials. The drugs most commonly tested for are
marijuana, cocaine, amphetamines, opiates (including heroin) and PCP.
