What is the true value of franchisee background screening?
It only takes one or two poor experiences at a franchisee location to change the public’s perception of your franchise brand. Aside from building and maintaining a credible brand reputation, franchisors must ensure that their customer experience is consistent from location to location. Allowing the wrong individual to be a franchisee can undo years of building your franchise brand, operational standards, and reputation.
However, the franchisor isn’t the only one with skin in the game. The typical franchisee applicant is investing a substantial amount of their personal wealth, often approaching $500,000 to $1 million or more. An astute businessperson will value a franchise brand that implements a rigorous background check program to ensure that individuals with undesirable or dangerous criminal histories are not associated with the same company in which they are investing their own assets.
Need more convincing of the value of franchisee background screening? See Below:
Top five reasons for implementing comprehensive background checks for all franchisee applicants:
- NO COST | The average cost of a franchisee background check can be passed through to the applicant, either as part of your franchise fee or as a separate application fee. Be sure to disclose this in your Franchise Disclosure Document (FDD). Since the FDD is updated annually, it is never too late to institute this process.
- FINANCIAL SECURITY | A credit report doesn’t just reveal payment and bankruptcy history, it also helps unearth the credit utilization of your applicant. Highly leveraged people, those that are “maxed-out” on most of their available credit lines, are extremely high-risk candidates that generally lack the liquidity needed to launch and run a new business.
- THOROUGH CRIMINAL RECORD SEARCH | No criminal database exists that covers the entire country. Even the FBI database only has about 50% of all crimes in the United States. It is necessary to check county courthouse records where a person has lived (usually over the past seven years) for any county criminal records that are not part of the criminal database, otherwise convicted criminals from those counties will not be found.
- ALIAS CHCECKS | Many criminal records have incomplete information, missing identification, and typically no social security numbers attached to them. To conduct a thorough background screening of any individual, alias names, such as maiden names, also need to be checked.
- FEDERAL CRIMINAL SEARCH | The Federal Court System is never part of a criminal database search or a county criminal search. Yet, federal crimes tend to be more financially oriented, such as money laundering, embezzlement, and tax evasion. Performing a separate Federal Criminal Records Search is crucial to protecting against franchisee applicants who have committed financial fraud.
Not only will a professional screening program help secure the top-quality franchisee applicants, but a reliable background screening partner will also do a deep dive into your business, to better understand your industry’s unique needs and provide informed recommendations for your risk mitigation program.
Posted by: Rudy Troisi, L.P.I., President and CEO, Reliable Background Screening
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