Mark Vandegrift 
Welcome to the latest episode of FranSimple, the podcast designed to make the concepts of franchising simple. I'm your host, Mark Vandegrift, and with me is the president of FrancSource, an all-time expert on franchising, and my franchise brother, Steve Vandegrift. Steve, welcome.

Steve Vandegrift 
Thanks Mark. It's great to join you again.

Mark Vandegrift 
So we have a lot of developments in franchising right now, but one of the topics that we want to cover is just what makes for an ideal franchisee, right? And in these developments, we're seeing growth in the franchise industry. You wrote a blog article on what the summer of 2026 looks like in terms of forecasting. And last time we covered what makes for a great franchisor, so I want to cover this time this idea of the ideal franchisee. Now that makes it sound like it's some kind of mystical model and everybody has to be in the same mold, but it's not really that. There's traits that we can track and I think one of the reasons our listeners will be interested in that, a lot of franchisors are listening, and they have to do all the betting because they're bringing folks into their organization that may or may not be ideal franchisees. And so I think that's what we want to cover today. I know when we were, you know, when we you had your franchise system and I was intimately involved with that. We had let's call them not so great franchisees. And we had some really great franchisees. And I can tell you we didn't put them into a personality mold. It's kind of, you know, a challenge to bet. But you were in your early 30s, I was in my late 20s, and we're not that anymore. So we've learned a lot about after your 30 years of experience setting up franchise systems, really kind of a much more targeted trait list. So before we, you know, get into that, let's talk about a few of the things that you're seeing in the franchise industry that might be development since our last episode.

Steve Vandegrift
Sure. Well, you mentioned the IFA's 22026 franchising economic outlook report. And the great news is franchising definitely continues to be incredibly strong and continues to grow. Just a few data points. The number of franchise units are projected to grow this year by approximately from eight hundred and thirty two thousand five hundred to eight hundred and forty five thousand units, and that's an increase of one point five percent employment-wise, franchise employment is expected to increase by more than 150,000 jobs to nearly 8.9 million jobs. That's an increase of 1.8%. In terms of output, franchise output is expected to rise from a little over 907 billion to 921.4 billion. That's an increase of 1.6%. And total franchise gross domestic product is expected estimated to grow approximately 1.8% from 550 billion approximately to 558.4 billion. So that's massive. And it continues to perform like this every year that we're seeing. And what's especially interesting to me is that we're seeing growth across the variety of different sectors: home services, health and wellness, quick service restaurants, senior care, and even business services. But we know that growth also creates competition. So the brands that are really winning right now, they're the ones with strong leadership, strong systems, and franchisees who are engaged operators. That's a great combination right there.

Mark Vandegrift
Awesome. So we see the industry growing. That's good news for I think our economy, right?

Steve Vandegrift 
Yes.

Mark Vandegrift 
Because it's tends to be a much faster growth pattern. And then we have just the
Jobs that it creates and all of that that follows along with it. So we're excited just to see it from an economic perspective.

Steve Vandegrift 
Yes.

Mark Vandegrift
Let's dig into the ideal franchisees now. Okay. Again, this isn't a set mold, but it's kind of a good list as a litmus test, right?

Steve Vandegrift 
That's right.

Mark Vandegrift 
When we're thinking about traits, it's nice to have a checklist and maybe people that hit that checklist tend to work out well. You know, it'd be nice to be able to take one of those personality exams. And just say, I need everybody that's a blank type of personality. We do the disk assessment here.

Steve Vandegrift 
Right.

Mark Vandegrift
And one of the things we find out is that we need every personality type. So you can't, you know, use this as a hard and fast rule.

Steve Vandegrift 
That's right.

Mark Vandegrift
But why don't you start out? Give us some traits that you've seen over the year that successful franchisees tend to have.

Steve Vandegrift 
And you say it exactly right. They're traits. And as you mentioned, you know, people are different, people have different personalities, and that's okay. But there are traits that really lead to being a great franchisee. And first and foremost, I think is coachability. It's huge. Franchising works because systems already exist. So the best franchisees are willing to follow the franchisors proven system and processes instead of trying to reinvent the wheel. That doesn't mean they can't bring creativity to the table. I call it innovation at the franchisee level. An example of that is McDonald's fish fillet. I've been sharing this story for years. It was proposed by a franchisee decades ago, and it's still on the menu today. But successful franchisees understand the importance, the value of consistency throughout the franchise network. So that coachability is a just a huge, huge part.

Mark Vandegrift 
Good. Well, you know, one of the things I always think about in considering a franchise system in the past, even for my own like should would I want to buy into this? And I think, would I make a good franchisee? And I think, well, I've been a business owner before, but there's a lot of folks that are coming out of middle management, like maybe they've been downsized, but they have good savings. And they're like, you know what? I'm ready to be my own boss, but they've never owned a business before. First question, and let's call this a two-part question. Do franchisees need prior business ownership experience to be successful? And then maybe if the answer is it helps or no, you don't need that. What are some other important traits that relate to business understanding? You know, maybe it's balance sheets, how to read in an income statement, an expense report, stuff like that. Give us some ideas around that.

Steve Vandegrift 
Well, you know, truth be told, having previous business experience is not necessarily critical. Some of the best franchisees we've seen, they come from multitude, different corporate careers, military backgrounds, veterans make great franchisees, healthcare, education, really it's all kinds of industries that they're coming from. What matters most in my mind is the mindset and the overall personality. In other words, having a positive attitude and personality, a strong work ethic, a passion for the brand. I consider that a very important aspect. Accountability, and then certainly having leadership and team building skills. And then the final one would be a willingness to learn and follow the system. They all of that typically matters much more than someone having previous business experience.

Mark Vandegrift 
Okay. Well, in that vein, what are some common misconceptions that you see about franchise ownership? So this idea that I'm a franchisee, pros prospective franchisee, and what misconceptions might I have in regard to buying into a franchise system if I've never been a franchisee before?

Steve Vandegrift 
I think one big misconception is that franchising is passive income. Even with a great system, franchise ownership really does require dedication and engagement, especially early on. Even in the case of a semi-absented owner, they need to have that oversight. I think another misconception is that success is automatic because the brand already exists and it appears to be successful. I like to say that a franchisor, however, provides a vehicle on the roadmap. But the franchisee has to supply the fuel, which is their passion, their dedication, their commitment, and of course their capital. So execution by the franchisee obviously matters a great deal.

Mark Vandegrift 
Well, you mentioned a little bit about you know, the business background and it's not critical or anything like that, but there's also the component of financial responsibility or discipline. How important is that, would you say? And let me rephrase this: how important is financial discipline for franchisees?

Steve Vandegrift 
It's very important. I mean, successful franchisees, they need to understand budgeting, cash flow, and operational efficiencies. They don't need to be a CPA, but they need to understand the numbers. Financial understanding and discipline often are the difference between surviving or thriving.

Mark Vandegrift 
Would you in the case of someone that's more entrepreneurial? A lot of times they like to you know swerve and do their own thing and they don't necessarily attach themselves to financial performance. If you didn't have that financial discipline, what's a recommendation you might make to maybe getting someone else to complement that or going back to a class?

Steve Vandegrift 
No, that's exactly it, Mark. The reality is, you know, in those situations, first of all, it's it's always wise to if you lack in in something like the financial aspects, then work with an accountant, work with the CPA. You'll learn a lot through that process and eventually probably not need them as much. But you seek people who understand things that maybe you don't understand as well. And that can be a a critical success aspect.

Mark Vandegrift 
Do you think another area, do you think and entrepreneurs are hard to follow, right? They just their mind is a little bit different. What role in this regard do leadership and people skills play? And can you complement those in a similar question? Can you complement those with maybe the people that surround you?

Steve Vandegrift 
Well, there's no question about that. You know, surround yourself with people that that are that are better you than you at certain things, more knowledgeable, et cetera. But leadership and people skills, they play a huge role in any successful business. I mean, ultimately franchising is about people and the employees, the customers or clients, the vendors, the community relationships. So franchisees who build strong teams and they create positive cultures tend to perform extremely well. Emotional intelligence, I like to say, matters more than people sometimes realize. Being comfortable with yourself.

Mark Vandegrift 
Yeah, the yeah, the EQ, the emotional quotient, as they say these days, is so critical. Do you think with all the franchisees you've seen, do you think that and I know we talk about changing employees or changing people, changing spouses, right? Like somehow we can impact changing people. Do you think that these traits are something people are born with, or can they actually be developed within a franchisee?

Steve Vandegrift 
Well, they certainly can be developed. I mean, very few people start as a perfect operator or leader. Franchising can strengthen leadership and operational skills through mentorship, coaching, and strategic planning. And franchisors, great franchisors, they're good at providing that. And franchisees can certainly improve their financial literacy, their management and team leading skills, and even their communication abilities. Getting into a franchise system there's that peer collaboration. You're going to learn from other franchise owners within your system. And so, yes, I I definitely believe they can be developed.

Mark Vandegrift
We you know, we know from our own family that that hard work is just ingrained in us. And, you know, that's really an important aspect. If I were a franchisor now and I'm trying to develop a list that says, what's in my ideal franchisee? What do you think's the possibility that you can measure hard work from someone? Does it just really take kind of an in-depth interview is this something you get to know somebody through Discovery Day? Are there questions that can be asked that would help get that sense of hard work and some of the attributes or traits that you listed today?

Steve Vandegrift 
That's a great question. I mean, ultimately I believe the great franchisors, they have great franchise sales processes. They have a system in place. And it's all designed to be able to determine is that individual or individuals going to be a good fit? And so having a system, working with a good franchise consultant that can talk you through that and help you develop that system, you're going to be able to pre-qualify, then qualify through that process. So coming out the other side, you should be able to ascertain some of the traits we're talking about here and even the hardworking aspect of it. We develop, as an example, an interview questionnaire that can be conducted with prospective franchisees during Discovery Day visits for our clients. And so through that process, they can have a number of team members spend 10 or 15 minutes with the individual, go through that questionnaire with them. Ask additional questions that come up as a result of the response from that perspective franchisee. So, yes, I mean, again, having a good system is so critical. Otherwise, you're just granting franchises. You're not qualifying franchises. And those systems, they might start to grow very rapidly, but oftentimes we see the downturn. They sell 50 franchises one year and only 10 open the next year. And so again, it all comes back to having a robust franchise sales process system.

Mark Vandegrift 
In business I mentioned earlier that we're allowed to we're allowed to give personality tests to prospective employees or existing employees for that matter. Is there anything in the world of franchising that has franchise laws or anything? If someone likes to operate by a personality test like disc, is that allowed to be applied at some point during that sales process?

Steve Vandegrift 
Most certainly. And you know, we have clients that do love that aspect. Even franchise broker organizations, some of them, when they're recruiting prospective franchisees, they'll actually do a personality test as well. So yes, they can be incorporated into the franchise sales process.

Mark Vandegrift 
Are there any skills assessments that are applied as well? Like beyond personality, are you allowed to test for technology? I mean, are there limits to platforms that can be used to test. Like, I mean, let's say it was a platform or a franchise concept that had to do with coding, right? Web programming or something. We give tests here for prospective developers that is just a basic assessment test. Are there any legal restrictions as to what you can test for?

Steve Vandegrift 
Not at all. It very similar to what you take an employee through. You can implement that within a franchise system as well. So there's really not a limitation. And in some concepts, I would think it's critical that they do have those quote unquote tests. You want to make sure it's a great fit for that franchisee and a great fit for the franchisor as well.

Mark Vandegrift 
Yeah, I could see where you could turn people away if you gave them a litany of tests. But I also think there's a balance there that says, hey, these people are they really care.

Steve Vandegrift 
That's right.

Mark Vandegrift 
And they're vetting, you know, things that go beyond just an interview process. Do you see that that would add some credibility to the to the franchisor's interview process? 

Steve Vandegrift
I think prospective franchisees, those that are serious about becoming a business owner and a franchisee within a system, they appreciate knowing that the franchisor is truly qualifying. It's not qualifying them. It's not just they have a check, they have some type of you know corporate job background. So yes, I mean it really, it really gets into that level sometimes. They'd like to know that they're being qualified.

Mark Vandegrift
Have you ever seen a franchisor use a third party not a just a test, but an organization where there's interviews involved and it's almost like a psychological run through? I don't want to scare anyone away. I'm just wondering if you've seen any franchise systems or franchisors use that in the past.

Steve Vandegrift 
I don't see that much. It's usually internal rather than external. Now again, there's gonna be certain concepts that might it might make sense. But again, it's based upon your business. What are you operating and how critical would it be to have that type of due diligence on a prospective franchisee? But we don't see it a lot.

Mark Vandegrift 
So you would say the closest thing to that is the broker system where they're kind of vetting franchise prospective franchisees before they introduce them to the franchisor.

Steve Vandegrift 
Sure. I mean there they're somewhat yes, there's somewhat of a you know, third party. And so they're doing their own due diligence to help direct and the best franchise consultants or brokers, they really do want to get that individual with the right systems and the right fit for them. And so there is some level of that due diligence even before the franchisor is now following up with that franchise consultant or franchise clients, in actually walking them through the process. So they have that benchmark from the broker organization themselves.

Mark Vandegrift 
That's good insight. So let's go over to the franchisee side of things because we've talked about how the franchisor can kind of vet a franchisee. Let's talk to the franchisees on our on our list as our listeners. What advice would you give someone that's considering becoming a franchisee?

Steve Vandegrift 
Well, I would say first of all, focus on really preparing and what's the alignment with the franchisor is it the type of business that you really would excel at? And you know, they can ask themselves a prospective franchisee could ask themselves a number of questions. You know, first of all, do I understand the commitment and what it takes to become a successful business owner? am I willing to follow the franchisor system? That's critical. You know, pure entrepreneurs, they can what someone who loves to create, create, create, they can be good franchisees. but to your point, a lot of times they want to make changes and changes and changes. And you have to understand that the system is the system because it's successful. Another one that relates is do they communicate well? It's vitally important that the franchisee and franchisor are both good communicators. Is the franchisee prepared to lead a team? Do they like the idea of recruiting, training, retaining employees? Do they feel that's a skill set of theirs? Do they have the ability to successfully recruit, train, motivate? And again, such a critical aspect for most franchise systems because you're going to have team members. And also, do I have a passion for the products or services in the brand itself? You know, people do best when they're passionate about what they're doing. And we could probably devote an entire episode to this, quite truthfully, but I'll end with this. Prospective franchisees shouldn't rush the process of identifying the right opportunity. Take their time. The strongest franchise relationships happen when both the franchisee and the franchisor are aligned in values and expectations. And so there needs to be that clarity to make that relationship work.

Mark Vandegrift 
Yeah, I love the idea of communication, you know. We've seen it so often that a franchisee sometimes enters the relationship almost like an employee to a boss, and there's like this natural friction, like, I don't know if I can trust them, they're just trying to make money off me, whatever. You know, I would I guess my personal recommendation is if you're a franchisee, walk into the relationship in a trusting with a trusting nature and try to inculcate good communication with the franchisor.

Steve Vandegrift
Critical.

Mark Vandegrift 
If you don't feel that connection, then maybe it's you know, move on to something else because you're almost well, I could say you're pretty much marrying that franchisor right, and whoever the contact is there.

Steve Vandegrift 
Yes. No, that's very, very true.

Mark Vandegrift 
So yeah, I mean you have to feel a good rapport and you have to have trust because if you don't then you're always going to be questioning the decisions that they make. You're going to assume that they don't have your best interest at heart. It's all about the franchise system or the franchisor. At the same time, though, as a franchisee, don't think that you can't question things. You know, that's the heart of a good relationship. 

Steve Vandegrift 
That's right. It's communication. That's exactly right.

Mark Vandegrift 
Yep, good. Well, we're gonna wrap it up here, but as I always do, what's that one key thing that you wanna have our listeners take away from today's conversation? What would that be today, Steve?

Steve Vandegrift 
Well, as I shared in our previous episode, franchising isn't just about the brand. It's also about people. So strong systems matter, but the real success stories come from franchisors and franchisees who trust each other, as we said, communicate well, and they stay committed to continuous evaluation and improvement. Franchisors, they welcome the great ones, they welcome input. Franchisees have to trust ultimately through what the decision is. It might be an idea that doesn't fit the brand. So again, that communication and trust is so vital. Make sure you have it when you're looking at a franchise concept with that franchisor.

Mark Vandegrift 
Awesome. Well, as always, great questions, great answers. Just appreciate you being on again today. And for our listeners, we want to thank you for joining us. Let's wrap up this episode of FranSimple. And as always, please like, please share, please subscribe to FranSimple, the podcast designed to make the concepts of franchising simple. And until next episode, may your business expand through the power of franchising.