Keeping Your Franchise Safe with the Right Background Checks 26 Oct 2018


Finding the right candidate to purchase your franchise can be difficult. Not everyone who wants to buy a franchise is qualified for it. In fact, Franchise Direct found that 41% of people who want to run a franchise have never operated their own business. Besides, the wrong candidate can risk your franchise investment and reputation. So, how can you keep your franchise safe?

Running a background check on potential franchise owners is a great way to ensure your franchise is safe. Choosing the right background checks can confirm that franchisees are safe to work with and financially responsible. It can also verify that they have the required experience to run a successful business.

In this article, you’ll learn:

  • how background checks protect your business
  • which background checks are available
  • how you can run a background check legally.

The Right Background Checks Can Save You Money and Protect Your Reputation

Hands making a protective roof over a piggy bank

If you put a franchise in the wrong hands, you could end up wasting your time, money, and effort. In a new franchise system, the wrong candidate could cost you up to $150,000! A background check can show the candidate’s history of crime or financial trouble that might affect your franchise’s future profits.

Along with protecting your resources, your franchise’s good reputation should be a top concern. Without a background check, you could find your franchise’s reputation at the mercy of a bad apple. Using background checks ensures that the people representing your business will help your franchise’s reputation, not hurt it.

Consider, too, the human component of your franchise. If a franchisee with a history of violent crime injures an employee or customer, who will people blame? As the franchisor, you could be liable for putting that candidate in a position to hurt others—something that could cost you your reputation and a lot of legal fees.

With all these potential pitfalls, it’s clear that franchisors need to run background checks on franchise candidates. But, will just any background check be enough to protect your business?

Which Background Checks to Consider

A variety of background checks are available to franchisors. Depending on your business, you may need specific background checks suited to your industry. Here are the most important background checks and how they’ll help you.

  • Identity check. An identity check confirms that the potential franchisee is who they say they are. It also ensures that any subsequent background checks you run look into the right person.
  • Criminal background check. A criminal background check investigates a person’s past criminal record at the state and federal level. It checks if they are safe to work with or if they have a history of violence that might disqualify them from running your franchise.
  • Employment verification. An employment verification check looks into a person’s employment history to make sure they have the work experience needed to run a business.
  • Education verification. An education verification check reviews a person’s education history to confirm the schools they attended and the degrees they attained.
  • Professional license search. A professional license search checks if the person has a license and if that license has any restrictions on it. This background check is essential if your franchise owners need a license to run the store.
  • Credit history report. A credit history report checks the person’s credit history. A good credit history is critical if the franchisee needs to secure financial assistance to get the franchise started.
  • Federal bankruptcy search. A federal bankruptcy search looks for bankruptcies filed under that person’s name. If the person has filed multiple bankruptcies, they may not be able to get the financial assistance they need to run the franchise.

Learning which background checks to use is only the first part of the process. Now you need to run these background checks while staying legally compliant. How can you do that?

How Can You Run a Background Check Legally?

Now that you know which background checks to run, you need to know how to run a background check. Multiple state and federal laws regulate background checks. So, make sure your background checks follow all legal requirements.

Here’s a list of ways you can run a background check legally.

  • Explain that you will be running a background check and get the person’s consent. Tell the person which background checks you are going to run. Then, have the candidate sign a separate consent form authorizing the background checks.
  • Give them a chance to dispute findings. Sometimes there are extenuating circumstances for a situation. Allow the person to explain the situation or dispute the findings if they are untrue.
  • Use a reliable background check company. A reputable background check company ensures that the results are accurate and in compliance with the law.

At Trusted Employees, we offer background checks that can be customized for your franchise. Our background checks are also in compliance with federal and state laws. Contact us today to learn more about our background check packages.