Watch CBSN Live

The Smart Way to Find Business-Savvy Franchisees

By Paul Damico, President, Moe's Southwest Grill, Atlanta, Ga.
In 2008 I became president of Moe's Southwest Grill, a restaurant franchise based out of Atlanta, Georgia. We have 428 restaurants across 32 states, Canada, and most recently, Turkey. At this point, we're growing at a rate of about one new restaurant a week and plan to have 65 new locations open by the end of this year.

The problem
While we're very enthusiastic about growing the company, we found ourselves repeatedly facing the same issue when signing new restaurant owners: Very few of them had any experience in running a franchise or a restaurant.

We're very particular in selecting new franchise owners. Of the 2,700 inquiries we received last year, we only signed 70. We need to protect our brand, so we have to weed out the applicants who won't succeed.

At the outset of the signing process, we ask if prospective franchisees have the financial qualifications to open their own Moe's. Most of them do. We also ask if they have experience in franchising, and, more specifically, experience in the restaurant business. This is where we were losing a significant number of opportunities to sell franchises.

The solution
We didn't want to lower our standards, but we also didn't want to turn away otherwise capable owners. We were faced with an interesting challenge: How do we help give these individuals who have the capital, the desire, and the passion to run their own franchises, the experience they are lacking? The answer was to create an internship program.

Our franchisee internship is an opportunity for individuals who have a sincere desire to join our team, to spend three weeks in one of our restaurants. Six days a week for ten hours a day, they do everything from cleaning bathrooms to rolling burritos to serving guests. We use this period to evaluate their abilities and the interns use it to determine whether or not this is really something they're interested in pursuing.

We don't allow Moe's to be an investment for anyone -- they must sign on as Owner-Operators. It's a full-time commitment and they have to be willing to step in and get their hands dirty. Anyone can have the desire to go into business for themselves -- this program affords them the opportunity to see what that experience is actually like.

What's more, it allows us to see which aspiring franchisees are really serious. It's a pretty unique and dedicated individual who flies down to Georgia on their own dime to work with us for free for several weeks. We don't sign any franchise agreements beforehand and we don't collect any money until after the program is complete. If both parties are on board when the internship ends, we sign the interns on as a franchise owner and they begin the process of becoming an entrepreneur.

The aftermath
At this point, we've had five people participate in the program. Four of those candidates completed it and now have businesses that are up and running. Our sales last year, as a company, hit $347 million, up 5.5% over 2009. We opened 12 new restaurants this quarter and have another 20 currently under construction. We plan to continue our expansion west across the United States over the next few years, and are confident our intern program will continue be a part of that growth.

Paul Damico discovered the importance of speed in successful service during his first job as a dishwasher. While on the road for business he keeps himself busy dominating Scrabble on his iPad.
-- As told to Alex Coppola