Internal vs. External Hiring in Franchising: 5 Factors to Consider
Aug 26, 2025
When your franchise business is ready to hire a District Manager, you must decide whether you will do an internal or an external hiring.
- Statistics indicate that, in the franchise industry, you have a higher possibility of success if you promote from within.
However, that may not work for you. The best option will depend on your business situation and the particulars of your job offer, among other aspects. To help you make up your mind, in this blog post, I will give you five factors you should consider to make the best decision.
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1. Culture Fit
The first thing you need to consider is the culture fit. This is mostly a given if you promote someone from within because you already know them, and they already know you, your company, your culture, your standards, and your expectations. In other words, you wouldn't even consider them for the District Manager position if they weren't a great culture fit.
If you hire someone from the outside, on the other hand, you won’t know if they're going to fit well with your organization’s culture, values, mission, and vision.
Keep learning: "The Challenge Culture" from the Former Dunkin Chairman
2. Skill Level
The second thing to consider is how skillful the candidate is. Obviously, if you're promoting someone from within to become a District Manager, their last job was as a Unit Manager. They may have been a Super General Manager (or super GM, as we call them), but that does not guarantee they will be a great District Manager.
- Why? Because the skills required to be a Unit Manager are not the same as those necessary to be an excellent District Manager.
If an internal person will take on this position, you must provide them with the skills, knowledge, tools, resources, and guidance to do their next job the best possible way. (Keep reading to discover how!)
When you hire someone from the outside who has been a District Manager before, they should already have specific skills. However, they're also going to bring habits and routines that may not be compatible or in alignment with the type of actions, behaviors, and routines you want in your organization.
3. Long-term Loyalty
When it comes to loyalty, there's a significant advantage to promoting from within rather than hiring externally.
If you promote someone who has been with your organization for many years, perhaps even starting as a team member and then moving up to Unit Manager, you know that considering them for the District Manager role will motivate and excite them, increasing the chances that they will stay with you long-term.
If you hire an external, they will see this as a stepping stone in their career. However, they may leave you if they find a better opportunity to keep advancing and growing.
4. Team Impact
You should also consider how your team is going to react if you promote from within and if you hire externally.
Your team members will see an internal promotion as an opportunity for growth. It will confirm that you recognize the people’s performance and achievements, help them develop to the next level, and that they can make a career in your franchise organization.
That might be exciting for some people, and could also inspire them to perform their best in hopes of future promotions.
Bringing someone from the outside could hurt your team’s motivation and morale because they were not considered for that position. On the other hand, this external could bring new skills, diversity of thought, and a fresh look at your operations, and your team may be excited to hear and learn from them.
You should really analyze whether an external hiring could have a negative or a positive impact, and how you are going to manage that impact as a leader.
The last thing you want to do is hurt the company based on your decision. And since the District Manager you hire will oversee multiple units, you could affect the culture and the team’s motivation in multiple units across your organization.
5. Cost and Return on Investment
Another thing you need to consider when hiring internally vs. externally is how much it will cost you, and when you will have a return on your investment.
When you promote someone from within, you will have to pay them more, so there will be an increase in your labor expenses. However, hiring an outsider with experience in that position will cost you more.
Now, that additional cost may be worth it because the person can start operating almost immediately once you hire them, while with an internal promotion, you have to invest in training and developing them so they can learn how to be effective and get up to speed, which is also an expense you must consider.
Either way, there is going to be a cost.
What about the return on investment? Yes, an external District Manager might deliver quicker results, but remember, promoting someone from within gives you a two-to-one chance of success.
However, that person will require training and development to make that success come to life. You need to ask yourself if you are willing to wait 30, 60, or 90 days to get that person to where they need to be to be effective.
Don't miss: 6 Key Financial Insights for Multi-Unit Franchisees
Whether you promote someone from within or hire externally, you need to give your District Managers the tools and knowledge they require to succeed in that role, whether new or experienced. You must also specify the routines and actions they need to perform daily to achieve the results you expect. And to do all of that, you need to have the knowledge and understanding of their role and responsibilities.
But don’t worry, you are not alone at this. LEAD, our Multi-Unit Leadership Certification, is a training program designed for the men and women who oversee multiple units. During this 10-week comprehensive training, we teach them about their roles, routines, and responsibilities, as well as what they should do every day to succeed.
The Direct Supervisors also gain access to all the content and knowledge so that they too can understand how to be a District Manager and what it takes for them to be successful.
If you'd like to learn more about the LEAD Program, visit AFALead.com, make an appointment with our admissions office at www.admissioncall.com, or register for the free information session we have each quarter by clicking on the banner below:
Reflections:
- Do you have one or more Unit Managers ready to become District Managers?
- How would your team react to an internal promotion vs. an external hiring?
- Can you handle the financial cost of hiring an external District Manager?
- Do you have clarity on the role and responsibilities of a District Manager?
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