Franchise Success: It Takes More Than An Investment!

Too often than not, franchisees are of the mindset that they’ve bought into a franchise system and just need to sit back and wait for the business to flow through their doors. Sometimes, it’s ignorance and perception that clouds their thoughts. Thinking that the brand name they invested in should be enough for instant business success at their location. But, most of the time, it’s just plain old arrogance that gets in the way. It’s the arrogance of having committed hundreds of thousands of dollars to buy a franchise as being the sole reason for success. It’s also the basis of feeling that with this level of financial commitment, the franchisor should be solely responsible for making sure franchisees succeed. Almost demanding a guarantee of success!

Well, it is not the franchisor’s sole responsibility, under any circumstances, for making sure that franchisees succeed. Sure, the franchisor must provide franchisees with a proven system and field-tested tools, that when utilized diligently and effectively, should provide them with the foundation to succeed. But, it’s just that, a foundation. And, the franchisor should have systems in place to monitor franchisees’ progress, provide additional training and guidance, and further the overall development of the brand which all contributes to solidifying that foundation. But, as detailed and comprehensive as all this sounds, it still is not enough for most franchisees to succeed without their own desire, drive and determination. And, not just words, but actual action.

Failure or Success?

Years ago, I was working with a franchise group on a complex marketing project. The project was ultimately a success and achieved most of the goals and objectives that were established prior to launch. Most of the franchisees embraced the strategy and were extremely instrumental in executing the plan. However, there were five franchisees that just couldn’t get out of their own way to realize the benefits of the plan, and did not realize positive results as their fellow franchisees had.

As with many of my franchise clients, the franchisor requested that I work with these franchisees, ascertain the root of their problems, and develop an aggressive plan of action to move their businesses forward. You see, the franchisor truly wanted to see their franchisees succeed! By the way, these franchisees represented the bottom of the franchise group in average unit sales. Definitely, that was no coincidence. Well, to make a long story short, the obvious problem in each case pointed back to the franchisees working “in” the business, as opposed to “on” the business. Mix in some procrastination, entitlement attitudes, and of course, total denial, and the recipe for total business failure was complete.

I was able to determine that these franchisees were compensating for their path to failure by being at the business location longer hours, spending more and more time taking care of customers, while spending less and less time on anything else. All claimed to be working harder than they had ever worked before. Was it because they had to cut payroll and do the job themselves? Ironically, that was not the case as I found employees standing around while the franchisee did their jobs. Often, I witnessed franchisees literally stepping in front of employees to take care of a customer. When I addressed the same with the franchisees, all were actually preparing for failure but didn’t want to be considered the actual cause of failure. All thought that by being seen at the business long hours every day and working non-stop behind the counter, no one would be able to say they didn’t work hard at making the business a success. Certainly, they wouldn’t be blamed for failure.

Of the five struggling franchisees, all but one was anxious to listen and make firm commitments to improve their situations. The remaining franchisee was thoroughly convinced he would fail and there was nothing he, or anyone else, could do to change the situation. He placed total blame on the franchisor, claiming they didn’t provide support, and strongly professed that he, himself, did everything humanly possible to succeed. When I asked what he was referring to, he pointed to the long hours every day. When I asked about marketing efforts, he claimed he shouldn’t have to do anything in that regard and pointed back to the franchisor. He ranted about how the franchisor should have spent money on his behalf in promoting the business and how he spent over $300K on build-out and equipment and that should have been more than enough to ensure his success. Further, he felt he should be able to open the doors everyday, and if the brand name was strong enough, success would occur in a relative matter of time.

As I indicated, four of the franchisees decided to move forward. Agreeing that failure was not an option, we developed and executed an extremely aggressive, yet cost-effective, plan of action centered around getting outside the business location every day to promote their business wherever and however they could. They all agreed they should have been doing this all along but always seemed to procrastinate in actually getting the job done. They attributed a big part of their procrastination to a strong sense of entitlement that the franchisor should be doing more because they, the franchisees, were the ones that already made an investment to grow the brand. As such, they had convinced themselves that any possibility of failure would fall firmly on the franchisor’s shoulders. In turn, they buried themselves “in” the business and were awaiting the inevitable.

After many hours of discussion and debate about vision, passion, drive and determination, all four franchisees decided to take responsibility for their actions and would hold themselves to a high level of accountability, to their business, employees, family, and themselves. Each was relentless in their quest to turn their businesses around. They spoke to whoever would listen about their products and services. They were tireless in their efforts to discover new groups and organizations that might listen and learn about what their business had to offer. They were almost to the point of being ruthless in their desire to ask for referrals and recommendations. They were all thinking outside the box, always asking themselves, “What more can be done?” and never accepting a “nothing” answer. Needless to say, their new attitudes became contagious and before they knew it, everyone seemed to be spreading the word. Nowadays, we would refer to that as a “viral” effect.

The Final Tally

One franchisee sold his business to an individual he met when spreading the word about his business. The new franchisee became a multi-unit operator and eventually sold the business for a significant profit.
Two franchisees took on partners they met in their efforts within the community. All are now multi-unit operators within several franchise systems.
One franchisee continues to operate her business and although happy to have survived, never had the desire to open additional locations.
And, the franchisee, who said he would fail… was absolutely right!

This post was originally published on this site October 2010


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Nothing Happens Without A Sale!

This week, we focused our attention on increasing sales in franchise organizations at all levels. We discussed sales prospecting, presentations, sales questions in a B2B situation and even the sale that possibly goes wrong. Although yesterday’s segment was scheduled to be the last in this series, we received many emails, tweets and comments throughout the week basically asking the same thing, “what do you think is wrong with my salespeople?” Well, here’s an article from our archives that may best address this question. Again, realize this applies regardless of what you may be selling as they’re based upon solid fundamentals! Happy selling!

sales flyNothing Happens Without A Sale!

Dedicating our efforts to the latest technology is essential to leading the field in any industry. However, we must not lose sight of the basics. Just as a professional baseball player practices and drills on the basics, especially when in a slump, entrepreneurs must review and stress the basics of business. And, nothing is so basic to business as sales. In fact, nothing happens in business without a sale.

With this in mind, I will take you back to the very fundamental aspects of sales from the perspective of you being the one making the sale. Share the same with your salespeople in your organization and you’ll be pleasantly surprised at how back to basics improves your team’s results.

On a very basic level, there are five ingredients needed to create a sale:

The salesperson. The qualified prospect. A need or want that the prospect has. The product or service. The selling strategy or procedure you follow that guides a prospect to the natural conclusion of the selling process; the sale.

While many salespeople would say the selling process is about the customer, they wind up making it about themselves. Think about all the fears or reluctance you may experience when it comes to cold calling or selling. I don’t want to say the wrong thing. I don’t want to look bad. I don’t want to be a nuisance. I don’t want to impose. I don’t want to be rejected or hear no. I don’t want to blow it! I, I, I, I, I!

Look at the first word that begins each statement above. Making the selling and cold calling process about you is the number one roadblock to successful prospecting and the number one cause of cold calling reluctance. Instead of making the selling process about you and how much you can gain if you sell, make it about the prospect and how much value you can deliver to them.

If you are experiencing any fear or resistance to prospecting, look at who you’re making the selling process about. Chances are, you’re making it about you! Once you shift your focus and energy towards making it about the prospect, it will immediately relieve you of the unnecessary pressure to look good and perform.

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When the Sale is Critical, What if…?

This week, our focus has been centered on increasing sales in franchise organizations at all levels. We’ve discussed sales prospecting, presentations and sales questions in a B2B situation. Today, in our last segment, we’ll discuss the key sale that possibly goes wrong. From a business owner’s perspective and in light of today’s economic environment, the possibility of being in this position is quite real. This applies to all types of sales!

When the Sale is Critical, What if…?

fail444456You’re close to finalizing a major deal with a prospective client that will result in a large payout and repeat business for years to come. The time you’ve spent nurturing this prospect will finally payoff. Some of your current clients have been disappointed by the lack of attention you’ve shown them over the past year but you know you can make it up to them after you close this deal. Besides, this new client will generate a significant increase in revenue and profits that everybody knows is vital to the company’s future success.

But wait. You’ve learned in the 11th hour, the prospective client is changing directions and is exploring options with your competitor. As it turns out, the change in direction is being blamed on something you did or said that they weren’t exactly happy with. You find this out from a former employee, now employed with your competitor. He goes on to tell you the prospect would rather do business with your company but only if you weren’t involved.

You think about the potential loss of immediate and future business. What about the revenue and profits the company desperately needs? How will you be viewed by your employees (and partners) if the prospect signs with your competitor when you’ve invested so much time and resources? What happens if key employees find out the prospect could have been saved if you stepped aside? What is it that you did or said that caused the change in direction? Does it really matter now?

Forget the “this wouldn’t happen to me” response. Put aside the “it couldn’t happen like this” statement. Look beyond the “he should have seen it coming” exclamation. Let’s assume it happened exactly as it was described above – What would you do?

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B2B Sales: Questions Are Your Greatest Tools

In continuing with our focus on increasing sales in franchise organizations at all levels, we will build upon the last two days’ articles about sales prospecting and presentations, and today discuss sales questions specific to a B2B situation, but can be easily revised for any sales situation.

sales questionsB2B Sales: Questions Are Your Greatest Tool

Prepare, in advance, the questions you’ll ask when you actually get face to face with your prospect. Of course, every selling situation is unique and every selling situation requires some variation, but certain basic questions that come up in every interview can be planned in advance.

By carefully planning them, you can make sure you cover all of your bases and that your wording is precise. There is one caution – be careful not to phrase them so they sound canned.

Ask As Many Open-Ended Questions As Possible

Closed questions that call for a “yes” or “no” answer tend to discourage people from talking, to give only limited information, and they tend to set a negative tone. During the Probe (the questioning) step of most selling systems, ask primarily open-ended questions that require prospects to tell you how they feel, what they want, or what they think. There is room for “yes” or “no” questions, but be careful not to use too many or to use them incorrectly.

Ask Needs-Based Questions

In the Probe step you want to do more than get your prospect to talk; you want to find out what he or she needs. Therefore, frame questions that will give you insights into how prospects perceive their needs.

Ask Questions That Help You Identify Problems That Need To Be Solved

Usually there’s one overriding problem that needs to be resolved in the prospect’s mind – a situation you can understand by asking the right questions. Plus, with proper pre-call planning and strong internal advocacy, you should already know what those problems are.

Ask Questions That Help You Pinpoint The Dominant Buying Motivations

Buying motivations and needs are not always the same. Buying motivations have to do with desires, feelings, tastes and so on.

Avoid Offensive Questions or Asking Questions In An Insensitive Way

Certain types of questions can offend prospects and cause them to back away from you. Here are some examples of pitfalls to avoid:

Don’t use leading or “set up” questions such as “You do want to make a profit, don’t you?” What’s the prospect going to say…”No, I don’t?!”
Probe, don’t pry. Nosy questions can be a real turnoff.

Be careful about phrasing. For example, instead of asking “How much can you afford to spend?” you could phrase it a little more positively: “How much had you planned to invest?”

Ask Questions That Are Easy To Answer

Questions that require knowledge the prospect doesn’t have can often make him or her feel stupid. For example, asking most consumers, “What’s the maximum wattage per channel on your amplifier?” might get you a dumb look for an answer. The smarter you make your prospects feel, the smarter they’ll think you are and the more they’ll like you.

Use Questions To Guide The Interview & Keep The Tone Positive

Some people love to ramble on and on, but by skillfully using questions you can keep the interview focused and moving in the right direction. Also, ask questions to which people can easily respond in a positive manner. Studies have shown that most people much prefer to agree than to assert themselves and disagree. In other words…make it easy to say “yes.”

Ask – and Then Listen

The prospect can’t talk while you’re talking. Besides, you can’t learn while you’re talking. Don’t just get quiet and think up something to say next. Instead, listen to every word that prospect says and analyze the words, tones and the gestures. Remember, you can talk people into buying, but you can also listen them into it.

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Average vs Professional Presentations

In continuing with our focus on increasing sales in franchise organizations at all levels, we will build upon yesterday’s article about sales prospecting and today, discuss sales presentations. Remember, the points we’re making are from one of our recent B2B training sessions. But the fundamentals remain the same and are applicable for any type of sales.

Average vs Professional Presentations

Research indicates that most salespeople put 80-90% of their time into presenting and demonstrating and leave only 10-20% of their time for other things. Professional salespeople, however, spend only 40% of their time presenting or demonstrating; not more than 10% prospecting; and about 50% of their time qualifying and planning.

Let’s look at these figures one more time. The professionals spend half as much time demonstrating or presenting as the average salesperson does, yet we find that he or she still manages to turn in at least twice the volume. And this is a conservative figure. Actually, the professional brings in between four and ten times as much business as the average salesperson will. It’s not uncommon for a single salesperson to outsell the entire bottom half of the sales force, and keep on doing it month after month, year after year.

sales presentation cartoonSo what is it that the true professional does to stand above the rest? By far the greatest difference lies in his or her attention to and ability at planning sales, at selecting and qualifying the right people to sell to, at overcoming objections and closing, and at deserving and obtaining referrals.

So as important as presenting and demonstrating is, if you do it with the wrong people because you didn’t qualify properly, it’s all for nothing. If you’re working with the right people, but you let their objections beat you because you haven’t prepared properly, it’s all for nothing. And if you have no capability in closing, you’re working for nothing. If you can’t close, many sales you could and should make will go to the next competitor who comes along because you built the structure for the sale but couldn’t close the door before he or she got there. You have to be a strong presenter or demonstrator to sell strongly. You also have to qualify strongly, handle objections strongly and close strongly.

There are three things you should cover in your presentation:

1. Tell them what you’re going to tell them. This is your introduction.
2. Tell them what you’re there to tell them. This is your presentation.
3. Tell them what you just told them. This is your summary.

That’s the outline of all successful speeches, presentations and demonstrations. In other words, we use repetition. We don’t say exactly the same thing three times, of course, As outlined above, we begin by introducing our new ideas, then we cover our points in depth and relate them to our future clients’ interests and needs and finally, we draw conclusions from our points and indicate the direction that things should take.

Repetition is the mother of learning, yet average salespeople don’t like repetition. For one thing, they have used their material so many times that it’s stale to them. All too often, average salespeople have gone worse than stale on their presentations and feel it would be better off buried. The professional, on the other hand, never tires of phrases that work, ploys that sell, and ideas that make sense to his or her buyers.

There is no doubt about it, one of the keys to the professional’s greater skill at presenting or demonstrating lies in his or her ability and willingness to use repetition effectively to reinforce every point. He or she doesn’t mind repeating the sales point because he or she knows it leads to repeated sales to the same type of clientele.

So think in terms of tell, tell, tell and remember: Repetition is the seed of selling.

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The Foundation to Sales Success

Throughout the franchise community, there are many reasons to prospect for new business. Whether it’s prospecting for franchise candidates, national accounts or even at the franchisee level prospecting for outside sales, good old fashioned sales skills are paramount to sales success. The first step in the sales process, sales prospecting, sets the foundation to that success. Yet, many individuals, even many experienced sales professionals, despise prospecting and some actually fear it! Below are some points from one of our recent B2B training sessions. Keep in mind, whether you’re in B2B or B2C sales, or selling franchises, the fundamentals remain the same. Adapt accordingly.

Sales Prospecting: Motivation and Overcoming Rejection

Style points don’t count. Ability is not enough. In sales, winning comes only with the right attitude! And winning at prospecting or cold calling, whatever you may call it in your business, is all about attitude!

When you’re responsible for opening new accounts, as a salesperson one of the keys to your financial success is your attitude toward prospecting.

If you don’t have the desire to prospect, or are afraid of it, you don’t do it often enough. As a result, your prospecting skills become weaker. This in turn causes your motivation to diminish and prospecting then becomes a monumental task.

ProspectingWhen we evaluate the reasons why a salesperson has failed or plateaus at an unacceptable level, we are constantly reminded of the following; they are not motivated to prospect or, have a fear of rejection. Neither their lack of motivation nor the fear of rejection is the main culprit; both are to blame. It is a catch-22. Either the lack of motivation causes the fear of rejection or the fear of rejection demotivates them. Either way, the person never becomes the effective prospector they could be or should be.

What we offer here, are some ideas on how to get motivated and stay motivated when prospecting or cold calling. We have also included suggestions that will help you overcome the fear of rejection. When you internalize these concepts and techniques, you will become the most effective prospector you can be and will achieve the level of financial success you deserve.

Believe in it: it works.

Prospecting over the phone or cold calling “door-to-door” is a very effective way to find qualified leads for your business. Since the beginning of time, farmers, livestock ranchers and a variety of other vendors have been bringing their products to market on horse and buggy. Today, millions of companies spend millions of dollars and have millions of salespeople doing it. So why shouldn’t you?

Prepare yourself properly.

Prospecting is like a contact sport. You are either prepared and have an advantage over the other person, or you are unprepared and don’t. Top salespeople have regular phrases, statements and/or scripts they use to generate interest on the part of the prospect. They are also prepared with a list of common objections and responses to handle any resistance the prospect or gatekeeper throws at them. This preparation comes from practicing with a peer or sales manager and/or from making a lot of calls to prospects. The key question is, “Are you fully prepared?”

Discipline yourself.

Every time you feel like quitting and/or find yourself procrastinating, you are being bit by the Fear of Rejection bug. The only way to beat this bug is to maintain the discipline to keep going. Discipline in business is about forcing yourself to do something that you don’t want to do. When you are staring at that name on your list or standing outside the prospect’s door – Just do it! No one has more power to discipline you than you.

Convert that feeling.

attitude-scaleTry to understand why you get sick to your stomach when you have to prospect. Or why you hate the phone and have fear of rejection. Ask yourself why you feel this way and then listen for the answer. When you are in a quiet place and are truly interested in finding the reason, it will come out. Don’t let that feeling control you. You have to learn how to control it. Once you have control, you can convert the negative feelings into positive energy. The good news is, the worse you feel now, the stronger you’ll be when you convert it and the more chance you have of being a prospecting dynamo!

Don’t take it personally.

Most, if not all, of the prospects you are going to call are bombarded with salespeople each week. And they reject most, if not all of them. They are not rejecting you; they have rejected every other salesperson that has called them this week. So when you call, it is not you they are rejecting, they are rejecting another salesperson. Don’t feel so singled out. You are among an elite group of people whose job it is to find people who are not so willing to or who are unable to reject salespeople. And that’s easy when you have a good call list and are well prepared.

Partner with a buddy.

Many people that exercise would rather do it with a friend because this helps keep them motivated. Both people enjoy the workout more, plus they keep each other in line. We recommend you find another salesperson in your organization that has the same or better work ethic as you and agree to keep each other motivated and positive during prospecting sessions. When you make commitments to each other of when, how long, and who you are going to prospect, you subconsciously put incredible pressure on yourself to hold up your end of the bargain. This is very healthy pressure to have.

Make the time to prospect.

This is part of the discipline theory we spoke of before. Every salesperson we meet says they are busy, and some say they are too busy to prospect. This is nothing more then an excuse and an infection by the Fear of Rejection bug. Top salespeople make a habit of allocating a certain percentage of their week to prospecting. Regardless of their workload, they put a priority on prospecting and do it regularly. It is your responsibility to make time to prospect and create this habit.

Organize your list of leads.

It is a complete waste of time to make phone calls to companies and people who are not qualified to buy your product or service. Top salespeople have at least 100 qualified leads on their call list at all times. A qualified lead is defined as a prospect you know can use and pay for the products or services you offer or is currently using similar products or services offered by your competition.

A business card is not a prospect.

We are amazed at how little value salespeople put on prospects. They get a business card from somewhere, write some notes on the back and use this as their main prospecting system. A stack of these things with a rubber band wrapped around them is an inefficient method of prospecting. We recommend you use your computer, iPhone or tablet and keep as much information as possible on each prospect. In addition to the name, title, phone number with direct extension, and address of the person who has the authority to buy your product or service, you can collect additional information and use it to your advantage.

Call Decision-Makers only.

Strong lead lists will have the name of the Decision-Maker for each lead. A Decision-Maker is generally defined as the person who makes the decisions in relation to your products or services. Generally, there are two things we look for when categorizing someone as the final Decision-Maker: 1) the ultimate authority in their organization to over-rule everyone’s decisions regarding products or services, 2) the ability to allocate money, set budgets, issue POs, sign checks, give a credit card or enter into agreements. They have the money and they can spend it!

All at once or not?

Salespeople regularly ask us if it is better to cold call for eight straight hours (one full day) or to break it up into two-four hour sessions. Frankly, we have met successful salespeople that do it both ways. One salesperson may prefer to allocate a full day to nothing but prospecting while another may prefer to break it up into two mornings on two different days. We don’t think it makes a difference, we believe we all have to find the method that is comfortable for us. Provided you discipline yourself to concentrate on prospecting during this time period and not on other busy work.

Break up the day/session.

The fact of the matter is that even great prospectors are going to be rejected. Prospecting is a numbers game based on percentages. Having said that, we believe it is sometimes difficult for people to take a lot of rejection for a long period of time. So we recommend breaking up your session in a fashion similar to this. Make a particular number of calls to brand new prospects and then, make some calls to prospects you have previously called on, then call some people for referrals, then take a short break.

What we have just described is one cycle. The length of each cycle will depend on your commitment to prospecting, your work ethic and level of tenacity. In order to effectively prospect, you are going to have to repeat these cycles as often as you can in order to get results. Only you can determine the length of each cycle and how many cycles per day you are comfortable with.

Use a headset.

telephone headsetNot for motivation, for discipline and efficiency. When you are “literally” connected to the phone via a headset, it is much harder for you to walk away from your desk. So many people put the phone down and have trouble picking it back up. They don’t even realize it, but as soon as they put it down, the resistance to picking it back up is even greater. If you don’t have a headset, make it a rule that you will never put the receiver down until you dial at least “x” amount of calls. Just hang up each call with your finger instead of putting the receiver down. Once it’s down it’s even harder to pick back up again!

Hold all calls.

Not for motivation, for discipline and efficiency. A telephone prospecting session is just that – outgoing calls only. Have your receptionist or assistant hold all your calls or direct them to your voice mail. Telephone efficiency is all about rhythm. Once that rhythm is broken it’s hard to get it started again. When you start to field incoming calls you might get sidetracked by a friend or even worse a customer who needs something now. Boom: rhythm broken.

It’s a numbers game.

Even professional baseball players are only successful at getting on base 30% of the time. And they rate in terms of skills in the top 1% of all the millions of kids who start out playing baseball. So let me get this straight. They are the best of the best, get paid millions of dollars and yet actually fail on a consistent basis 7 out of 10 times! Why don’t they get the fear of failure? Because they understand it’s a numbers game. In the sales profession a 20 to 30% success rate is good. When you can secure 2 – 3 appointments from every 10 prospects or leads you are doing a good job. Keep in mind that every customer “no” gets you one step closer to that elusive “yes.” Just keep stepping up to the plate.

Build on little successes.

Regardless of your experience level, you may occasionally hit slumps just as professional athletes do. To overcome this they don’t quit, they focus their attention, practice regularly and keep at it. Little by little they start to succeed and get their confidence back. You can do the same by working a strong referral list or by calling on some previous accounts. By doing so, you will get your rhythm back. As soon as you start to succeed throw in a couple of cold prospects and watch your confidence take over. Even if you are not in a slump, during a call session you may want to call on some older customers to keep your motivation and confidence level up.

Increase your tolerance level.

You don’t start your running career with the 100-mile marathon. You start by first running the 5-mile marathon. Then you build your level of tolerance and stamina. Same with prospecting. If you are suffering from a lack of motivation or the fear of rejection, start small and build your way up. Start with 10 calls the first week, 15 calls the second week, 20 calls the third week, 25 calls the fourth week, and so on.

Set goals.

sales successRecently we were speaking with a veteran salesperson of about 16 years. For the past 8 years, he had a strong account base and did not have to make cold calls. He just took a new job with a company that does most of its business by telephone prospecting. He said he was scared at first (he took a cut in pay in hopes of the bigger payoff) but had faith in the company and went at it. He told me the main reason he has been more successful on the phone than most of the other new reps is because he sets goals for himself every week. He has goals for the number of times he dials the phone, the number of contacts he makes and the number of appointments he sets. Basically, he said he works as many hours as it takes to hit his goals. Now that’s commitment and desire!

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Franchisee Failure: Logical Reasons or Lame Excuses?

personal accountabilitySome time back, posted on LinkedIn was a discussion about franchising that generalizes negative franchise experiences, places blame for the experiences on “improper practices” and ultimately forces the franchise community to defend its practices, and ultimately, its integrity. My question is, “When do franchisees take responsibility for their own actions, or in many cases, their own in-actions?”

Too often franchisors are assumed to have done something wrong in the franchise sales process, when in fact, they have been diligent throughout the process. Certainly, that does not mean there aren’t franchise sales professionals taking shortcuts and providing misleading financial performance representations. I’d be a fool not to acknowledge that this occurs! But in having surveyed hundreds of franchisees that have failed over the past five years, I have discovered a multitude of issues that may have contributed to franchisee failure. And, in only a handful of cases did these franchisees complain about false promises or improper disclosure from their franchisor.

Some of the issues that may have contributed to franchisee failure include franchisees’ lack of general business skills, little or no emotional support at home, personal or family members’ substance abuse, and as a result of just sitting back and waiting for business to come to them. With this in mind, I believe franchisee training should address business 101 skills and franchisees need to understand the necessity of grassroots marketing. With respect to the “family and personal” issues, although franchisors cannot and should not be family counselors, many do promote their franchise as a family, and as such, should attempt to identify problems when franchisees begin to show signs of failure. At least they should keep their eyes and ears open for troubling signs outside operational issues.

As we’re discusing franchise failure, I would be remiss in not first referring to my own personal experience as a franchisee.

The following is the actual LinkedIn discussion along with a few key responses. As we have always done in the past, the responders are kept anonymous and are only identified by their Linkedin position statement or by a review of their LinkedIn profile. As always, your comments are encouraged and should be submitted in the section provided below this post.

Franchising – Have you bought yourself a prison sentence?

I have recently had a number of discussions with people who had been looking to improve and secure their futures by investing in a franchise, a proven business model that, whilst perhaps not leading to a grandiose life style, should offer an honest income and self fulfilling future.

Acknowledging that there are many successful franchise opportunities, however I have been shocked by the revelations that have unfolded through my discussions. In some cases, plights of despair, with franchise agreements being sold on the pretence of realistic earning that do not even come close to reflecting reality. Many feel conned and trapped by lengthy contracts, weighted heavily in favour of the franchisor, but struggle through with acceptance because they are not necessarily dependant on the income. On the other hand, some find themselves in serious financial difficulty, with dwindled saving, remortgaging and further borrowing to survive and support a non viable business, with no easy exit and the threat of legal action for non conformity or failure to keep the business going.

If you were running a small business and it turned out to be a non viable proposition, you would most probably take the decision to close it down, learn from the experience and move on. However, one franchisee told me that they had “bought themselves a prison sentence”. As a result of the franchise they had no funds remaining to fight a case or exit from the business and were fearful of their harsh and unsympathetic franchisor.

Senior SEO and Marketing Consultant provided some perspective from outside the franchise community:

“This tragedy speaks to two serious issues that are not in fact confined to the franchise business model, yet are, due to contractual agreements and financial outlay up front, most often more severely felt.

First there’s the issue of false / misleading and otherwise deceptive sales tactics used by unscrupulous people.

The second is people wanting to buy a dream more than a business – people who truly do not comprehend the complexities or depth of commitment required in running a business in any economic situation, let alone our current economic landscape. These people almost always do little true due diligence in just about any aspect of a business model.

While many of these people are more vulnerable to unscrupulous sales tactics (as in they don’t bother to hire a accountant to do an in depth accounting, or a business attorney / barrister to review the terms), just as often many buy a business that they are not truly passionate about or think it won’t involve 60 hour work weeks at certain points.

While we can not condone unscrupulous business sales practices, we need to truly hold those looking to buy a franchise or ANY business accountable for their footwork and business sense.”

A Director of Development at a National Franchisor submitted a very detailed response:

“Given the current conditions, I think the question makes for an excellent discussion. Since no direct question was posed, I’m responding to your general request for comment regarding what I paraphrase as franchisees who buy a franchise which is not viable and then feel trapped by the terms and of the franchise agreement. For me, you’re looking at three components: (1) integrity of the selection process (sales process), (2) performance of the franchisor and franchisee, (3) contemplations on the missing “no fault” termination by the franchisee (the prison).

1. The sales process is not a yes/no or right/wrong proposition. Each franchisor is defined by a number of characteristics: lifecycle, capitalization, experience, management team, strategy, customers, etc. Likewise, each prospect has different personal goals, experience, talents, discipline, and aptitude for being a franchisee within the confines of a system. Alignment between the Zor and Zee from the onset is critical. I understand the UK does not have Disclosure Laws which makes this process all the more difficult and important. The question every Zee should ask is… am I prepared to fail? In my experience, prospects would rather “make money now” than conduct disciplined due diligence to select the opportunity making them easy prey. See link for more.

2. Mutual Performance is required. Need not be said but was not mentioned in your post. I’m a firm believer that businesses don’t fail for one reason alone but a series of bad decisions over time. With that being said, I’ve found one of the fastest ways to failure for a franchisee is lack of capitalization by the franchisee to carry through a rough opening or difficult time. A solid turnaround often times requires capital that just isn’t available. Franchising is a strategy for growth using other people’s money. Franchisors rarely bailout franchisees.

3. The thrust of your question really is the word “prison” which I can only conclude evolves from the reality that while franchisors can terminate the franchise agreement based on default conditions a franchisee does not have the courtesy of a “no fault” termination. (ie… Franchisee may terminate the franchise agreement/close the business with 60 days notice.) As a franchisor, it’s important to note that we’re building a system with a number of franchisees and only one franchisor. The strength of any system is its size and stability. Allowing franchisees to simply walk away is not always in the best interest of the franchisor, the customers of the brand or franchisees who might be operating nearby. Indeed, a no fault termination could cause havoc for a system at the first sign of danger.

Still, franchisees actually have three exit options: (a) find a buyer (nearby franchisee, someone looking for a new challenge, which can be approved by the franchisor. etc) and transfer the agreement; or (b) request a “workout” from the franchisor; or (c) declare bankruptcy as a franchisor usually reserves the right to legally terminate the Franchise Agreement in the event of bankruptcy or other creditor issues. If the Zor/Zee were aligned and both worked hard to make the business work, the Zor should be able to find a way to let the franchisee out of the deal. More often than not, a reasonable workout can be provided with the franchisor assuming the business or closing it on mutual terms with the franchisee. Workouts don’t work when the franchisee is unwilling to take some/all of the responsibility for the failure of their business. It’s not the job of the franchisor to bail the franchisee out… indeed doing so would cause challenges for the system and tax the successful franchisees that are performing. In all cases, it is very important to clearly review the terms of the agreement and seek legal advice.”

A very prominent franchise consultant provided his perspective:

“I can only add that I’ve been involved in franchising for 30 years and during that time I’ve certainly met unhappy, disgruntled and failed franchisees — and some who failed because they selected faulty franchise systems and didn’t necessarily do anything wrong themselves.

Fact is: Not all franchise companies are created equal. Some are better than others.

The thing that always gets me is the failed franchisee who is boo-hooing because they’re “held prisoner,” they had no options, they “bought a job,” they didn’t know any better, they were misled, even lied to . . . come on now. It’s possible that happens to some of the people some of the time — but it doesn’t happen all that often EXCEPT to people who allow it to happen.

People don’t want to accept that there are no guarantees. They think they should be able to buy a franchise and be wildly successful just because it’s a franchise. They’re shocked to find out that it doesn’t always work that way. And if you ask them how much homework they did, who they asked about the opportunity, did they ask others: “Is this the same as buying a job?” . . . “Do you feel imprisoned by the franchisor?” . . . “Do you think you were misled about how much money you can earn?” . . . etc. etc. etc, it turns out they didn’t do any (or much) real homework.

Thanks to the recession, we may be coming out of the Age of Entitlement, and that will benefit franchising, network marketing, and all other forms of business.”

A Founding Partner of a Media Business provided his perspective based upon prior ownership of a franchise:

“My wife and I owned a franchise on the East Coast for a while. We used it as a transition from the corporate world to getting the courage to do “our own thing” and form our own business. Here is my take on franchises (we investigated 10 franchises before buying one specific franchise): we dealt with a really good, top-notch franchise consultant, by the way:

1. You’re essentially using your capital to “buy” a new job or career. It just comes wrapped in a business model which may or may not work depending on your region, local area, local culture, and most important, your level of effort and seriousness.

2. As long as you’re a franchisee, you will be paying rights, royalties, percentages of your hard-earned income, to a franchisor. That money comes off your top line, by the way.

3.Some franchises are innovative and create significant improvements in their products or services; others have founders who lose their excitement or will to develop innovations when they’ve made their money, BUT you’re still paying royalties and fees to them.

4. Many franchises and franchise types are profitable only if one obtains employees from the bottom of the economic barrel, because they must pay “bottom of the barrel” wages in order to break even or make a profit. That level of employee is often undependable, turnover of employees is inordinately high, and one often spends days without adequate staffing when employees don’t show up.

5. Because one hires from the bottom of the economic barrel and is paying not much over minimum wage, one feels (at least we felt) that we were exploiting people.

6. Finally, “owning” a franchise, because of the often restrictive nature of the business model, the marks, the methodologies, is just as often about NOT being in charge of your own business as it is about being in charge of your business. When all else fails, read my comment number 1 above.”

Last, an entrepreneur of what appears to be an independent business responded:

“Isolating individual experiences and calling that a pattern or problem with franchising might be a little misleading. It’s not a perfect world and if you have 100 of anything, a certain percentage of that number will not pan out for an infinite number of reasons. there are a lot of bad franchisors out there, and there are a lot of bad franchisees. As for the bad franchisees, a good franchisor should 1) never should have awarded to them and agreed to their locations etc and 2) some franchisees never follow thru on the execution and hard work.”

Need additional food for thought? Here’s another interesting article.

*This post was originally published on this site December 2010.

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Ten Commandments of Social Media

Lon Scafko, author of The Social Media Bible, and keynote speaker for the upcoming Franchise Social Media Summit, wrote an article some time back for Fast Company magazine where he discussed the Ten Commandments of Social Media. These commandments are an excellent guideline to developing a social media marketing strategy, and for future reference.

ten_commandments_large_web-copyCommandment 1. Thou Shalt Blog (like crazy)

Blog. Please. That’s the first priority. Set up a blog, a personal blog, a business blog. It’s easier than you think. Use an existing blogging site such as Blogger.com or GoingOn.com or install your own branded blogging site right on your own server by using WordPress. And, WordPress is free.

Commandment 2. Thou Shalt Create Profiles (everywhere)

Create your profiles; do it now before someone else takes them. Once they are gone, they are gone forever. That’s called cyber squatting. So get out there. Use Open Social to make filling in your profiles as easy as a click of a button.

Commandment 3. Thou Shalt Upload Photos (lots of them)

Upload photographs. You’ve got them. Don’t upload the one with you with a lampshade on your head…counterproductive; but other photographs? Absolutely. Customers want to see and participate. You want to give people a face to go with your company.

Commandment 4. Thou Shalt Upload Videos (all you can find)

Videos. You all have got videos. I don’t care whether it’s training videos or customer videos, grab your video camera and go interview some of your customers. What’s better than seeing your customer’s smiley face on your Web site? And it doesn’t cost anything.

Commandment 5. Thou Shalt Podcast (often)

Podcast. If you’re too cheap to get a camera, use the free audio software that’s in your computer. That’s what I did. I created 48 audio podcasts. If you take the podcasts I did for my book and played them back-to-back, they run 24 continuous hours of interviews. You can do that. It’s free. It just takes time.

Commandment 6. Thou Shalt Set Alerts (immediately)

Set alerts. People are talking about you. You probably need to know what they are saying and you want to participate.

Commandment 7. Thou Shalt Comment (on a multitude of blogs)

Comment. Commenting is like going to a cocktail party. You wouldn’t walk into a networking event, walk up to a group of people talking, and tell them your name and what you do in your business. That would be rude and unacceptable. Listen first. Read the blogs and add comments. You can be controversial, that’s okay. But participate. Get involved.

Commandment 8. Thou Shalt Get Connected (with everyone)

Get LinkedIn. Put it in your email that you have a LinkedIn account, you have a Facebook account, and that you have a Twitter account. Make it a part of your heading on your letterhead, because that’s how you propagate. That’s how you sell it.

Commandment 9. Thou Shalt Explore Social Media (30 minutes per week)

Explore social media. Give me thirty minutes a week, that’s all I’m asking. Friday morning grab your coffee, lock yourself in your office, and give me thirty minutes. Just Google something. I promise you within the first 30 days you will be excited. You’ll be as excited as I am. You will get excited because of the ROI.

Commandment 10. Thou Shalt Be Creative (go forth and create creatively)

And the most important commandment is creativity. That’s all. It’s just creativity and having fun. But you know what, that’s what your customers want. They want to see transparency. They want to see authenticity. They want to see you having fun. They want to be able to relate and communicate.

* Previously posted on franchisEssentials June 2010 and June 2011


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What is Your Social Media Marketing Strategy?

The following was my response to a business executive that posted the following discussion on LinkedIn in a non-franchise group:

How are you and your business using social media to drive business and gain awareness? With the social media landscape becoming increasingly fragmented and complicated, how are you managing to gain the most from this medium?

“All of my clients are within the franchise industry which is a more difficult environment in which to effectively utilize social media because there are different elements to the relationship between franchisor, franchisee and customer as opposed to just B2B or B2C. That being said, it can and is being done quite effectively. However, it takes a very concentrated focus, or as I fondly describe as [E-IDEA], the acronym for franchisEssentials five step process to social media success:

social media types1. Exploring different aspects of Social Media, including Social Networking and key Web 2.0 technology that creates excitement and brand awareness within your industry segment.
2. Identifying primary and secondary targets – Who will be targeted to purchase and/or visit your franchise locations? How deep do the target groups go and are there collateral groups that can be tapped?
3. Developing a Strategy and Plan of Action – Customized to specific targets in accordance with franchise development goals and objectives?
4. Executing the Plan – Putting the plan in motion including monitoring, managing the process including new content and updates. Keep it fresh!
5. Analyzing & Quantifying the Results – Is it working? Do you continue straight ahead or repeat the process from the beginning? What are actual results in franchise sales and system revenue?

Yes, there are many aspects of social media and more being added every day. That doesn’t mean it’s being fragmented. Instead, it’s providing more tools in which to cross-reference and link together. Unlike traditional marketing that is more or less a straight line, social media marketing, used most effectively, is a cross-platform, multi-tiered strategy that uses multiple Web 2.0 tools to cross in front of the targeted audience multiple times and from different directions.

It’s akin to the businesses with limited marketing budgets that only advertise on TV once or twice a month, at one specific time but on multiple channels simultaneously. Then, when the consumer changes the channel upon seeing the commercial, again and again, the perception is “this business is everywhere and must be spending a fortune on advertising. Therefore, it must be good.”

Unfortunately, social media marketing is not a one-size-fits-all strategy. The strategy must conform to the organization’s goals and objectives and must target the appropriate audience by the appropriate means (Web 2.0 tools). For instance, if the target is young adults age 15-18, MySpace would be an essential component of your strategy. Couple that with a lot of video and audio, as this age group gets bored very easily.

On the other hand, if the targets are businesses in the insurance industry, your strategy might include developing a blog for industry professionals and then linking the same through LinkedIn to insurance groups. Simultaneously, you may develop a Facebook page to refer interested parties to visit and/or join.

A key factor in an effective social media strategy is to be sure to integrate the same with your traditional marketing. As an example, if your company frequently uses direct mail, be sure to include the company’s various social network links, blog links, etc. In a B2B environment, do the same with your blast email campaigns. And, in a corporate environment where you may be attempting to attract a consulting client, personalize your traditional strategy with social network interaction and enhance it with video and audio messages.”

Now that you have read this article, I’ll ask you straight up, “What is your social media marketing strategy?”


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Questions That Decision-Makers Ask About Social Media

The following is a recent discussion in one of the Social Media groups on LinkedIn. As always, I’ll keep the individuals anonymous and only identify by their Linkedin description. The discussion was started by a Digital Marketing Consultant. Not only did he ask the question, he provided his answers as well.

questionsFive Questions Your Boss Will Ask About Social Media (and the answers)

1. Isn’t social media just a new type of ad?

No it’s more than that, it’s actually a whole new way of reaching clients. If you think of ads as one technique used to communicate your value to prospects, social media is a whole new channel to do this. Yes you can still communicate your value but rather than trying to cram it all into one sentence (as you would with an ad) you have to be a bit more patient.

2. Isn’t all this social media stuff expensive?

Well yes and no. From a cash investment perspective, most of the top online social media services are free of charge to register with. However, to really make an impact through these tools you need to spend a lot of time on them. You have to explore, see who’s talking about things related to your company and try to open up a dialogue with them in a non-creepy way.

3. But I hear it’s all a fad anyways

Certainly various social media services will come and go and some will be a bit more gimmicky than others, but the underlying principle of social media, transparency, is hard-coded into the very DNA of the world wide web. If you can build your social media ‘muscles’ on one tool you’ll quite easily be able to transfer this skill set and mentality to other tools.

4. It’s all very well to make ‘friends’ online but SHOW ME THE MONEY

There are clear cut and well documented examples of companies making money from social media. But it doesn’t quite work like a typical print/online ad. You’re not likely to get a flood of business from your first blog post, your first message on Twitter or your first video uploaded to Youtube. But as you start developing a base of followers you can really start to leverage the power of social media. Imagine having a few thousand online users following your every uttering on Twitter, or subscribing diligently to your blog updates. These become powerful channels for launching new products, promoting special offers and even testing products.

5. Ok, so I guess we’ll need to hire some guru to get us set up?

By all means if you can hire one of the multitude of talented social media gurus and specialist agencies. But I think you’d do just fine with a couple of diligent, friendly and passionate members of staff. After all, you and you’re staff know your product and your clients better than any guru. Also, in the world of social media, an authentic, if perhaps clumsy approach trumps a polished but scripted approach. People can usually see through that quite quickly and your credibility will drop dramatically.


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