Controlled Growth Key to Success for New Franchise Concepts!

Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…

Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.

The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.

They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.

Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.

However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.

As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.

Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.

While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.

It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.

So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.

Franchise Sales: A Tale of Two Theories

franchise_salesA couple of years ago, there was a discussion in the Franchise Executives group on LinkedIn with the posted question, “Who is using outside franchise sales groups [brokers]?”

Below are some interesting responses from group members that are not franchise consultants or brokers:

An experienced franchise executive stated:
“Why wouldn’t you develop your own small sales group? Using a service that sells multiple franchises diminishes your quality control to some degree. I have been a part of 2 franchisors for 25 years and neither has ever used any of these groups and we have had lots of success. What are you trying to achieve by using these”groups”? Lower cost of acquisition, less hassle, expecting more leads, more foot soliders?”

The president of a national franchise concept wrote:
“We do not work with an outside group. In talking with our prospects it seems important to them to know that our development staff are part of the company and experts on the concept they are selling. We even have a dedicated sales team for each concept. My advice is to talk with some of your new franchisees to see if it would have made a difference in their decision making process.”

A franchise attorney posted his response:
“…if you use an outside broker in the true “sales” role, they can lose credibility if they appear detached and not knowledgeable about what they’re selling (often happens when your brand is only one of many in the broker’s portfolio). That should factor into your due diligence process when you’re looking at outside brokers. But when the relationship stays between the franchisee and the sales person, the prospect’s going to be let down when that sale is done and the sales person is on to the next prospect. Besides, I always wanted my sales person’s relationship with the prospect to taper off once the sale was done – the franchisee’s relationship should be with someone on the development then someone on the operations team. Two points – first, I always caution my clients to use brokers more as “matchmakers” rather than “salesmen.” What should really “sell” the franchise is not the sales person (internal or external) or the broker, but the confidence that the prospect has in the brand and in the ability of the management team; and, second, if my clients use outside sales people, I always make sure the outside sales team attend the same training I give my client’s internal team and do so at the same time. That way the outside sales folks get entrenched into the company’s culture, they know what to expect from management, they see how to use management to “sell” the franchise, and they know what management expects of them.”

A Vice President of a national franchise concept went on to write:
“For a variety of reasons I’m personally a big believer in building sales teams from within the company. But then again I’ve had the luxury of working for established franchisors and had resources to either develop salespeople from within the company, or rely on referrals to hire from outside and train them to become franchise salespeople. Both methods take time – generally about 12 months for a franchise salesperson to really “hit their stride”. Many franchisors don’t want to wait that long, or can’t wait that long, or don’t know how to train franchise salespeople. In those situations it may make sense to bring on outside franchise sales groups.”

So, that’s what franchise professionals were saying a couple of years ago… but what about today? Please, let us know your thoughts!

Social Media… A Jungle for Franchising?

Franchising is no stranger to change. The industry adapted well to the internet when it integrated its then traditional marketing at tradeshows with development of elaborate websites. Next, the industry adapted again as it integrated its marketing efforts and web presence with franchise consultants and brokers through a multitude of franchise portals.

Well, as Bob Dylan once wrote, “…the times they are a changing.” Much has been written and spoken about weeding through the many tire-kickers experienced on the internet, shuffling from one portal to the next with the same non-objective to “see what’s out there.” The franchise industry has literally seen thousands of these leads with no purpose, no chance of ever presenting a franchise opportunity.

Instead of trying to catch fish in a wide open ocean, why not direct your attention to the fish in a lake, pond or even, a barrel? That’s correct, a barrel! In searching for qualified franchise candidates, we, as an industry, need to locate the barrels of candidates that exist in the market today. How do we accomplish this seemingly insurmountable task? We need to embrace new technology and integrate the same with traditional efforts. Specifically, Social Media and all it has to offer.

Social Media is truly extraordinary, consisting of many different aspects beyond the familiar LinkedIn, Facebook and Twitter. There are wikis, webinars, blogs and podcasts, just to name a few. But there are others as well. To the many, the thought of stepping foot into this jungle is daunting, and therefore, the journey continues to be delayed. So, as the old adage of how one could eat an entire elephant (of course, one bite at a time), it’s necessary to take small bites out of the Social Media elephant and step through the jungle carefully, one step at a time – using all the tools at our disposal to reach our destination… our objective.

The following is a discussion on a blog by Michelle Bonat originally posted in 2008 but still very relevant today. Michelle discusses taking small steps towards integrating Social Media Marketing with classic (traditional) marketing programs.

Babysteps…How to integrate social media with traditional marketing programs

Social media marketing is most effective when it is an integrated part of your overall marketing efforts. But how do you jump into social media when you already have some really effective classic marketing programs in play? Here are a few ways you can babystep into the world of social media by leveraging the good stuff you already have.

1) Maintain a single consistent marketing strategy through classic and social media marketing.

Your goals, objectives and messages should be consistent across all of your marketing. Sounds simple, but unless you define and enforce this it won’t happen.

The good news here is that you don’t have to re-figure this all out just for social media. It is really just taking your existing marketing platform and extending it.

2) Extend your reach – Reach out to your influencers in ways that they like to communicate.

Use your existing marketing knowledge about who influences your product’s purchasing decisions, and use social media tools to create a discussion with them where they hang out.

Some specific examples: Are your influencers kids? Get on the social networks catering to the younger set. IT buyers? Figure out which bloggers are influencing this community. Mobile sales professionals? Deliver content in a mobile enabled way, such as Twitter.

3) Invite your customers into the process.

While you are planning your next product, refining your messaging, or even launching a marketing campaign, figure out a way to get your customers involved whenever possible as early as possible. When you do this they feel that they have been heard, feel more engaged and valued, which results in a tighter connection with your company and product. It also gives you the benefit of upfront input. A product that people actually want? Described in a manner that speaks to them? Wonderful!

A good way to on-ramp this customer involvement include online communities (public or private, even a public group on an existing social network). You can even ask them to deliver their thoughts in video form by way of a contest – “describe what our product means to you”.

4) Turn an online forum into a social media hub.

Make people feel more at home by adding profile information and allowing the posting of pictures (or pointers to a picture posting service like Flickr).

Recognize that you have to give to get. Start a genuine conversation with your audience by having company employees contribute to the forums in their own words. For example, instead of just asking for feature enhancements suggestions, tell them what direction you are headed and, if possible, the timing for these enhancements (without giving away too much info). Then ask them their opinion.

Try these few tips to help ease into a social media program that leverages your existing marketing – and you will soon be on your way!

Note: This post was revised from earlier post on this site, “Web 2.0 – A Jungle for Franchise Development” (Mar 2009)

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Local Franchise Lead Generation Q & A

question-mark3aA few months ago, there was a discussion in one of the LinkedIn franchise groups about local franchise lead generation. The discussion was initiated by a franchise professional specializing in franchise sales and consulting. As we have done in the past when posting comments from a social network discussion, we will identify the individuals that submitted comments according to their social network profile.

The discussion opened with the following post:

Ideas for Lead Generation Sources. Anybody have suggestions for local lead generation? Looking for ideas from zors, zees, consultants & brokers on how to generate leads local to a specific area.

Here are some of the responses that were posted including my own which just so happened to be the initial response:

“[Name], I usually explore social networking groups specific to the area such as the inHouston LinkedIn group if I’m trying to generate leads in the Houston area. This type of group is realtively easy to target and expand beyond based upon member recommendations and suggestions. Work the crowd as if you were in a room.

In addition, I focus on networking groups that include individuals that best fit my franchise candidate profile. From there I drill down to individuals in the local area. Let’s say teachers fit my candidate profile. I would search out networking groups spefic to teachers, education, etc. I may participate in discussion groups to get a feel for the group and to be recognized within the group. There’s always a spin you could use. Next, I seek out members from the specifc area I’m targeting and communicate what I’m trying to accomplish. It’s been amazing how many times I’ve wound up with a candidate in California that is willing to jump at an opportunity in Texas. It happens.

I also focus on groups that can provide me with referrals such as insurance agents, realtors, financial planners and attorneys. Again, if you’re proactive within networking groups it’s realtively easy to enlist support and gather information.

Lead generation through online networking takes time and effort no doubt. However, once you’re proactive within the groups, you almost windup with a snowball effect as the leads come in bunches. Some leads start out as simple as posting a thought provoking discussion, some back and forth interaction with a responder and the responder saying,”what is it that you do?” Next thing you know, you’re discussing an opportunity and the door is wide open.

Most times it takes considerably more effort but I’ve found people are networking online and participating in discussion groups for a reason. They’re all looking to expand their business, improve their position, seek out opportunities and make money. It sure beats running an ad in the local paper and waiting for the phone to ring.”

An executive of a national franchise concept responded as well.

“Other sources of local lead generation include – classified advertising, seminars, the local business journal, and chambers of commerce. I also use industry specific sources (trade publications, trade associations) depending on the franchise. My favorite is PR. If you can can a story published at a local level – it tends to generate a good deal of buzz.

As you are finding – it is a bit more challenging to put together a local or regional campaign, than it is to promote a national effort.”

A franchise executive of a national foodservice franchise concept posted the following:

“I like to target existing multi-unit operators of non-competing brands in the same industry. For example, if I am selling full-service restaurants, I would seek out multi-unit fastfood operators in the area. Or if I was selling windshield replacement franchises, maybe I’d target muffler or brake franchisees in the area. Get your hands on some UFOC’s that list franchisees by state. It’ll give you the franchisee’s name, address and phone number and you can go down the list contacting the owners. You must size up the target market to your product. For example, you probably wouldn’t have much success targeting Subway franchisees for a TGIFriday’s franchise, as it’s a big leap from a $50,000 investment to a $3 million investment. But maybe the Subway UFOC would provide good leads for someone selling Baskin Robbins franchises. Get the idea? Last thing, by focusing on existing franchisees in someone else’s system, those prospects already understand franchising, know that fees are due and payable weekly, understand they must operate according to the franchisor’s standards, realize they must undergo training, particpate in the marketing co-op, etc. Hope this helps.”

Next, the foodservice executive and I exchanged the following comments:

Me: “[Name], excellent points. I utizilized a similar strategy with great success. Other key factors include the current franchisees’ knowledge of franchising and their lender’s knowledge and experience with the franchisee may be just the edge needed to secure financing in today’s tight credit markets.

Foodservice Exec: “Paul, you mention an important point in today’s economic market. Successful existing franchisees should already have relationships with lenders who have seen them perform over time. A well-funded prospect is worth his weight in gold! Any contracts that are “contingent on financing” may as well be thrown in the trash, as lenders are not willing to take the risk with an unknown, untested, unproven franchisee.

Me: “I absolutely agree with you. Just the mention of a brand new candidate exploring a franchise concept without the candidate having any experience sends a lender running for the hills. It really doesn’t matter how proven the franchise brand is and how long it’s been around. To that end, I see primary growth in franchising coming from current franchisees looking to diversify their business portfolio, adding new revenue streams and streamlining redundant expenses.”

It was an interesting discussion and I believe several good ideas and thoughts were presented. I know the information reached an audience that did not actually participate in the discussion because I received over thirty emails from individuals asking me to expand upon my responses, and those of the other participants. In addition, we shared ideas and thoughts, and discussed our own experiences. I’m proud to say that I also learned a few things myself. Proof again of the benefits of social networking!

Franchise Development via Social Media: Let the Journey Begin!

This week, a great deal of time will be spent on this site focusing on Franchise Development via Social Media. I’ll address the basics and identify how to integrate Web 2.0 technology and tools with traditional franchise marketing and development methods. The ultimate goal and objective to be achieved by these efforts will be to provide franchisors an effective way to generate franchise sales in today’s economic environment and beyond.

Now, before proceeding on our exciting journey, let’s not lose site of basic sales skills and the fact that franchise candidates must be treated professionally and with a sense of urgency. To that end, as a primer to this week’s journey of Franchise Development via Social Media, I am reposting below, the recent article posted on this site that referred to Franchise Update’s mystery shopping of franchise companies. Let’s keep the results focused in our minds and understand, regardless of what methods generate interest in a franchise concept, it still takes personal attention to detail, extreme professionalism, and diligent follow-up to successfully move any interested party from franchise candidate to franchisee.

Your participation is greatly encouraged and will certainly be appreciated. Please submit all comments and questions in the appropriate section at any time during the journey and I’ll respond as quickly as possible but definitely before the next day’s segment. I anticipate four segments in all, with one each evening through Thursday of this week. That will provide more than enough information to ponder over the upcoming Memorial Day weekend.

Without further delay, let the journey begin!

lagging-salesWhy Are Franchise Sales Lagging?
originally posted on this site March 24, 2009

Besides the obvious factors of economic uncertainty and tight credit, what other factors are contributing to dismal franchise sales across the industry? Are we contributing to the problem? Are we doing a disservice to franchise candidates, the very people exploring options for a better future?

Recently, Franchise Update’s own mystery shopping (posing as a qualified buyer and phoning in and emailing to 148 franchise companies who represented 57,000 units) revealed such fundamental flaws as:

no callback within 48 hours (58%);
not taking a name (24%);
not taking a phone number (45%) or email address (40%); and
not asking for a time frame for buying/opening a franchise (67%).

The ironic thing is that the industry routinely pays out 20-30-40% commission on franchise sales.

In light of recent poor performance and, high expense in actually awarding a franchise, can the franchise industry continue its franchise development efforts in the same manner as it has for the past ten or so years AND expect to grow?

Regional Franchise Development as a Growth Strategy

PowerHouse FranchisingThe following article, the first in a series of articles on the subject of Regional Franchise Development as a Growth Strategy, has been submitted by franchisEssentials Guest Author, Dan Durney, Partner and Co-Founder of PowerHouse Franchising. Dan has a wealth of business and franchise experience including:

•Expert in analyzing business opportunities and clearly explaining the details in a clear and concise manner.
•Thoroughly enjoys the “exploratory” phase of business qualification where the goals, expectations and capabilities of the individuals seeking to be in business for themselves, but not by themselves, are matched up with the individuals who are looking for partners to help launch their concept.
•Directing the development of the current Internet strategy for PowerHouse Franchising, including enhanced pipeline and lead-generation reporting.
•Currently owns multiple Regional Development Concepts in the U.S.
•Experienced (and entertaining) presenter for conferences, training seminars and business opportunity expos.
•Prior experience in sales and support to large Corporate Enterprise customers as well as small “mom and pop” operations allows for comprehensive understanding of today’s business climate.
•Has started and successfully run three separate businesses (Telecom, IT training, & Marketing).

franchisEssentials is pleased to have Dan as a Guest Author and we look forward to posting additional articles in the future from Dan and his excellent team at PowerHouse Franchising.

Regional Franchise Development as a Growth Strategy

It’s not for everyone to be sure. In fact, it’s for very few. Estimates range from 3-5% of all franchisors use this method of growth as a corporate strategy. Maybe, only about 15% even should consider it. However, when the right franchise concept, with a dynamic business model and strong unit economics embrace it… it can be MAGIC and make the brand a “Force” to be reckoned with.

Regional Development SampleWhat is Regional Franchise Development? Do we know it by any other name? Oh yes we do – Regional Representative, Area Director, Area Representative and of course Master Franchising. Oh ok, now I’ve heard of those – so what’s the difference? Basically, not much but if the Franchisor shares the Franchise Fees, Royalties and sometimes Distribution income with these Strategic Market “Partners” (legal guys – please don’t sweat the use of “Partner” here – I use it mainly for illustration purposes and not strict legal definition – thanks!) then you have the makings of a Challenging, exciting and VERY rewarding business building opportunity – both for the Franchisor and for the Regional Developer (RD) (we’ll stick with this Acronym for these articles).

We’ll start off this series by discussing WHY a Franchisor would decide to develop their brand this way and what they can expect to see in terms of growth and infrastructure development. Then we’ll explore what benefits (branding, revenue opportunities, etc.) are in store for the company, the RD and the Franchisees too.

FOUR Reasons for a Franchisor to Consider Regional Development as a Growth Strategy

1) Faster Growth – more sales efforts in each Region.

2) Lower Corporate overhead costs – staff up to support approximately 60 Regional Developers.

3) Greater collective EXPERIENCE of Regional Developers brings more objective input with local experience. No ”Ivory Tower” syndrome.

4) Better ongoing franchisee support with costs pushed out to the Regional Developers.

The RD has an incentive to develop the Region as quickly as possible; therefore the franchise recruiting efforts can begin immediately within the local market. Using Business Brokers, Franchise Consultants, Local Networking, Online Portals, Classic Advertising, Social Media (I won’t even get started on THAT here), etc. are some ways to find the most interested, qualified and “ready to move” candidates. Of course, once the “Pilot Unit” is open, customers of many concepts have become franchisees themselves after experiencing the products / services of the franchise as a consumer.

Imagine the growth curve for the franchisor as the RDs begin to recruit in their local market – face to face – filtering out the unqualified and presenting the ones who are properly vetted to the franchisor for approval. What kind of candidate would an RD be looking for? One with whom they feel they can work well together, who will be a TEAM PLAYER in the market with the other franchisees, and will be receptive to coaching and mentoring that the RD will provide.

What would the Franchisor’s costs be to hire, train, house, and compensate franchise sales people to accomplish the same thing? The Franchisors who “do the math” clearly understand this concept. It can result in strong, controlled, and calculated growth. Who doesn’t want that?

One VERY SUCCESSFUL franchise concept that rolled out exclusively thru Regional Development has over 540 units open (800+ awarded) across the USA and is supported by a staff of only 40 at corporate HQ. Those staff members support the RDs and the RDs support the franchisees in their local markets. It’s a tiered distribution of support. Remember, the RDs are compensated for this with the sharing of the Royalties paid by the franchisees. (More about the revenue streams to the RDs later).

It still needs to be done correctly, having sufficient staff to support initial RD location openings, etc. This company did it right, for the most part, enduring some bumps and bruises along the way, but there are certainly others who haven’t. What caused their downfall? That’s for another installment…

Best PracticesBubbling up the “Best Practices” from the Regions thru the RDs provides the Franchisor with invaluable “field research” to improve the brand, its offerings and stay better apprised of the competition.

If you think about it, it is actually a “selling” feature of a franchise to have local support by someone who has a vested interest in the success of the franchisees in their market. Often the RD is only a short distance away and visits more frequently than head office staffers dispatched quarterly or less frequently.

Branding is better controlled as well since the RD is responsible for monitoring the local co-op advertising activities in their market.

So, we see the benefits for the Franchisor, RD and Franchisee can be substantial. What are we looking for in a Regional Developer? What characteristics should be avoided for an RD? Is it for you? Is this the right time in your life and personal circumstances?

Social Media and Franchise Lead Generation

Mark Siebert, Chief Executive Officer of the iFranchise Group, one of the leading franchise consulting companies, recently wrote an excellent article about Social Media Marketing, and how it can be used to generate franchise leads. Mark explores the world of Social Media Marketing while defining it as the fourth part of effective franchise lead generation strategies. I believe Mark is spot on in his thoughts and views of Social Media Marketing. For the benefit of all that may not have read the article as of yet, I have listed the article below.

Enter the Fourth Horseman
Social media is the next lead generation site

By Mark Siebert
As published in: Franchise Times – April 2009

franchise-timesBy virtually all accounts, the Internet represents the single biggest lead source for most franchisors. Yet despite its dominance of the franchise lead generation market, a significant number of franchisors simply do not use it effectively.

It is little wonder. The traditional troika of Internet lead generation – organic search, Pay-Per-Click, and portals – are all designed to keep us off balance. Organic search engine optimization techniques change almost weekly, as the major search engines try to improve their search algorithms and SEO companies strive to catch up. Pay-Per-Click advertising, by the very nature of the competitive bid process which serves ads, can require frequent strategy changes in an effort to stay a step ahead of the competition. And franchise portals, which now number more than 100, represent the primary focus for most franchisors’ Internet marketing strategy.

Read more

Franchise Sales & Space Mountain: An Odd Comparison?

social-networkingThe great thing about social networking, that has been missing from online franchise lead generation, is the “meeting place.” It’s a place where a candidate gets to know the people in the know as well as on the fringe; the concept’s customers. So, let’s define the “meeting place.”

The “meeting place” is anywhere online where cyber identities gather. Ok, it’s where people network on social networking sites such as LinkedIn, Facebook, Twitter, MySpace, just to name a few of the most popular sites. I just wanted to be geeky cute so forgive me for the humor.

Anyway, in these social networks, individuals meet with others, share information and learn new things. In this process, if they’re looking for a franchise or business opportunity, they’ll seek out information that may assist them in the process. Through referrals and discussion groups they may be exposed to “experts” in their particular field of interest. Experts that may have the answer to what they’re looking for.

But, would they trust a direct push right to a website full of information? The answer is no because they’re only “hearing” it from one source. They need to have full understanding which the website may help provide. But before that, they need to “see” and “hear” what others have to say. Others that know what’s going on. Others that have experienced the service or product as the end user. Others that are the “operational” people. Where does the candidate find that online? Is there a place online that is not intimidating and so one-sided that it creates a level of discomfort as opposed to excitement to proceed?

Yes, there is such a place. For one, a Facebook fan site of the concept, could be just the right place. A landing zone so to speak before being launched to the company website. This non-intimidating site may have a cross platform of many different individuals “talking” about their views, positions and experiences with the company as a candidate, a franchisee, a corporate executive or a customer. It’s in this zone that the franchise candidate learns about the practical side of the concept, the pros and cons as they are conveyed from different individuals, and they get to “see” the experience of the concept itself through the “eyes” (comments) of

It’s kind of like standing on a line for a ride at Disney World where the time up until the ride takes off is the Facebook site and the ride itself is the concept a franchise candidate is considering. On the long line for the ride, you kind of know what to expect and the anticipation builds as you move along. But, you just don’t jump on the ride, right? You first go through the info stage. You read the general signs at the entrance. You hear directions and watch videos along the way. Sounds a lot like Social Media, doesn’t it?

Further along, you see the caution signs. You interact with other guests on line. You share what you have heard about the ride with others and them with you. You interact with the ride personnel as they usher you to the ride itself. There, you interact with the people who just finished the ride and you see the excitement and joy on their faces. Now you’re ready for the experience yourself. Hold on tight because as the ride leaves the station, YOU”RE COMMITTED!

agreementOf course, franchise sales are not quite as easy or simple as anyone who has ever presented a franchise sales opportunity can attest. But when you consider the building and infrastructure of the ride and the time spent developing the ride concept, the design of the structure, the projected ride experience and the large financial investment, it’s easy to see how both a franchise opportunity and a ride evolve the same and ultimately have similar objectives; to encourage participation, create a positive experience, instill a desire to do it again without remorse and to share their unique experience with others.

The one key thing that Disney has that may be lacking in many franchise organizations is “attention to detail.” It’s the little things along the way that create the desire, justify the value and establish trust that the Disney name brings to the experience. Is it ironic that key components of a sale are need/desire, value and trust? Are you ready for the Disney-ish way of selling franchises? If you are, then you’re ready to sell franchises through social networking, social media and all the other goodies that make up Web2.0!

Why are franchise sales lagging?

lagging-salesBesides the obvious factors of economic uncertainty and tight credit, what other factors are contributing to dismal franchise sales across the industry? Are we contributing to the problem? Are we doing a disservice to franchise candidates, the very people exploring options for a better future?

Recently, Franchise Update’s own mystery shopping (posing as a qualified buyer and phoning in and emailing to 148 franchise companies who represented 57,000 units) revealed such fundamental flaws as:

no callback within 48 hours (58%);
not taking a name (24%);
not taking a phone number (45%) or email address (40%); and
not asking for a time frame for buying/opening a franchise (67%).

The ironic thing is that the industry routinely pays out 20-30-40% commission on franchise sales.

In light of recent poor performance and, high expense in actually awarding a franchise, can the franchise industry continue its franchise development efforts in the same manner as it has for the past ten or so years AND expect to grow?