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?