Franchise Recruitment

"Risk more than others think safe­." -- Howard Schultz, Starbucks

Ever notice how closely the words intimate and intimidate are in their spelling? Probably not, but that's okay. It dawned on me while writing this, the third article in my series on Socially Engaged Lead Management. It is clear that to succeed brands today must become much more intimate with their customers and prospects.

A quick rewind... My first article introduced you to the significant changes in online behavior and its implications on your ability to engage with prospects and leads. The second focused on the organizational and technological impacts these changes are having on your ongoing business operations. Now we can explore how to deal with prospects prowling around the hallways and cubicles of your company (metaphorically) - well before they have agreed to be your customer...

Franchisee validation can make or break your franchise sales. Pow! Just like that and a once-supercharged prospect can deflate to nothing in 24 hours, bailing out of your process instantly. Validation is the most influential stage in the selling process. What franchise owners say means far more than what corporate sales execs tell them. Franchise operators are "doing it," and it's their experiences that count foremost to cautious buyers.

Many of your candidates don't know what to do
For most franchise recruiters, successful owner validation opens the gate to Discovery Day visits at headquarters. To mitigate confusion and awkwardness for your prospects, it's essential to prepare them for their conversations with franchisees...

I certainly enjoyed successful broker relationships over the past 20 years. Discovering qualified franchise owners through the professional efforts of franchise and business brokers contributed to the growth of several franchise companies I represented. Based on my personal experience and the insights from hundreds of franchisors who have sold broker-referred prospects, here's how to increase your popularity and closing rates with broker networks.

1. Present your franchise in broker's terms--They want to know what your concept is, what's hot about it, who your buyer is, how responsive and how good you are at closing deals, and what the payoff and other incentives are. Don't try to "build the watch" when you tell them. Just hit the hot spots that will excite and turn them on to your concept...

In last month's Franchise Update Sales Report, I provided an introduction to working with brokers to increase your franchise sales, and highlighted some of the advantages of using brokers as part of your development strategy. This month I examine some of the risks and downsides, as well as how sign up with a broker that works for you.

1. Challenges of working with a broker

"If we open a quarrel between past and present, we shall find that we have lost the future."--Winston Churchill

Online behavior is maturing more rapidly than ever before. Social networking advancements from all the market leaders have, and will forever, change how we collaborate, communicate, share, and engage with any relationship online--whether it's the closeness of a family member or a first encounter with a franchise sales representative. Trust and transparency are the new operating rules, and engagement is determined by the initiator.

"Millennials" (those currently aged 18 to 30) will rarely, if ever, fill out a general name/email form in the hope of receiving the information they are pursuing. They know spam and obtuse sites, especially those with trumped-up, SEO-saturated content...

The incredible surge in outsourcing prospect generation to franchise brokers has reshaped the sales programs of many franchise systems. Once tarred by the horror stories of the 1980s, today's brokers are reborn and repackaged as the "franchise sales consultants" of the 21st century. This isn't surprising. Networks of professional consultants with years of franchising experience have swooped onto the franchise sales scene with extraordinary success. Today they deliver an estimated 3,000-plus new franchise owners annually to appreciative franchise companies. Franchise Update Media Group's Annual Franchise Development Report revealed that 57 percent of the 126 franchisors surveyed used brokers, with 67 percent closing deals.

Are you right for each other?

This is the million-dollar question you have to answer...

Each year, for more than a decade, Franchise Update Media Group has surveyed hundreds of franchisors about their sales and development practices and compiled the results in its Annual Franchise Development Report (AFDR).

For the 2011 AFDR, we gathered data on sales and recruitment practices from 126 franchisors representing more than 42,000 units (38,563 franchised and 3,528 company-owned). Their responses are sorted and analyzed to provide an in-depth view into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors. Below is the third, and final, installment of sample highlights from the report. (See selected highlights from Part 1 and Part 2, presented in the two previous issues of this newsletter...

Each year, for more than a decade, Franchise Update Media Group has surveyed hundreds of franchisors about their sales and development practices and compiled the results in its Annual Franchise Development Report (AFDR).

This year, the AFDR gathered data on sales and recruitment practices from 126 franchisors representing more than 42,000 units (38,563 franchised and 3,528 company-owned). Their responses are sorted and analyzed to provide an in-depth view into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors. Below are sample highlights from the report. (Click here to see sample highlights from Part 1.)

This is the second of three parts about how to maximize the effectiveness of your Discovery Day. To see or review part one (Fundamentals) in last month's Franchise Update Sales Report, click here.

Set expectations at the outset
When your candidates arrive at Discovery Day, naturally you'll start with a warm welcome. Explain the purpose, process, and activities for the day to ensure everyone is "aligned" in the right direction. This provides further clarity for your Discovery Day guests and eliminates any potential confusion that may occur during the event.

Here's one approach to setting the stage: when a group attends, ask each candidate to make a brief personal introduction including their business background, how they found out about your opportunity, and why they are so interested in your franchise...

Each year, for more than a decade, Franchise Update Media Group has surveyed hundreds of franchisors about their sales and development practices and compiled the results in the Annual Franchise Development Report (AFDR).

This year, the AFDR gathered data on sales and recruitment practices from 126 franchisors representing more than 42,000 units (38,563 franchised and 3,528 company-owned). Their responses are sorted out and analyzed to provide an in-depth view into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors.

On the whole, says Franchise Update Media Group Publisher Steve Olson, who unveiled the findings at the company's Leadership & Development Conference in late September, there have been some noticeable improvements in performance by franchisors compared with last year...

One of the most anticipated events at each year's Leadership & Development Conference is the presentation of results from the Annual Lead Generation Survey. This year's survey gathered data on sales and recruitment practices from 126 franchisor participants representing more than 42,000 units (38,563 franchised and 3,528 company-owned). Participants consist of franchisors who have registered for the conference and fill out the survey forms. The responses are sorted out and analyzed to provide an in-depth view into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors--and provide the basis of our Annual Franchise Development Report (AFDR).

On the whole, says Franchise Update Media Group Publisher Steve Olson, who presented the findings at the conference, there have been some noticeable improvements in performance by franchisors compared with last year...

Good lead screeners make major contributions to the sales process

BrightStar Healthcare took home first-place honors in this year's STAR Awards for Best Telephone Prospect Follow-Up. Shelly Sun, BrightStar's CEO and co-founder, says that using a pre-qualifier to screen leads has been a critical component of her company's rapid growth.

When it comes to having a pre-qualifier, "It's interesting how many people see it as an expense," says Sun. "I think the reason we won in this class is we see it as a resource." In fact, she says, "I see it not as an expense, but as the highest ROI in the entire sales cycle to move an initial prospect to a lead and a lead into a closed sale. As soon as franchisors see it this way, they'll begin to see the success and the results follow...

Referrals are vital to franchise system growth. As noted in the May FUSR, studies validate the power of referral sales. Close rates for direct referrals are typically three times higher than for other leads. According to Franchise Update Media Group's Annual Franchise Development Report, referrals continue to be a top franchise sales producer every year.

How to increase participation
Some franchisors aren't generating any significant referrals. If their problem is triggered by poor system support and struggling operators, this is very understandable. But some franchise systems with good validation still lack referral activity. This is often the fault of the franchisor. Sometimes franchisees haven't been asked for referrals...

Most prospective franchisees want financial performance information as part of their due diligence process when deciding whether or not to purchase a particular franchise. Prospective franchisees are understandably hesitant to invest thousands of dollars if they have no idea what kind of financial performance exists at the outlet or unit level. Financial performance information can be a powerful selling tool for franchisors because this information responds to a prospective franchisee's compelling need for information concerning the possible financial results of their investment.

Neither state nor federal law requires that a franchisor provide financial information to prospects. Except under two limited circumstances, if a franchisor is going to provide a prospect with any type of financial performance information, this information must be included in Item 19 of the Franchise Disclosure Document (FDD)...

Nontraditional locations, typically seen as a vehicle for spreading a franchise brand into new places to reach a captive audience, also can serve as an additional lead generation tool, part of your overall development strategy. Let's consider a few instructional examples.

Franchise development teams are trying to defy the seemingly insurmountable odds of today's economy by creatively ramping up their sales efforts. Tactics such as discounted franchise fees, reduced royalties, buy-back guarantees, and other incentives have been pouring onto the franchise marketplace in recent months. The innovative techniques seem to be getting results.
Finance solutions"These are incredibly unique times," says Glenn Franson, CEO of San Antonio, Tex.-based Massage Heights. "I've talked to other franchisors and some of us are seeing lead flow down by as much as 80 percent." One of the fundamental reasons, he says, is prospects' inability to obtain bank loans to cover the franchise startup costs.

The company's response has been to get actively involved and speed up the financing process any way it can, says Franson...

We all know a sales process is mandatory for successful recruitment. But many continue to tilt at windmills with their marketing, not realizing that successful lead generation also demands an effective, step-by-step process. Those who embrace this methodology and performance metrics can increase prospecting success by 30 percent or more. Here's a time-tested, four-part approach to lead generation that can deliver more qualified buyers for your sales team at lower costs.
Step 1 - Who is your ideal franchise buyer? Define your market of qualified prospects. You can't effectively advertise until you understand who your franchise candidate is. If you don't, marketing efforts can be disastrous! It's like being in a boxing match blindfolded with the lights out, with no clear target to punch...