Grow

The Internet portals continue to be one of the most successful inquiry generators for franchise sales. Like all of our businesses, the portals have gone through a transformation and are making many positive changes so they can continue to provide us with good inquiries.
Like a ship on the sea, your brand needs to find the right port (or portals!) to dock. And, just as ships are not all the same size or docking at the same ports, all brands are not created equal. Bigger ships are more expensive and need deeper ports, while smaller ships have many ports to choose from. Think of your brand as a ship and find the ports that fit you best.
The key to finding the right portal for your brand is not just a matter of calling up a provider, but knowing what you are looking for, who you are looking for, and where you are looking for franchise candidates...

Building a strong franchise system through unit growth is a team effort requiring participation from the entire organization. To succeed more often in attracting and capturing the best possible candidates for your system, it is essential that all departments contribute.
Most franchisors don't take the time to educate and involve all their key department heads in the development process. But without this interaction, conflicts can arise about the capabilities of new franchisees, with blame for any failures placed on the franchise development department--even though operations didn't want to be involved in the selection process. These conflicts usually occur when a new franchisee is struggling after a few months and the discussions start focusing on whether the franchise was granted to the right person...

What role does diversity play in your brand's recruitment and development process?


Chris Cheek
Chief Development Officer
Toppers Pizza
Essentially doubling in size since 2010, Toppers Pizza is one of the fastest-growing pizza chains of the past 3 years. At 50 stores, we are at the beginning of a period of even more accelerated growth. Our goal, to reach 500 pizza stores by 2020, can only be realized by our focus on recruiting new franchisees that, among other things, are able to win the pizza delivery competition at the local community level.
If you look at the changing population of the United States in the last 12 to 15 years, we understand and embrace the strategic imperative that, to be successful in the growth of financially successful new stores, our franchise owners must be able to bring it with passion and build something special at the local level...

Franchising has proven itself to be a bellwether business model, surviving the financial crisis and adding units since the early days of the current economic recovery. Between 2008 and 2013, the franchise community netted more than 25,000 units, a CAGR of 1 percent. This is impressive, given the economic environment. Praise should be given to the hard work of development staffs across all of franchising for executing in a tough environment.
Given these successes and the emphasis franchising places on growth, it is easy to continue to push for market share and to allocate additional dollars to development efforts. However, before finalizing your budget, answer this question: How many of your units, regardless of the reason, closed their doors in the last 3 years? If the answer is more than zero your brand is likely leaving hundreds of thousands of dollars on the table...

In previous articles we looked at the basics of taking your franchise global, how technology helps you succeed globally, and how U.S. franchises are growing around the world. So if you have decided to "Go Global" with your franchise, the next question is, "Now what?"
Recent reports by both McKinsey and the Economist indicate that global executives in many regions of the world are more bullish about new investments than in recent years. More countries are expected to see more investment in new projects in 2014. This is good news for U.S. franchisors seeking international licensees.
What qualities does your franchise need to succeed globally? Experience across more than 50 franchisors shows the following to be critical to success:

When it comes to franchise sales, it seems the more things change, the more the development practices of many franchisors remain the same.
This was a key finding of Franchise Update Media Group's annual Mystery Shopping survey, unveiled at the 15th annual Franchise Leadership & Development Conference in Atlanta in October. Across the board, our expert team of mystery shoppers found that, despite technological advances that make it easier than ever to connect with qualified prospects, franchise sales and development teams don't always pursue promising prospects with the fervor, immediacy, and persistence they would in a world of best practices.
"The constant frustration in the mystery shopping results is the failure of franchisors to respond to qualified inquiries," says Steve Olson, president of Franchise Update...

"How do you set standards and measure performance in your brand's sales and development department?"

Taylor Wiederhorn
VP, Franchise Marketing & Development
FatburgerFatburger sets development standards based on a variety of different types of target markets and development standards designed specifically for those markets. In domestic markets where Fatburger already has a footprint, the criteria are based on a calculation of factors including the existing number of units and how much room there is in that arena for new restaurants to develop.

In existing domestic markets, Fatburger allows single-store and multi-unit operators to develop new units after determining that market's ability to handle additional units...

Tom Wood, president and CEO of Floor Coverings International (FCI), served as Conference Chair of the 2014 Franchise Leadership & Development Conference in October. Based in Atlanta, FCI has been franchising since 1989. We asked Wood for his own opinions on many of the topics that came up at the conference.

What are the most important factors and characteristics you look for in assembling a successful sales team?
Sales people who understand what they are doing in the role: "selling." While we are only looking for the best franchisee candidates, the right people will still need a sales professional to guide them through the process and keep the process on track. Characteristics include goal orientation; a realistic outlook on the business and a strong communication style to communicate it; and an ability to manage by the numbers...

The findings from the 2014 Annual Franchise Development Report (AFDR) were unveiled this October at the 15th annual Franchise Leadership & Development Conference in Atlanta. In keeping with past years, Steve Olson, president of Franchise Update Media Group, presented the findings during the first general session of the conference. This year he was joined by Conference Chair Tom Wood, president of Floor Coverings International, and Greg Vojnovich, chief development officer at Popeyes Louisiana Kitchen for a discussion of the results.
This year's AFDR is based on responses from 101 franchisors representing 34,509 units (31,047 franchised and 3,462 company-owned). The participants were franchisors who pre-registered for the conference and completed an in-depth survey online in advance...

Franchise Update mystery shoppers posing as qualified prospects identified a stellar group of franchise companies for best practices in lead generation, follow-up, and recruitment. Scoring 152 registered companies on telephone response to prospects, and 127 franchisors on recruitment websites and response to website prospects, mystery shoppers judged how well--and how quickly--franchise sales and development staff replied to inquiries. In addition, online experts evaluated franchisors' recruitment websites and their use of social media.

The resulting STAR Awards (Speaking To And Responding) were presented at a special dinner during the annual Franchise Update Leadership & Development Conference, which took place from Oct. 9-11 in Atlanta...

While many U.S. franchisors are now expanding into other countries, seeking new growth and less competition, international franchisors are finding the world's largest economy a target too good to pass up. But are the streets of the USA still paved with gold?
"Many international franchisors salivate at the prospect of entering the United States, the world's largest consumer market," says Ray Hays, senior director of EGS in a recent Entrepreneur magazine article. "Perceived barriers to entry for non-U.S. franchisors include a litigious and highly regulated legal environment, complicated multi-cultural demographics, fierce competition, and high investment requirements. In short, the U.S. market is often viewed as too expensive, risky, and complex, but many of these perceptions are overblown myths...

Have you ever noticed over the years that you come across a candidate who seems to be a perfect fit for your franchise opportunity, and all you have to do is lead them down a mutual exploration process to the sale? What do you think caused that to happen? Is it just a "bluebird" candidate who would have invested in the first franchise they looked at? Or was it a candidate who truly understood your concept and believed there was a market for the product or service in their area?
There are great lessons to be learned from a candidate who profiles so perfectly for your business. So how do we use this knowledge as professional sales consultants to facilitate a lead generation program and a sales qualification process that attracts the right candidate, along with a sales process that allows them to discover there is a good match for their personal and business goals?
Profile, profile, profile...

How many strategic initiatives has HR brought to the "C level" in the past 12 months? Your answer to this question tells us if you have a tactical or a strategic thinking HR person. Perhaps the more important question is, what type of HR person does the position require? A strategist can think and handle tactical application, whereas a tactician really struggles with strategic thinking. If your company has one HR person, it is better for that person to think big picture.
That person also should report directly to the CEO and, in my opinion, be part of the executive team. Given the expense associated with people, the impact this position has on your clients, and the need for continuous improvement, HR should not be the responsibility of a person lower on the food chain...

Support Pays Off: Fewer Closings, Higher Royalties

By Darrell Johnson

On average, 43 percent of franchisor G&A--money and human resources--is spent on functions that directly support franchisees. These include franchise development, site selection/pre-opening activities, training, field operations, compliance, marketing, and legal. The question franchisors and franchisees both should be asking is how effective these resources are. We know we get what we measure. Let's start with what might be good objectives to achieve. First, the franchisor perspective.
Having a franchisee who opens a unit more quickly will generate more royalty revenue. If that franchisee also gets to breakeven cash flow more quickly, they will be a higher performer and require less downstream support...

Have you ever noticed over the years that you come across a candidate that just seems to be a great fit for your franchise opportunity and all you have to do is lead them down a mutual exploration process to the sale? What do you think caused that to happen? Is it just a "bluebird" candidate that would have invested in the first franchise they looked at? Or was it a candidate that truly understood your concept and believed that there was a market for the product or service in their area? The answer is most likely all of the above except for the "bluebird" statement.
There is a great lesson to be learned from a candidate like this that profiles so perfectly for your business. So how do we use this knowledge as professional sales consultants to facilitate a lead generation program and a sales qualification process that attracts the right candidate along with a sales process that allows them to discover that there is a good match for their personal and business goals...

"In an era of increasing automation (CRM, etc.), how do you maintain a personal, one-on-one touch with prospects?"



Jennifer Durham VP of Franchise Development,Checkers
At Checkers and Rally's, we've been in the business of Big, Bold Flavor for more than 27 years. But there is one aspect that sets our guests, our restaurant teams and our support teams apart - and that's Passion. We offer crazy good, one-of-a-kind menu items at a great value to our guests, which are also easy to execute operationally for our franchisees. Our unique buildings and restaurant designs stand out from the pack and provide a retro feel with a contemporary edge.
The same passion holds true with franchise prospects interested in a Checkers/Rally's franchise opportunity...

For years franchise lenders have used SBA failure rate data as an initial screening tool to determine whether they should consider a loan to a prospective or existing franchisee. Many lenders have inserted failure rate limits into their credit policy guidelines. They do so even with the clear SBA disclosure accompanying these data that SBA failure and loss information should not be relied upon for credit decisions because of data quality issues.
In most of the brands we have evaluated, SBA data overstate, sometimes by multiples, actual loss unit experience in those brands. The result is that most brands are adversely affected when it comes to capital access. And that needs to stop.
The right way to assess a franchise system's risk profile is to look at how all the units of a system perform over time, not just those associated with SBA loans; the risk profile of a franchise system is not dependent on whether the franchisee has an SBA loan, a conventional loan, or no loan at all...

Franchisors constantly strive to attract more franchisees who are similar to their top-performing operators. To achieve this, they must take the time and effort needed to pull together the information they can use to build a franchise development program that attracts interest, and then recruit the top candidates to sign with their concept.
Candidates today are seeking franchise opportunities that meet their financial goals and increasingly view franchising as an investment vehicle. Today’s candidates want more information sooner in the process if they are going to proceed to investigate your brand. Franchisors need to get that information to them clearly and quickly through “responsible disclosure” in the FDD.
One of the main points of resistance to disclosing financial information about the company units, multi-unit, or franchisee groups through the FDD is that will it become public knowledge...

Technology is critical today to finding, signing, starting up, and growing your international franchise network. Technology can also save a U.S. franchisor money, help grow international units faster, and help preserve your brand across the world. Today, your international franchisees may be in time zones 12-plus hours--a full half-day--away from you. If you master franchise your brand outside the U.S., the most important thing to remember is that your international masters are both franchisees and franchisors.
The really good news is that, thanks to the Internet, most U.S. franchisors already have many technology tools developed and in place that are directly applicable to international development. This helps lower the cost of international development, training, support, and brand control...

"How are you using technology tools toimprove your recruitment/development speed?"

Zeb Hastings
Vice President of Development
Quaker Steak & Lube
Over the past few years, The Lube has been able to reap the benefits of technology, using it to gather feedback from prospective franchisees and fans in real-time, which has helped further our development nationwide. In April, we completed an innovative social media promotion launched for our loyal Lubies who don't have a Quaker Steak & Lube to call home.
Using the Facebook platform, Lubies around the world voted to choose from 10 cities where we will open a restaurant. Through the "I Want My Quaker Steak & Lube!" promotion, the brand listened to the resounding cries from Lube Nation to aid in our rapid expansion...