It's Tune-Up Time!: Seven Steps For Keeping Sales (And Spirits) Up In 2009

What does a struggling economy mean to the franchising industry?

Does it affect all aspects of franchising? Does it affect all industry categories? How can operations and franchise development work in harmony to have the franchise system thrive (yes, thrive) in a tough economic climate? Let's take a seven-step approach to "Tuning Up Your Franchise System" in an uncertain economy.

  1. Create retail sales or service programs to help franchisees cope in the next 12 to 18 months. What has your company done to assist franchisees in dealing with the changing economic conditions? I suggest everyone in the franchise organization, from president to janitor, meet to brainstorm ideas for creating franchisee success stories in tough times. I also would solicit suggestions from any franchise owner associations and top franchisees. By doing this, your franchisees will understand that you're concerned about them, and candidates validating with franchisees will hear that the franchisor has programs in place to help them survive the economic slowdown.

  2. Review best practices and successful franchisee profiles. In every organization there are franchisees who see the glass as half full rather than half empty. More then ever, it is important to communicate best practices with your franchise system. Spread as many positive messages as possible to keep your franchisee base motivated.

  3. Closely manage your franchise development advertising budgets. STOP. This does not mean cut all advertising, but to more closely review where and how you are investing precious dollars. It's not time to stop advertising; you must go into 2009 budgeting aggressively to maintain a meaningful spend. There will be more people looking for jobs and franchise opportunities in 2009 than in the previous two years. This is an excellent time to test alternative or previously unexplored lead sources to search for more good candidates.

  4. Keep the sales team motivated. You can't excite people about getting into your business if your franchise team has their heads hanging down. Training and more frequent meetings are important to keep the flow of new programs and franchisee success stories in front of your team. Unfortunately, if you have team members who are pulling everyone down this may be the time to make a change. Average and low producers will struggle during these times, and it is important to maintain positive momentum in your organization. When leads are sparse they need to be worked by your best team members.

  5. Select the "right" franchisees with available capital. Today's franchise candidates must have excellent credit ratings to qualify for business loans. More than ever, it is important to make sure they will qualify for the "correct" amount of money to operate the franchise and to maintain stability at home, because it will be increasingly difficult for them return to lenders for additional funds. Retirement rollovers will continue to be a major component of financing for franchisees in 2009, even with the stock market slowdown. And once the stock market returns to an acceptable level (around 10,000), many investors will be looking for alternative investments. This is also a time to check in with family members or friends looking for larger returns on their savings.
  6. Explore existing resale opportunities. In 2009, we will also see an increase in marginal franchisee operations looking to close or sell. It is important for all of us to put into place a "Franchise Resale Program" to quickly assist franchisees in selling their business by matching them with excellent new owners to facilitate a successful transition. This is a hidden opportunity to strengthen your system by culling your non-performers and creating attractive operating business resale opportunities for buyers to move in more quickly.
  7. Set realistic goals and expectations. Make sure you work closely with your management team to temper expectations, while doing your best to keep a strong advertising budget in place. While lead volume may be down, lead quality should improve with fewer dreamers and tire-kickers submitting inquiries. The good news is that there will be thousands of American entrepreneurs who will be downsized, fired, or just tired of one more round of layoffs.

Think about it… what an opportunity for franchise professionals to assist budding entrepreneurs with identifying and starting their new franchise business! The franchisors that will grow in 2009 will have instituted programs for the existing franchisee base to survive and prosper. Franchise development departments must know (and be reminded) why the opportunity they have works in the present economic environment, and what sets them apart from the competition.

It's not time to panic, pull advertising budgets, or give up. On the contrary, franchise sales and systems should flourish during these times--as long as all of us stop, take a look in the mirror, and "fine tune" our systems to be the best they can. Follow these steps, and you'll be fine in 2009!

Published: March 9th, 2009

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