Making Yourself Attractive: Survey Finds Franchisee Prospects Are Drawn By A Combination Of Expectations And Emotions
Earlier this year at the IFA Expo, we interviewed nearly 100 prospective franchisees as they came into the hall -- and again as they left. We were looking for what attracts prospective franchisees to a particular brand.
Expos provide an opportunity to engage in face-to-face conversations, which encourages some insights that are tougher to extract by phone or email. Here are some generalizations I can make about today's prospective franchisees.
Prospective franchisees are more focused, ready, experienced
More than two-thirds of the people who walked down the aisles of the show had previously researched potential franchise brands and narrowed their interest to particular candidates. Further, one-fifth of the attendees were absolutely sure that they will open a franchise within the next year, while more than half evaluated their chances of doing so as 75 percent or higher.
They look for profitability, uniqueness, reputation
Nearly forty percent of the attendees indicated that a store's ability to generate cash is the primary factor they consider in evaluating the brand. The next two most important factors that affect a prospective franchisee's choice of a brand are its unique characteristics and how well recognized the brand name is.
Financial and investment estimates are critical
Half of the attendees at the franchise show felt they receive insufficient information about the franchise financial performance at a unit level. Since a brand's profitability potential is a franchisees' primary aspect of interest, it is hardly a surprise that many of the prospective franchisees feel that they need to be armed with more details about the franchised units' gross sales and bottom lines.
Related to the attendees' need for financial information is their wish to acquire specific details on the franchised unit's initial investment requirements. Such information is central for them to find out how qualified they personally are for the investment as well as the potential return on investment the business can generate. The franchise community should consider providing a combination of investment and sales information in a sales-to-investment ratio to give prospective franchisees a better tool to evaluate opportunities.
Many prospective franchisees want guidance in finding sources of financing. As access to capital is constrained and the preferred lending model is largely gone, prospective franchisees increasingly are seeking franchisor help to obtain financing at a time when lending is more available locally than nationally.
Interesting concepts and brand representatives attract attention
More than half of the attendees were drawn to booths because they thought that the concept looked interesting. Their opinion was formed either based on the brand's description in the Expo directory, or on the booth's visual presentation. And nearly one-third were attracted to a booth they had not considered visiting because the brand representative caught their attention.
In addition to validating that prospective franchisees are more prepared today with prior homework, this survey's value lies in the confirmation and reinforcement that as more information is readily available to prospective franchisees, they are coming in more informed and with better questions and expectations than their predecessors.
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