Sales Advice for New Franchisors: Balancing the Risks and Opportunity
When word got out that Sweat440, the membership-driven fitness concept headquartered in Miami Beach, was developing a franchise program, friends, family, clients, and business associates, all raised their hands to express interest in the franchise opportunity. In fact, the first Sweat440 franchisee is a relative of one of the principals. "I love the concept. Sweat440 offers clients many advantages such as being able to combine working out in a small group with convenient, flexible timing. I've witnessed the success of the studio in Miami and I know the management team. They are all very smart, hardworking, high-energy people," said Brittney Fremeth, who jumped at the chance to become a franchisee and will open her studio in Montreal in late 2019.
Youth Enrichment League (also known as YEL!), an after-school children's enrichment program that just launched their franchise program, has also found tremendous interest from those close to home. Founder and President Chet Gunhus says, "We've had several employees ask about a franchise. We're pleased to be able to offer them this opportunity to own their own business." One of those employees, Kamau Wilkins, a YEL! employee for 7 years, said, "Working for YEL! is pretty close to being my dream job. I love working with young people, and being able to work from home gives me great flexibility and more time to spend with my family. I am excited to explore owning my own franchise."
Kim Collier, director of franchise development for Ducklings Early Learning Center, an early education program for children aged six weeks to six years, has had a similar experience. "We've been operating Ducklings in Southeastern Pennsylvania since 1994 and are well-known in the communities we serve. We've had a tremendous response to our franchise program from the parents of students and former students. Our first operating franchisee is Deb Bellino, who had been a Ducklings employee for 20 years. She purchased an existing school as a turnkey franchise." Says Bellino, "I know being an owner will be different than being an employee, but I'm confident Jody, Kim, and the Ducklings team will give me the support I need to be successful."
New franchisors are missing a good bet if they don't get the word out that they are franchising to their own customers, employees, suppliers, friends, and family. Using grassroots lead generation--such as talking with or sending a letter to customers and suppliers, a kickoff meeting with employees, franchise information on your website, or postings on social media--is not only cost-efficient, but (as noted above) these tactics can be highly effective. Even if the recipient is not interested or qualified they may know the perfect candidate. Another way to get the word out is simply to put "Franchises Available" on everything from point-of-purchase signage and packaging to napkins, invoices, and receipts.
Of course, not everyone who knows you and loves your business enough to ask about becoming a franchisee will end up taking the plunge and investing in your franchise. It is still a bigger risk to be first than some people are willing or able to take. And not everyone who knows you and loves your business is someone you will want to have as a franchisee for the next 10, 15, or 20 years.
Franchising is governed by a contract, but successful franchisors manage their franchise network by building strong relationships with their franchisees. "Whether we're talking to someone we know or someone we've never met, we put everyone through the same sales and approval process to ensure that we are all on the same page and that we have set the proper expectations," says Warren Fremeth, vice president of franchise development for Sweat440. "We are also careful to strictly follow the FTC and state regulations regarding offering and selling franchises. We do not want any surprises down the road."
Highlight the benefits
In talking with prospects on the fence about being first, new franchisors can highlight the benefits of going with a new franchise system.
- State-of-the-art franchise program. New franchisors have the advantage of including in their franchise program the most modern and state-of-the-art franchise practices. For example, technology continues to play a greater role in the way businesses are managed and how they communicate with their customers. Keeping up with the latest technology can be costly, but slipping behind can take away from the business and the ability to attract and keep customers. Newer franchisors often include a technology fund or fee to enable them to maintain their competitive edge as technology changes.
- Ability to select their territory or location. New franchisors have plenty of open territory, and the first franchisees have first pick of prime locations.
- Full attention of the franchisor. First franchisees become either a franchisor's best salespeople or their worst nightmare. Because future franchisees are able to validate the performance of the business and the franchisor with current franchisees it is critical that first franchisees be given the support they need to be successful.
- First mover advantage. In addition, as the brand grows, so does the value of the business. Those who take the risk of being first can reap the rewards as the system grows.
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