Selling Deals Through Franchise Brokers: Part 1 of 4
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. Whatever the outcome, you could make a critical mistake if you don't explore this growth opportunity. Whether you are a start-up or veteran franchise company, a successful marriage with franchise brokers could accelerate your growth by 25 percent, 50 percent, or even more! Some franchisors pretty much hand over the development reins to broker networks that have been responsible for building their system.
Let's peel the onion to determine the pros and cons seasoned franchisors are experiencing with broker networks. This may help guide your decision-making if you are not using broker representation at this time.
- No up-front costs -- Especially for the younger, bootstrapping franchise this is a huge benefit. Brokers can reduce your sales payroll and advertising expenses, and provide you with a network of seasoned franchise consultants who can present your franchise program to prequalified candidates throughout the U.S. By using brokers, some attractive and well-run start-ups have enjoyed explosive franchise growth without investing any advertising dollars to promote their concept.
- "Found" buyers -- Consultants bring you qualified owners you never would have met otherwise. Buyers you sell directly from your own marketing efforts have evaluated different concepts and selected you as the franchise they want. Buyers brokers send you often didn't know what they wanted and sought out counsel to help them weed through the opportunity jungle of thousands of franchises. From the 1980s into the 2000s, I awarded franchises to broker-referred candidates who had never thought of considering our concept... until the broker sent them our way. Broker networks are valuable in recruiting additional qualified prospects, creating a new pool of buyers for franchisors that participate in their programs.
- Qualified prospects -- Your candidates have been pre-screened to fit your prospect profile: financial and operational requirements, skill sets, character traits, corporate culture, etc. They believe in the franchise model, are ready to start a business now, and understand they will have to follow a sales process to qualify for your franchise. Brokered franchisees I have sold became top producers, receiving system-wide honors for their outstanding achievements.
- Free sales training -- Some broker networks offer you on-site training to help ensure your mutual selling success. This is particularly beneficial for younger franchisors without a strong sales program in place. Their assistance helps you establish an effective relationship with the broker by seamlessly connecting your recruitment approaches for maximum sales results.
- Buyer insights -- Your broker can provide vital information about a prospect that can make the difference in closing a new franchise. Third-party consultants are sounding boards for candidates, who share with them their impressions, concerns, and interests about your franchise. This additional awareness of your candidate's status certainly helps as you guide them through your qualification process.
- Service concepts capitalize -- Brokers are especially successful with lower investment, mobile, home, and office-based franchises. These are often easier package sales, less complicated, and pay higher commissions. Consequently, the most successful broker relationships are with service-driven concepts. If your concept falls within this category, definitely check out broker representation as part of your lead generation strategy.
Next time: Broker challenges; how to sign up with a broker.
This is an excerpt from my book, "Grow to Greatness: How to build a world-class franchise system faster." To order copies, click here.
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