When you present something like the Ultimate Guide to Franchise Sales, you really have to start by addressing a few key questions, so let’s start there!
Why the Ultimate Guide to Franchise Sales?
Ya, the name is a little pompous. However, as you read through this guide, I think you will agree that every step in the franchise sales process, most of the "what if's", and all of the questions you ask every day about franchise sales are covered. I hope you will agree this is an "ultimate guide to franchise sales".
Why do you get to write the Ultimate Guide to Franchise Sales?
Well, that's a fair question. The fact is that I have earned my stripes; I have sold franchises in retail, home health care, preschool, and QSR, just to name a few. I have personally helped 22 individuals secure franchises in one calendar month (22 franchisees, not 22 franchised units to a lesser number of franchisees). I went 10 consecutive months where I sold more than 10 units per month. I have helped individuals invest in a franchise with low double-digit net worth, and I have helped at least one individual become a franchisee who had a net worth in excess of $50mil. I have been the sole person responsible for franchise sales in a company, have been one of a team of 6 franchise salespeople, and have led a team of 5. I have sold a franchise in 16 days, and I have worked with a candidate in excess of 900 days before they invested. I don't believe I am the only one qualified to write this guide, but I believe that I am most certainly qualified to write the Ultimate Guide to Franchise Sales.
For prospective franchisees
I am not going to tell you not to read this guide. You may find it informative, though frankly, I think you'll find it boring. What I will tell you is that you won't find any "gotcha's" in here. You won't find any tricks, or manipulation tactics, or anything remotely similar. The fact is, if you are working with a franchise sales person that is using underhanded tactics to try to "convince" you to buy their franchise, you are working with someone who has no understanding of how franchising works. This is likely indicative of their franchise system overall, and I would advise you to run, not walk, away from that franchise system.
How you should use this guide
If you are in the front line of franchise sales, and are new to the industry, I recommend reading this guide, and then re-reading it every 45 days until you either agree or disagree with every section (in other words you are informed enough to make an opinion). If you are a VP/CDO level, I recommend you read this guide slowly, completely, and reflectively. Ask yourself if you agree with the majority of the tactics shared, if you learned new information and if your team could benefit. If so, share it with them, go through the take-aways with them, and help this guide your process going forward.
Throughout this guide, I will highlight take-aways.
Take-aways are little nuggets that I hope you will share with your team, your boss, your social media, or wherever you think they will do the most good.
Except for that one, the will be clickable links so you can drop them right into your twitter feed!
Ok, now that we have the preliminaries out of the way, let’s get into franchise sales!
This is Different From Anything you have ever done
If you are new to franchise sales, I promise you there is nothing that you have done in your past that has prepared you for a career in franchise development. As I mentioned in the introduction, I have worked with candidates for over 2 years before they reached an investment decision. The fact is, in any other sales-type career, you are asking someone to make a decision; is your product or service one that they either need or want and if so is your price fair and within their means.
A series of decisions
In franchise sales, however, a prospective candidate is making a series of massive decisions! In order to become a franchisee, a prospective candidate must likely decide to;
- Change careers
- Give up the security of benefits
- Put a substantial amount of their life's savings at risk
- Risk the financial, psychological, and emotional fallout of failure
Once they have made those decisions, now they have to decide which franchise to invest in. They have to decide if they trust you, have faith in your ability to execute on your duties as a franchisor, and believe in the longevity of the industry. Of course, when they ask you that ever-burning question "so how much money can I make", regardless of how robust your Item 19 is, you have to dance around the question with caveats and offer historical data in lieu of any sort of assurances of their level of success.
Trust me, there is a learning curve here, and regardless of your sales or business development background, this will be different than anything you have ever done. Take-away: Franchise Development is unlike any other sale, because in order for your prospect to make a buying decision they must also make a decision to completely change their life.
The Heavy Part
You are helping people make the decisions we just talked about. When your first prospect becomes a franchisee and then becomes a failed franchisee, your heart will break, I promise. It’s an unavoidable part of our industry; every franchise system will have therefore every franchise salesperson, if they are in the business long enough, will sell a franchise to someone who fails. This is a solemn responsibility. A franchise sales professional's most important job is to say "no". Not just to a prospect that is excited but misguided, but sometimes to an eager board, CEO, or franchisor-client (if you are a consultant like me) when they want to get that franchise fee in.
I have had a few careers in my life.. Rarely have I had the job satisfaction that comes from watching a franchisee succeed year after year, adding more franchised units, and reaching their own professional and personal goals after making an investment decision that I assisted in. Additionally, helping someone take their business from one or two local units to a world-class franchised brand is an opportunity afforded to few if any other professionals outside of our industry.
Franchise Sales Lead Sources
Every franchise sale begins with a franchise sales lead, and every lead comes from some form of lead generation. Therefore, every franchise sales effort must start with a lead generation strategy. Here's your next take-away; Every lead generation plan won't work for every concept. Your target prospect, your target growth rate, your investment, and your budget will all greatly impact your lead generation plan.
Is your goal to focus on only talking to high-quality candidates? Fine. That is one strategy, and it sacrifices possible franchise sales for the benefit of not having to weed through a lot of the wrong prospects. Do you want to generate as much lead volume as you can, while still maintaining an acceptable cost-per-close? Ok, that is a different strategy, and one that requires significant time investment but has a return of more unit sales. Do you have a geographic location you want to target? A specific candidate background? All of these are possible, but they require different components for your franchise sales lead generation strategy. Additionally, though I am a proponent of following the same basic franchise sales process with every lead, each type of lead source does require some modifications.
Franchise Portal Leads
The value of franchise portal leads is often debated. They require a lot of work, a solid franchise sales process, and an understanding of a franchise sales method (we developed the Be First or Be Last Method of Franchise Sales, which works great for portal leads). However, I have consistently sold franchises through portals for over a decade, and they are still producing sales as I sit and write this guide in June of 2018. According to a good friend of mine Eric Bell, who is the General Manager of Franchise Gator,
Portals are a place where prospects go when they don’t yet know exactly what they want in business ownership, or if entrepreneurship is even the right route for them. The best franchise sales people understand this and don’t assume a candidate is sold on their concept, or the concept of ownership in general, the way they might be had the inquiry come from their own franchise development website.
Eric makes a great point, and one that many franchisors struggle with. If you treat a portal lead like a direct website inquiry, you may find yourself uncovering information in the second or third call that you should have gotten to within the first couple of minutes of conversation.
Who are they for
Franchise portals should only be used by franchisors that have a franchise sales team, either in-house or outsourced, that can put the time into filtering, sorting, and nurturing the leads. I also do not recommend franchisors that are significantly limited geographically to use portal leads.
Franchise Broker Leads
Franchise consultants, coaches, or brokers should be a cornerstone of any almost any lead generation program. Franchise brokers usually belong to one or more networks, and you as a franchisor must also belong to one of those networks in order for the broker to be aware of your brand. The fees to join a network can range from nominal ($1,200/year) to significant ($30K/year+).
Who are they for
As I mentioned, I think broker leads are for almost every brand. If you are limited on budget, brokers are great because the majority of the expense comes after the sale. If you don't have a sales team broker leads are fantastic because you should only receive pre-qualified and pre-screened leads. However, if you are extremely limited geographically, or your business model doesn't allow for a significant ($20K+) commission payout, then you'll have to bypass franchise brokers. You can learn more about working with franchise brokers in the next tab.
Franchise Trade Show Leads
I love franchise expositions. They are fun, they are a place to connect with people in the franchise industry, and they are filled with buyers. As an exhibitor, you will talk to people all day that went out of their way to come to an exhibit hall filled with franchisors. Talk about fishing where the fish are!
who are they for?
Like portal leads, franchise trade show leads require a ridiculous amount of follow-up. If you don't have a sales team, don't waste your time going to these shows. Seriously. They are not worth the money unless you or someone on your staff can commit to working these leads diligently. If you are geographically limited or you are targeting a specific geographic area, area trade shows are a must for your plan.
Things to keep in mind
The Event Horizon
As an object reaches the event horizon of a black hole, time stretches out in such a way that, from an observer's point of view, the object never actually crosses the line.Tradeshows end at 5 pm, and 5 pm feels like an event horizon for a franchise salesperson; the closer you get the more time stretches out, and you think it will never get here!
Having said that, the goal of a franchise salesperson at a tradeshow should be to engage as many individuals as possible from the time the show opens until it closes, quickly qualify them from an interest and financial standpoint (90 seconds or less) , and then having meaningful conversations with those that have a keen interest.
Social Media PPC Leads
Let’s face it, everyone is on social media. As we share more and more information with them, LinkedIn, Facebook, Instagram, and the like are providing more and more targeted advertising opportunities. LinkedIn especially has proven a gold mine for certain franchisors; giving them the ability to target their candidate base in an extremely focused way.
who are they for?
Social Media leads are super-flexible, so they may fit into most franchise sales plans. For instance, if you only want to talk to extremely qualified prospects with a certain education and background who are currently unemployed, you can focus your advertisement so that you are only being shown to those extremely qualified, available people. If you are looking to generate a ton of leads in a specific area, or with minimum net worth, or other, more broad categories then you can use social media but with similar caveats of having staff available to nurture and follow up.
Search engine PPC is very similar to Social Media PPC, except that you are targeting a prospects specific behavior much more than their profile. However, everything that applies to Social Media applies in this section as well.
Franchisee leads is a broad category. This includes your franchisees specifically referring people to you, or someone seeing or being in a franchised location (if you are B&M) or interacting with a franchisee (non-location based), and then inquiring about the franchise.
who are they for?
Every single franchisor, period. Every franchisor should be concentrating on this lead source. The holy grail is to generate more than 1/2 of your franchise leads through existing franchisees. How do you concentrate on franchisee leads for franchise sales?
- Have happy, profitable franchisees
- If you are B&M, have an attractive and consistent buildout and design
- Have an incentive program to franchisees
- Have happy franchisees
- Have profitable franchisees
- Have profitable, happy franchisees!
Take-away time: A system with unhappy franchisees will cripple itself. If you have significant franchisee dissatisfaction, quit selling franchises and fix it.
Not only will you not produce franchisee leads, but you will lose all the other leads in the validation process (more on that later).
Franchise Website Leads
I left this for last, but it is actually the most important. In 2016, the FranConnect released possibly the most robust review of actual franchise sales ever seen. One of the learnings was that over 40% of franchise buyers inquired through the franchisor's website. The fact is that the majority of them were likely exposed to the brand elsewhere, but then, prior to inquiring, performed due diligence on the franchisor. This means that a robust, information-forward and easily navigatable website must be part of any lead generation program. Here you get a take-away and a bonus take-away: Every franchisor must consider their website as their first interface with a prospect. Regardless of your lead generation strategy, over 40% of your prospects will interact with your website before they interact with you. Bonus take-away: No one has ever typed in your URL to see what was there. They got to your site somehow.
Every franchisor must consider their website as their first interface with a prospect. Regardless of your lead generation strategy, over 40% of your prospects will interact with your website before they interact with you. Click To Tweet Bonus take-away:No one has ever typed in your URL to see what was there. They got to your site somehow. Click To Tweet
To accurately gauge the effectiveness of your lead generation strategy, you MUST ask "website" leads how they heard about you and track the lead source that actually led them to your site.
Technology is making this easier. Pixel tracking is becoming popular. Facebook offers pixel tracking for advertisements, as do the top franchise portals. Again, from our friend Eric at Franchise Gator:
Google Analytics will tell you what site a visitor was on just prior to visiting your website, but this gives you only one piece of information. Franchise Gator offers the opportunity to implement pixel tracking technology, so that if a prospect reads about a concept on Franchise Gator, then heads to Google to look them up, we can identify this visitor as someone who was first on Gator before landing on the customer’s website.
Technology should help you in this effort, but you should still be asking the questions. I can't stress this enough; knowing the origin of a lead to the best of your ability is imperative to make informed decisions about your lead generation spend. Take-away: Without an accurate picture of where prospects are actually first becoming aware of your brand, you are flying (and spending) blind.
Every lead generation strategy doesn’t work for every system. You’ll need to define what your concept needs most at this point in time and design a strategy that caters to that. Is your system looking to generate lead volume? Is your goal to focus less on quantity and more on lead quality? Are you looking to expand into a new market? Regardless of what your franchise aspires to accomplish, ensure that every aspect of your lead generation strategy supports that. Then, work backward to determine how many leads you’ll need to generate per month to reach that goal.
(This started as a stand-alone article, and I have kept the original article in place as well. You can see it here)
Why working with franchise brokers makes sense
I went to the Franchise Broker's Association Annual Convention some time ago. Afterwards, I was in the Houston United Club on a layover, and I had a call with one of my franchisor clients. He was shocked to learn that we were working with franchise brokers. "They are so expensive! Why should they get $20,000 just for a lead?"
The commissions paid to brokers "just for a lead" are surprising to many would-be or brand new franchisors. For some reason the franchise broker/zor relationship can become occasionally adversarial. I have never understood this. To franchisors; franchise brokers are out there building YOUR brand. You are NOT paying them for just a lead; you are paying them because they are your brand ambassadors.
Brokers, coaches, consultants-they are known by many names. Basically, franchise brokers are responsible for generating their own leads, and they refer interested parties to franchisors.
I have heard it said that brokers just bring you leads that you would already get elsewhere. I can tell you that I have worked with franchise budgets in excess of $100K a month in lead procurement. I currently manage a budget close to $1mil/year, and in all my years of franchise development, I have only had one lead come through a broker and another franchise lead source.
If you chose to work with brokers, and I think most franchisors should, then you need to learn how. This is not a set-it-and-forget-it model, though it is often treated as such. It's important to understand that most broker networks have several hundred franchisors in their portfolio, but most individual brokers have between 10-20 go-to concepts. To make it on this "short list," the individual broker has to have a basic understanding of your concept, believe in it, and, most importantly, believe in your ability to get deals done.
I recommend that, once you list with a broker network, you get in touch with as many of their individual brokers as you can. Share your passion with them. Learn about them. Find out how they are generating leads. Let them know whom they should be sending to you, and whom they shouldn't. Most importantly, establish a relationship and maintain it. I also recommend that you invite the brokers to participate in your sales process for the first candidate they bring to you. This will give them a deeper understanding of your concept and make them more likely to show your brand to their potential candidates.
Take-away:Franchise brokers have hundred's of brands at their fingertips, but likely only 10-20 in their minds. If you want to succeed in the franchise broker space, you have to get on that short list.
(Part of this section started as a stand-alone article, which you can see here)
The Franchise Sales Process
I titled this section the franchise sales process, but this process is more accurately referred to as the mutual evaluation process. Semantics is the first step to a correct mindset about this process. You see, if you are trying to “sell” your franchise, you may end up with the wrong candidates in your system! As any experienced franchisor can tell you, one “wrong” franchisee can wreak havoc in an otherwise strong system. For a young franchisor, if one of your first franchisees is not a good fit, they can devastate your system and stunt your growth for years to come. So lets agree to call the franchise sales process a “mutual evaluation process”, shall we?
Initial Lead Process
Every franchisor knows that they need a sales process, whether they have one or not. Of course, this wouldn't very well be the Ultimate guide to franchise sales without reviewing, in detail, the franchise sales process.
Most franchisors and franchise salespeople think of the franchise sales process as starting when they start calling a lead. It begins so much earlier than that, though!
The First minutes count
In the Be First or Be Last Method, I talk extensively about the need to be first to a prospect, if at all possible. It’s even in the name of the method! It might surprise you, however, when I tell you that, in the ideal situation, your leads are contacted within less than two minutes of contact. You might think I am crazy, and that's an unrealistic goal, right? I would tell you that you are wrong.
Using technology on the front end
Technology is the friend of franchise sales! Franchise development people need to be at least a little bit of techno-geeks, or at least stay up on the newest trends. For example, do you use SalesForce? If so did you know that you can add a "text" button in SalesForce? Yes, I text prospects. And yes, its effective! But that is just a small example, and in fact not necessary for the first minutes. What are necessary are auto-responders. With almost every single lead source (the exceptions being brokers and trade shows), the prospect should receive an email from you within 2 minutes of inquiring. How?
Most franchise portals have some sort of web to lead, web to CRM, or even built-in autoresponders. Make sure that you work with your web development team as well as your lead provider to make sure that you are both providing immediate response and not providing duplicate information.
PPC, SEO, and other leads that flow through your site
Having technology that sends out a personalized email to a new lead that comes into your site is very simple. If you are using a Content Manager like Wordpress or Joomla, just get a plug-in. If you are using a web designer, have them build the functionality in. Additionally, the more robust CRM's like SalesForce and FranConnect have the option to deploy built-in auto-responders, and even emails that vary by lead source (so you can effectively make this your second contact for lead sources that have their own auto-responder).
The first minutes are yours
So yes, it is possible to be following up with your leads within 1-2 minutes of inquiry. Here's your take-away: The first one or two people that contact a lead are educators. The rest are salespeople. If you want to be an educator, you need to be first.
HAVING A PROCESS
The first key to a successful mutual evaluation process is to have a process! While this may seem obvious, we have interacted with many young franchisors who simply answer the phone or call the leads and talk about their brand, send out a Disclosure Document when they “feel” like the time is right, and basically provide a reactive sales experience to the candidate. The problem with this is two-fold.
You are the expert
You are the expert in this business. You know (or should know) what information your candidate needs to make an informed decision in a timely manner, and how they get that information. If you are simply reacting to what your candidate is asking for, you likely will have a longer mutual evaluation process, and may well lose your clients due to lack of comfort in your brand.
You need information
Your candidate is interested in the information they need, not the information you need. However, like them, you are considering entering into a long-term business engagement, and you also need to do your due diligence. A good mutual evaluation process is a consistent give and take, where both parties are able to learn more and more about each other as the process continues.
DISCLOSING THE PROCESS
Have you ever noticed the first time you take a trip it seems much longer than any subsequent trips to the same place? You are also much more likely to take a wrong turn that first time, or get distracted by other stops along the way. That’s because you know what to expect, you have landmarks you recognize, and you can keep track of where you are. If you don’t communicate your mutual evaluation process to your candidate, they are also more likely to take a wrong turn or get distracted. By having a clearly defined and communicated process, your candidate knows what to expect and has landmarks along the way. This will allow you to guide them through the process with more efficiency and allow you both to reach a decision quicker. Again, from Eric
Without letting them (the prospect) know that the next step is to speak, and what benefit they will get out of that next step, your follow up risks coming off as a nuisance.
DOCUMENTING THE PROCESS
The mutual evaluation process should be well documented. You should have initial qualification scripts, a detailed outline for your Program Review and FDD Review, a list of objections with answers, a list of red-flags, and guidelines to set up for Discovery Days, store visits, and interviews. By documenting the process, you are able to maintain consistency and candidate experience as you expand or if key personnel leave the company.
TRACKING THE PROCESS
It is important that you are using a robust CRM that allows you to track a candidate’s steps through the process, and pull detailed reporting on pipeline, lost deals, and bottlenecks. Understanding where people are getting hung up, or at what part of the process a particular salesperson is struggling, will allow you to modify your process or training to react to these issues.
WHAT ARE THE STEPS?
The franchise sales process or mutual evaluation process must be tailored to your unique brand and current market position. When you ask for an application, when you allow candidates to talk to franchisees, and when you provide your Disclosure are all affected by your brand strength, investment, and complexity. Here are the general steps for a strong mutual-evaluation process. Keep in mind that your actual process should be much more detailed than this, with sub-steps in each section.
This is the initial call or two where you and the candidate learn precursory information about each other, and make sure that, at least at a high level, there is some modicum of interest in working together.
During this time you will provide your candidate with more detailed information about the franchise, including what a day-in-the-life looks like, investments, potential returns, industry outlooks, etc. This process will likely include some combination of phone calls, web presentations (webinars), and in-person meetings. You will also be learning more about your candidate through well-formulated open-ended questions, and possibly an application.
This process is where your candidate will validate what you have told them through investigation, speaking with your franchisees, visiting locations, and reviewing your Disclosure Document. You will validate what you have been told be taking an application (if you haven’t already), checking references, and performing credit and criminal checks.
This is the final step. The closing process often includes a Discovery Day at corporate, an Executive Interview, and a final closing call.
This is a franchise sales process; If you want more information on our propriety franchise sales method, check out the Be First or Be Last Method of Franchise Sales.
Though this is a basic franchise sales process, the book How and Why to Franchise Your Business has detailed call and voicemail scripts as well as sample emails that you may find useful if you are just setting up your franchise development department.
Take-Away: The end goal of your mutual evaluation process should be to allow both you and your candidate to make an informed decision in a reasonably quick time frame.
Every conversation, piece of collateral shared, and every interaction should be focused on that goal.
Technology in Franchising
We've all heard the phrases. . . "Disruptors". . . "Game changers". . . "paradigm shift". . . Sure, they sound cliché'ed, but the fact is that over the last 10 years technology has created a significantly different world in franchise sales. I remember when I first came into this business, and my company started doing webinars, we were one of the first franchisors to do so. Now webinars are so last year, and franchisors are all abuzz with AI-produced performance data, algorithmic franchise evaluations, and the information economy. When I started working with Portals 12 years ago, they had recently rolled out auto-responders for lead inquiries. Now, with CRM based responders being almost ubiquitous, according to Eric (Franchise Gator)
we made that decision (to quit providing auto-responses) because most leads would then receive two or more autoresponders instantaneously after submitting an inquiry, which would lead to none of them being read.
If you are still using tech the same way you were 5 years ago, or if your franchise salesperson or CDO or consultant or whoever is setting up your franchise sales platform is still thinking 5 years ago, you are dangerously behind the times. Here are just a few of the technologies you should either be embracing or at least considering:
- Automatic calendaring systems
- Web-to-lead technology
- Distance learning platforms for common Q&A in the sales process (this should roll into
- franchisee training and onboarding as well)
- Follow-me and re-marketing lead procurement
- Automated drips and workflows
Take-away: Re-evaluate every step of your franchise sales process, from lead procurement, to nurturing, sales compliance, all the way through onboarding and data analytics, through the lens of using tech to increase productivity.
Wrapping it up
Franchise sales, franchise development, mutual evaluation, call it what you will, we are the front lines. The individuals who take the calls, host the webinars and Discovery Days, are the face and of the company and the originators of life-changing relationships. As an executive within franchising, you must realize that the individual, team, or company that you place in charge of franchise development truly becomes the face of your company. Chose well, and make sure they are well trained, and keep them happy!
Take-away: The person or team in charge of franchise sales is the face of your company to the prospect. Make sure you chose them wisely.
I hope you enjoyed The Ultimate Guide to Franchise Sales!
Author: Michael A. Peterson
Published: June 10th, 2018
Category: Franchise Sales and Development