Franchise Sales & Development | Franchise Beacon

Where Do I Find FDD’s Anyway?

Michael A. Peterson — Fri, 17 Feb 2023 01:42:58 +0000

Are FDDs Public or not?

The answer is kinda.

If you are like many people, you heard Franchise Disclosure Documents are ‘out there’, and ‘available’, but when you search all you find is sites offering to sell you the documents. There are a couple of reasons for that. First, FDD’s are not public records; they are not like court records, birth, death, and statistical records, or other type of documents you actually have a right to access. For some franchisors, in certain circumstances, you can find their FDD’s online, but if you can’t, no one ‘has’ to share it with you (assuming you are not actively engaged in their discovery process). Irrespective of if you are a potential franchisor wanting to see what this whole “FDD” thing is about, a young franchisor trying to find competitive FDDs to see if you can adopt some best practices, or even a prospective franchisees wanting to find old FDDs of a franchisor that you are considering as an investment, knowing these parameters will quickly let you know if the documents are something you can find, and I’ll even give you the direct links to find them at the end.

The franchisor must be registered in Wisconsin, California or Minnesota. As previously mentioned, FDDs are not public records and some states require franchisors to register their document with state authorities before they can offer or sell franchises in that state. Three such state authorities then make those documents available online: Wisconsin, California and Minnesota.
You must know the legal name of the franchisor; not just their DBA name (Doing Business As). This can be tricky as the legal name may be different from the name used for their brand or business. However, in Wisconsin, the state allows searches for FDDs by both legal and DBA names, so if the franchisor you are looking for is offering franchises in Americas Dairyland, you may still be good to go.
The franchisor cannot fall under the seasoned franchisor exemption. Different states provide different definitions of this, however California is the only state that provides both online FDDs and has this exemption. If the franchisor has a net worth in excess of $5mil, you won’t find their FDD on California’s website.DD on California’s website.

There are other places to find an FDD, but your first stop should be these three state sites:

A. California Department of Financial Protection and Innovation

B. Wisconsin Department of Financial Institutions

C. Minnesota Commerce Actions and Regulatory Documents Search

If you see something in an FDD that doesn’t make sense, want to learn best practices, or are looking to franchise your business or improve or even outsource your franchise sales process, don’t hesitate to reach out!

Since you are looking for FDDs, you are probably considering franchising.

We should connect.

As industry experts, Franchise Beacon prides themselves in offering top notch services to our clients, but also guidance to the franchise world at large.

There’s nothing to lose but questions, and everything to gain by investing 30 minutes.

Schedule a call today!

ECE is the place to be in 2021

Michael A. Peterson — Fri, 12 Nov 2021 17:01:35 +0000

Yes, The ECE Market is the Place to Be in 2021

_{This article was featured in the May/June edition of Franchise Connect.}

Businesses centered around childcare, preschool, tutoring, etc. are often spoken of in “soft” terms. Many individuals that enter into the children’s services space, and specifically the Early Childhood Education (ECE) space, have a desire to “give back”, “leave a legacy”, or “impact children’s lives. This is more than admirable; a desire to contribute to the greater good is a necessity to succeed in this industry. I want to begin, however, by bringing some hard facts to the discussion.

For the last 6 years, I have represented a franchisor in the ECE industry. When I first met the founders of Building Kidz Preschool in 2015, I was intrigued by their model, purported numbers, and passion, but had never considered the industry in-depth. As a metrics-driven individual, I started looking for concrete data on the industry. If you have ever researched the preschool industry, you know what I found, troves of information from extremely reliable sources.

I started, as they say, at the top; with a report from the Executive Office of the President of the United States (December 2014). The report is a detailed analysis of the true ROI, as a society, of early childhood development through education. If you are wondering if the impact of quality pre-kindergarten education can be quantified, the answer is a resounding “yes”. The report determined that for every dollar invested in educating young children, a lifetime societal return of $8.60 could be anticipated. Half of this return is from increased earnings of the child throughout their lifetime, and the other half is divided between increased parental earnings, lower engagement with the criminal justice system, and reduced expenditures on remedial education by the public school system. Outside of the straight dollar return, the report stated that pre-kindergarten age education leads to a “change in cognitive functioning and brain development” and could account for some characteristics, such as IQ, that are often considered to be hereditary.

Moving away from the President’s report and into actual industry numbers, I found the same availability of data. In 2015, the ECE in the U.S. was a $70B per year industry and had grown 13.5% CAGR 2011-2014. As I helped to launch Building Kidz into the franchise world and grow them to their current 30+ locations, the markers for ECE kept improving. In April of 2018, a report was released by Zion Market Research that pegged the 2017 U.S. market at $13.5B, and in February of 2020, a report by Facts and Figures had 2019 global Early Childhood Education Market at $245B and projected to grow over 10% CAGR until at least 2026.

Of course, that was THEN. Before the change that we are still watching remake our social and business structure.

In the last issue of Franchise Connect Magazine, I wrote about the appeal of home services businesses; lack of client contact, generally minimal investment, people investing more in their homes rather than vacations or going out to eat, among others. While completely true, home-based businesses and home services are not for everyone. Many people have a passion for helping their community, a passion for education, and a strong desire to build a physical presence that contributes. Recently I was speaking with Seth Lederman, one of the country’s leading franchise acquisition and development specialists, and he explained it like this:

Out of the 200 or so people that I have helped find a franchise, about half of them are really just looking for the right business for their needs, budget, and, especially now, the current economy. Many individuals, however, are driven to entrepreneurship by a passion. While still looking at unit-level economics and long-term trends, they won’t consider a business that doesn’t engage them in whatever brings them personal satisfaction. As someone who left the medical field in order to pursue a passion for coaching business owners, I can relate”.

The good news is that, while nothing is yet certain, the preschool and daycare industries seem to be surging back rapidly. The need for preschools as part of the economic recovery is both obvious and data-driven. We learned early on in the 2020 pandemic that, more than just an essential business, childcare is essential to business. For businesses that need their workforce on-site, the need for childcare is unquestionable. After the 30th or 50th zoom call interruption, however, the need for work-at-home parents to have childcare available is quickly becoming apparent as well. For the children’s sake, we’ve already explored the impact early childhood education has on their entire lives, but we must remember too that children that were not in preschool pre-pandemic often had playdates and other socialization activities. These activities are now often looked at as unnecessary group exposure, leaving only preschools and daycare centers as an option for early socialization skills to be developed.

The New Normal in Food and Beverage

Michael A. Peterson — Tue, 02 Nov 2021 22:33:08 +0000

How Actions and Reactions Defined the New Normal in Food and Beverage

_{This article was featured in the September/October edition of Franchise Connect.}

This issue of Franchise Connect is focused on the food and beverage space. What I want to share with you, however, is applicable across most franchises; how to be confident in your selection of a franchisor partner. Though this advice is somewhat franchise-ubiquitous, the actions over the last 18 months of franchisors in the food and beverage industry played an outsized roll in their franchisee’s success.

Is Now Really a Good Time to Consider the Restaurant Space?

The short answer is yes. The longer answer is: I can’t think of a better time to evaluate a franchisor in the restaurant space.

I can imagine you reading that last sentence and thinking “sure, there may be reasons why now is not a terrible time to invest in the food industry, but the best?”

Allow me to explain.

I likely won’t shock you when I tell you that most franchisors in the restaurant space were bruised and beaten over the last 18 months or so. It’s an unfortunate reality that some in the space didn’t survive, and others barely so.

The Covid-19 pandemic forced franchisors in all spaces to showcase their ability to execute in three broad areas:

Their ability to both react and react appropriately to unexpected marketplace changes
Their willingness and ability to truly partner with their franchisees
Their ability to truly lead

Let’s look at these one at a time.

Nimbleness and Direction

Dog Haus Restaurants epitomized what nimbleness in action looks like with their 2020 roll-out of “Absolute Brands”. According to Dog Haus’s Director of Franchise Development Erik Hartung, Absolute Brands are a series of virtual brands which re-menu portions of the Dog Haus in-restaurant offerings for take-out or delivery only. Erik explained to me that the company had been considering the Absolute Brands idea for some time, but prior to March of 2020 they were planning a roll-out “sometime in the next couple of years.”

When the pandemic hit and franchisees were suddenly forced to shutter their restaurants, the Dog Haus team went to work, and they went all-in on Absolute. Instead of “sometime in the next couple of years,” franchisees were able to offer the first of the Absolute Brands less than 60 days later, and today they have 4 different virtual brand offerings, with an eventual goal of 8. Dog Haus didn’t complicate things; they used what their franchisees already had; to-date they have only added one new sku to support the virtual brands, and franchisees of Dog Haus are automatically eligible to offer the virtual brands as well. The results? Franchisees generating pre-pandemic revenues by June of 2020 and comping up July 2020/2019.

A True Partner

A franchisor that enlists their franchisees in times of trouble, instead of shutting them out, is much more likely to react in a way that is helpful, rather than neutral or a hinderance. To illustrate this point I will step away from the restaurant space. In reaction to the stay-at-home order of March 2020, Building Kidz Preschools (a franchisor I work with directly) immediately took several actions to help their franchisees. Like many franchisors, they gave an abatement of royalties. Because royalties are typically a small part of a franchisee’s overhead, however, reduction of royalties is more of a sign of solidarity than it is a “life raft”. Franchisees expressed what they needed most; the ability to secure funding to weather the storm. Building Kidz reacted to the franchisees’ request for assistance and secured a relationship with an SBA lender well before the PPP loan program was actually passed through Congress. In so doing, they put their franchisees in a favorable position when the funds were approved; so much so that all Building Kidz franchisees (17) that applied for PPP loans received them.

True Leadership

Dog Haus and Building Kidz are just two example of the many franchisors that were able to step up and effectively lead their organizations during the initial days of the Covid-19 pandemic. They used very different methods, but to the same ends; to react to a sudden, unforeseen market shift in such a way that they either strengthened or, in some cases, outright saved their franchisee’s businesses.

Beyond Theoretical

The ever-changing landscape of 2020 and 2021 has laid bare a franchisor’s ability (or lack thereof) to step up to the plate. If you ask franchisees in two or three years from now how their franchisor helped them weather this storm, your will likely get vague answers. Let’s face it, our memories are short, and as business owners the events of two or three years ago are just not front-and-center in our minds. Right now, as many franchisees are just beginning to return to some sense of normalcy, is the perfect time to use real-world experiences, outside of the FDD, to evaluate the franchisor you are considering joining.

Go Beyond the Document

We all know that the FDD is an invaluable resource to help evaluate a potential franchise investment. If you are a franchise-savvy investor, you likely glance at Item 3, look at Item 7 to make sure it’s in your range, spend a bit of time on Item 20, and then dig into Item 19. However, when evaluating a restaurant franchisor as an investment today, I would encourage you to allow the narrative of the franchisees to carry at least equal weight to the FDD in your decision process. If you see an Item 19 showing that franchisees took a 10-20% hit in profitability yet hear from franchisees that business is recovering and also hear anecdotes that sound similar to Dog Haus and Building Kidz, you are likely looking at a franchise with strong and capable leadership. Likewise, if you see an Item 19 that shows a minimal drop or even increase in profitability in 2020, but franchisees can’t pinpoint how their franchisor helped them either push through the pandemic or make the most of opportunities it presented, you very well may be looking at a brand with mediocre leadership that happened to hold a market position that wasn’t hit hard, or even benefited from, the pandemic.

What Will the Next Challenge be?

The global and domestic economy, and U.S. small businesses, will suffer from another setback in the future. It may be another pandemic, but it could just as easily be caused by a financial bubble burst similar to the dot-com & housing market recissions, or even something completely unrelated to U.S. economics like the energy crises of 1973 and 1979. Prospective franchisees are in a unique position today to know, rather than hope, how well franchisors respond to external threats to their business.

Building a successful pet grooming franchise

Michael A. Peterson — Thu, 13 May 2021 12:40:58 +0000

See the original article here in Franchise Connect Magazine

Building A Successful Pet Grooming Franchise

Although I have an extensive background in franchising, until recently I have had limited exposure to the pet services segment. I am glad that has changed!

I have had pets all my life, and I have been in franchise almost 15 years. However, my knowledge of the overlap, i.e. the pet franchise space, was fairly limited until recently. Since December of 2020 I have had the pleasure of working with Keith Miller, founder of Bubbly Paws dog grooming in the greater Minneapolis area, as we turn his pet grooming business into the newest pet grooming franchisor.

When I learned this issue of Franchise Connect was going to focus on the pet industry, I saw an opportunity to bring a voice to the table that is rarely heard in the franchise space; a business owner that is partially through the process of becoming a franchisor. I believe that Keith’s extensive experience owning pet grooming locations combined with his recent venture into franchising allows him to provide unique perspective into this industry.
I sat down with him recently to discuss Bubbly Paws, the pet grooming industry in general, and the advice he would have to offer somebody who is considering coming into this industry as a franchisee. I’m excited to share our conversation with you, as well as some of my own observations, below.

Michael
Keith, thank you so much for sitting down with me today! I know you’ve got a lot going on; four dog grooming businesses that are booming, a new baby at home plus your 5-year-old, and now trying to break in the franchise industry all at once! You really do have your paws all over the pet industry, don’t you? Besides Bubbly Paws, you also own Pampered Pooch Playground, which is a doggy daycare, and, as I understand it, you’re a podcaster in the pet industry?

Keith
Yes, I run a podcast for pets plus magazine. I love it because it allows me to stay in touch with my roots, as I started my career in the radio industry, as well as provide what I hope is useful content to people in this business. We concentrate on content and interviews that are helpful to individuals in the pet grooming industry.

Michael
Like I said, a busy man! Let’s talk about Pampered Pooch for just a moment and then we’ll get into Bubbly Paws. Pampered Pooch was your first foray into the pet services industry, right?

Keith
It was. We’ve had Pampered Pooch since 2008. 13 years!

Michael
And it was actually your experiences at the Pampered Pooch that led you to launch Bubbly Paws, correct? Tell me about that.

Keith
Keep in mind coming this was 13 years ago. The doggy daycare world was just taking off, and we would often have people stop in and asked to use our tubs on the way back from a romp in the park. We weren’t really set up for that, though we did try to accommodate them when we could. We even considered adding tubs to the doggy daycare but frankly most of our customers picked their pals up on their way home from work or from a trip; they wanted to be in and out quick. So, we decided to launch Bubbly Paws Grooming.

When Keith launched Bubbly Paws almost 11 years ago, he experienced the same unexpectedly rapid success in the grooming market as he had in the boarding space. One location in 2011 became two locations in 2013 and he opened the doors of his 4th location at the end of 2017. When my team conducted a franchise feasibility study for Bubbly, we saw a trend; each location experienced rapid growth in the first 6-12 months, getting quickly to break-even and beyond, and then sustained year over year increases in all locations. We also saw a couple of significant market differentiators.

The first was a fantastic use of social media, including memes, influencers, and dog “ambassadors” to market their locations.

A recent scroll through Bubbly Paws tagged posts on Instagram revealed a post from 7 days previous by Murphy in Minnesota (a sheepadoodle with his own Instagram) with over 1000 likes and comments.

Besides their strong marketing platform, they also offer a service that is becoming ever more popular in the #newnormal world.

Michael
Keith let’s talk about a one of the things that you have done to help Bubbly Paws stand out in the Twin Cities marketplace. You mentioned that the genesis of Bubbly Paws was people coming to Pampered Pooch and asking to bathe their dogs, so you decided Bubbly Paws would have a self-service option, right?

Keith
Exactly. Though most of our services focus on full-service grooming, we do offer a self-service option. Self-service has wide appeal for a couple of different reasons. First, you don’t have to make an appointment weeks in advance. Before the COVID pandemic, even on a beautiful spring Saturday you wouldn’t wait more than 30 minutes, and rarely even that. Now we have an online reservation system so there is never a wait for self-service. It’s a perfect solution for a messy trip to the dog park; hop on the app and book an appointment on your way to the park, and swing by on your way home. Self-service also allows some of our customers that are more budget conscious to wait longer between groomings, instead of coming in every six weeks they can come in every eight weeks or even 10 weeks, and still keep their friend un-stinky in between groomings.
Now, with so many people working from home, getting groceries delivered, and having very little reason to leave their houses, we are finding that just getting out of the house to give their dog a bath in our facilities is what they look forward to for the day. Our bathing rooms have fantastic filtration and ventilation; after all who wants to smell wet dog, you know? The HAVAC systems filter the air out of each bathing room, and are equipped with UV lights which destroy various airborne viruses, like the rhinoviruses and influenzas that cause kennel cough. What better way to get out for a bit than to go to a safe, socially distanced environment that, by its very design, reduces the likelihood of exposure to airborne pathogens?

We saw this reflected in the feasibility study as well. Surprisingly, despite the world-wide disruption caused by the pandemic, amplified by the social disruption that Minneapolis experienced this summer, by the end of 2020 all but one Bubbly Paws location were back to pre-covid numbers, and the 4th is almost there.

To wrap up our conversation, I asked Keith to share his best advice for people who are considering entering into the pet industry. Here’s what he had to say.

Keith
The pet industry numbers are extremely attractive. We are talking about a 10-billion-dollar marketplace that had 6% CAGR growth expectations before the pandemic started, and now industry analysists are saying that is conservative. Honestly, if that is why you are considering this industry, you are looking at the wrong business. I don’t see a path to success, at least in our segment of the industry, for someone without a passion for pets. Pet owners don’t want their family members in the hands of someone that is just in the business for the margins. Groomers don’t want to work for someone like that. Your customers, your groomers, everyone you interact with will pick up on the lack of passion, and you will struggle with both employee retention and customer retention.
For those that have the right passion, before you decide to buy a franchise, do your research on the franchisor. Every detail is important in a pet grooming store; the ventilation, placement of the windows, the shampoos, and cleaners you use, where the bathing rooms are located in respect to the entrance, everything. Visit a few franchise locations; if you don’t see a painstaking attention to detail everywhere you look, then it’s time to look elsewhere.

We are still working through the franchising process. We expect to bring the Bubbly Paws brand to franchise market by mid spring. I, for one, am looking forward to seeing Keith’s passion for pooches translate into a strong, sustainable franchise model.

I Just can’t sell

Michael A. Peterson — Wed, 24 Mar 2021 17:42:41 +0000

See the original article here in Franchise Connect Magazine

I Just Can’t Sell

Many franchises in the home services sector require franchisees to engage in the sales process with the customer. If you think you just “can’t sell”, I promise you, you can.

In February of 2020, the world began to change, and the tectonic plates that underpin our personal, social, and business lives are still moving. For some people, this is the time to hunker down; others see opportunities in the changing landscape, or simply must pivot due to a lost job or other source of income. Irrespective of the reason, franchisors in industries ranging from in-home senior care to preschools to gift basket delivery are reporting year-over-year stability or growth in franchise development.

Home-based businesses are uniquely attractive in 2021. With minimal or no staffing or real estate requirements, and reduced face-to-face exposure to customers, the appeal is obvious. Home services businesses have an added advantage. As Tim Smeltz, the founder of the driveway repair and maintenance franchise NextGen GreatSealcoating recently told me, “Even people that are not working from home are spending significantly more of their free time in their houses. Our homes have truly become our sanctuaries, and people are spending more on both upkeep and the aesthetics of their home environment.” His case is supported by the fact that his first franchisee, who opened in May of 2020, took less than 90 days to break even (according to NextGen’s Franchise Disclosure Document). There are many brick and mortar businesses that are equally well-positioned, such as childcare, senior care, and fast-casual delivery, but the home services sector has most certainly enjoyed a lift in visibility.

For some, these obvious upsides can be tempered by the daunting idea of becoming a “sales person”. If you are hesitating to get into the home services space for this reason, I have great news for you; not only can you sell, but without ever meeting you I can tell you the sales style that you should adopt to sell effectively, and eventually even become great at it.

To be clear, a great salesperson is not someone that can “sell anything to anybody” or “water to a drowning man”. Part of being a great salesperson is identifying someone’s need or want and helping them comfortably reach a purchasing decision that fills it. Salespeople that “convince” someone to buy a product or service that isn’t right for them are not “great’, they are con artists.

So, how do you become comfortable in a sales role? It’s simple, really. First, I’ll share with you the two pillars of any great salesperson, and then I’ll tell you how to find your unique sales voice.

Lay Your Foundation

Pillar one: Become a scholar of your business.

Study your competitive landscape, and what differentiators you offer. Understanding both the strengths and weaknesses of what you are selling is pivotal. I sell franchises for a living, and of course part of my competitive landscape is simply non-franchised businesses. Starting your own business without a franchise does have advantages; for example, franchisees have restrictions on how they can advertise, or what products and services they can offer. If I were to not acknowledge this, at best my prospects would think that I didn’t understand franchising; at worst they would think I was dishonest. By understanding the limitations of your model, you can contrast them against the strengths, and again help the customer reach the decision that is right for them.

Pillar two: Know your competitor’s business as well as your own.

Every business owner sells on their own unique value proposition. In order to effectively communicate what makes your service different and valuable, you have to know the market. When your prospect brings up either a competitor, or even just a feature or benefit that a competitor offers, you’ll be much better positioned if you’ve already studied the advantages and disadvantages of the competition. Also, and equally important, your prospect may simply ask you questions to see how well you know your business; be prepared to answer them.

Zig Ziglar, one of the great sales theorists of all time, famously wrote that “sales is a transference of emotion”. This one phrase has many layers; the fact that you have to be enthusiastic about what you are selling and that people make buying decisions based on emotion backed by logic, rather than the other way around, are just two. Another, which you may not have considered, is that no matter how much you believe in your service you will struggle to covey enthusiasm if you are nervous. It’s hard to be excited in the moment when you are worried about your ability to answer customer questions. Suffice it to say that Mr. Ziglar was not referring to nervousness and self-doubt as the emotions that you need to transfer in a successful sale!

Find Your Voice

Of course, knowledge by itself will not make you a great salesperson. You must be able to transfer the appropriate amount of knowledge, along with enthusiasm and excitement, so that your prospect is fully informed and not overwhelmed. To accomplish this, you must have the knowledge base, and know your best method of walking the prospective candidate through your process, and ultimately decide to do business with you.

Buy Your Own Offering

I don’t mean actually make a purchase from yourself, but mentally go through the sales process from a customer’s point of view. Find the level of information, the tone, and the communication methods that would make you most comfortable if you were the customer. Break you’re the sales process down into steps and analyze each step through this lens. Ask yourself:

What information would I need to know at this step to move to the next step.
What information would overwhelm me at the stage. This is actually a difficult mental exercise; we like to think that we can just take in all of the information and make a logical choice, but that is simply not how we make decisions.
What information, if it wasn’t shared at this point, would you feel was misleading by its absence.
What tone, approach, or style would take you from considering to buying?
What would make you walk away from the purchase?

These 5 questions, when answered for every interaction along the sales process, will illustrate for you your most authentic sales style. If you start from a base of authenticity, and have a deep understanding of your service offering, you will be able to sell comfortably. As you interact with your first several prospects, go back to your notes and see where you may have been incorrect, or where you may need to make minor adjustments to ensure what you are saying and what your prospect is hearing match up.

I told you it was simple! Using this process, you may not start out great, but you will start out proficient. Most importantly, you’ll be comfortable, because you are not trying to force yourself into selling in an unnatural way. If you continue to use this lens to study your sales process, greatness in sales is achievable.

The Distinctiveness of Franchise Development

Michael A. Peterson — Wed, 23 Dec 2020 03:08:01 +0000

Franchise Sales is unique. So is the franchise purchasing decision.

I was recently discussing franchise sales with a friend in the franchise lead generation business (a franchise portal) and the subject came up of just how unique the franchise industry is.

I can promise you there is nothing else like what we do. If you are new to franchise sales, or even if you are a seasoned professional, you may have never realized, or lost sight of, the truly unique nature of a franchise sales transaction.

Let’s start out with the obvious; franchise sales can be frustrating. There are so many things outside of the development professional’s control that can blow up a perfectly good placement; a bad first validation call, an ill-timed yelp review for one of your franchisees, or a franchise coach steering a candidate that you know is a good fit toward another brand, just to name a few. Franchising in general, and franchise sales specifically, also takes patience. In my franchise career, which is approaching 15 years, I have had one franchise sale that took over 900 days to progress from first contact to agreement signing, and close to a dozen that have taken over a year. I can tell you, without a doubt, I have the patience for franchise sales, franchisee management, and franchise consulting in general only because I understand the uniqueness of my chosen field. In this article, I am only going to address one part of that uniqueness: the prospective franchise candidate’s decision-making process.

You Are the Last in A Line of Decisions

In order to maintain patience, and more importantly empathy, during the franchise mutual evaluation process, all you need to do is step out of your bubble and put yourself in the prospective candidate’s shoes. Investing in your franchise brand is not a stand-alone decision; it is the last of 5 decisions, all of which are pretty heavy. Let’s look at them individually. A prospective franchisee must decide:

To be in business for themselves. This seems self-evident, but if either you haven’t made this decision yourself, or it was a long time ago, take a moment to remind yourself how intense of a decision that is. As a business owner, if things go wrong, it’s your fault. If you lose your investment, your business, harm your family’s financial situation, as the owner the buck truly stops here. In my opinion, this takes a while for most people to fully internalize, and many never acknowledge it consciously. I believe at least some seemly-solid franchise sales fall apart in the 11th hour because the fear of failure with no scapegoat is something the prospect just can’t get past.
To walk away from their careers. Separate from number 1 above, if your brand is owner-operated, remember there are businesses that offer a fairly passive role for the owner, allowing them to stay employed. Being an active franchisee often means giving up benefits, retirement plans, and the assurance, no matter how flawed, that they have a “job” and therefore their income is steady.
They want to be in your industry. Your industry is likely either mature, meaning that it has a proven record but also probably has many big players, or emerging, with few if any institutional competitors but also without a long track record of proven success. If you happen to be in between the two, the odds are your industry going through a period of consolidations, commoditization, and other growing pains. No industry is immune to this. QSR, service-based industries, tech industries, the senior care industry, and all others have some unique combination of benefits and drawbacks. My day-to-day includes working with both a leading preschool franchise brand and a business to business services brand. The cost reduction company, P3 Cost Analysts, offers an executive, home-based franchise with a low upfront investment, the preschool business offers a unique, flexible business model, and they both offer industry-leading returns, but neither industry is for everyone!
They want to be a franchisee. The franchisor/franchisee relationship is at times strained. Franchisees don’t have full control or autonomy over their own business. You will find certain prospects wouldn’t consider “going it alone”, while others will be more resistant to the idea as they work through your process, but in every successful franchise sale the prospect at some point decides to accept the good and the bad of franchising.
This is you. Step five. In order to make an investment decision with your brand, a prospective candidate has to have worked through the previous four. With some very few exceptions, however, prospects are still working through those when they contact you. This is why persistence in the franchise sales process is key.

So, the next time a franchise prospect goes cold on you for a week or two, or a month or two, and then resurfaces, reflect back on these five steps, and have empathy. The next time you lose a “perfect”, well-matched prospective franchisee, realize that, even if they were the right fit for you the reverse might not have been true. It won’t make the loss of a franchise sale, or the patiently waiting weeks for returned calls, to be any less frustrating, but with empathy comes understanding, understanding builds your knowledge, and a stronger knowledge base will make you better at this thing we do.

10 Steps to Becoming a Franchisor

Michael A. Peterson — Wed, 08 Jan 2020 06:39:10 +0000

The 10 Steps to Becoming a Franchisor

Determine if your business is one that can be franchised
Conduct a feasibility study to evaluate scalability, national demand, and profit for franchisees.
Make sure you have the time and money
Be prepared to take a step back from your current business, and anticipate an investment of between $100K-$400k.
Surround yourself with professionals
At the start-up phase, at a minimum you will need an expert franchise sales person, Operations Manager, Training Manager, and a franchise attorney. Keep in mind that the, if you have a well-rounded franchise expert on board, they may be able to wear many hats (such Training, Support, and Operations). Another option is enlisting a franchise consulting company; often you will get a full team for less than a single executive salary.
Document everything
From the time the lights go on until they go off, every step of your business including marketing, employee management, product merchandising; everything you can think of should be put into a process guide. This will later become your Operations Manual. Again, a good franchise consultant or Operations Consultant can help you with this.
Determine the offering
Decide how much control you require on your look and feel, what your involvement will be in the supply chain, your fee structure, etc. This is the most complicated part of becoming a franchisor.
Develop a growth plan
Evaluate if local, regional, or national growth is the right initial approach and how many new owners can you support in a month.
Develop a marketing budget

Use your growth plan to develop a budget. This will typically include franchise brokers, franchise portals, exhibitions, as well as organic and paid web traffic.
Create a comprehensive, defined mutual evaluation process
Design your training, onboarding, and support processes
Execute
Be careful! Your first 2-4 franchisees will set the tone of your system for years to come.

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Who Should Be Involved in the Franchise Sales Process

Michael A. Peterson — Sun, 10 Nov 2019 14:39:21 +0000

This is another in my series of articles for Franchising.com, and was originally published there on October 15th, 2019. I wrote The Ultimate Guide to Franchise Sales about a year ago. It covers, at a high level, the entire franchise sales process. This is the third in a series of articles that will cover several of the subjects from the guide, with a narrower scope and deeper dive.

(note: You can see Lead Nurturing: Meeting People Where They Are here on Franchise Beacon and here on Franchising.com, and How To Be Ridiculously Productive by Implementing Tech in Your Sales Process here on Franchise Beacon and here on Franchising.com)

If you are a franchise development professional, you probably feel like you are on an island. Franchise development is a unique division within a franchised organization. As a CDO, VP of franchise development, or director of recruitment, you probably have finance pushing for projections, the board pushing for new franchisees, real estate pushing for fewer franchisees, training and support pushing appropriate timing to get multiple franchisees into the same class, and franchises pushing for brand growth, but don’t you dare encroach. Talk about getting pushed around! The adversarial nature of these interactions is not one that can or even should be eliminated. However, by involving every one of these individuals and departments in your franchise recruitment process, you can release a little of the tension. I’ll work backward through that list and show you how to wrap each of these seamlessly into your development process, and, in so doing, enhance the overall process and the new franchisee experience.

The franchisees

Let’s start with the franchisees. Franchisees can be your biggest advocate or your biggest roadblock in the franchise sales process. If your franchisees are consistently talking prospects out of your brand because they don’t make money or see other fundamental flaws in your brand, STOP and go fix it. You can’t, and shouldn’t, sell around validation. However, if franchisees seem to validate well one day and not as well another, or if prospects are just having a hard time getting them on the phone, you will make your life so much easier by just getting franchisees on board. Do your franchisees know your company’s vision? Have you talked to them about the benefits of brand growth? This seems obvious, but it is easy for a franchisee to get caught up in their four walls and forget about the value of a greater brand. How do you overcome this?

Franchise development should have a full time slot at your annual conference. Your franchisees should fully understand your franchise sales process and at what stage of discovery prospects are likely to call. Additionally, explain to your franchisees what your development department does to ensure that prospects are instructed not to reach out until they have entered the appropriate stage.
I recommend asking your franchisees not to engage in validation unless they have been directly introduced to a prospect so they know the candidate has been properly vetted. If the franchisees know that you respect their time, they will be more likely to speak with your candidates.
Talk to them about how growth helps the system. Be as specific as you can. Here are three things I have personally addressed at various conferences:
- Heightened brand recognition. I had two different franchisees talk about how an increase in market presence helped their business. Having a peer tell them their business had quantifiably increased when new franchisees came into the territory was a game changer.
- Show specific examples of negotiated rates that have changed because of brand growth.
- Show specific examples of agreements with vendors that have a lower unit cost when thresholds are met.
Thank them. Don’t overlook this one! When a candidate tells you about a particularly informative call with a franchisee, reach out to the franchisee and thank them for sharing their story.

Training and support

Training and support should be directly engaged with your prospects. I recommend a call with department heads, individually or jointly, either before or during the validation process. This is a huge value-add for your prospect and a triple play for franchise development. First, prospects will see that you have a culture of transparency, which should lead to them being more comfortable investing in your brand. Second, by speaking with individuals who are responsible for training and support, they start to picture working with these folks, thereby beginning to take possessive ownership of the franchise. Finally, your training and support staff will see the candidates as real people with real needs, so being flexible on training class dates or making other accommodations will feel more natural internally as well. Engaging training and support in your sales process will move your candidates through the pipeline faster.

Real estate

The real estate department’s involvement in sales is a delicate balance. If candidates become too invested in real estate before franchise agreement execution, they may delay moving forward until they have found the “right” real estate. Unless preapproval of real estate is part of your model, the Real Estate department shouldn’t be reviewing potential leased sights until a franchisee is on board, so this becomes a “Catch-22.” However, I do encourage brick-and-mortar franchise organizations to have the real estate department review a candidate’s area of interest during the validation process. This serves two purposes: 1) real estate is able to get a high-level overview of the area so they start with a base level of knowledge after the franchisee signs, and 2) they may spot potential problem areas before signing. If an initial environmental scan renders few or no viable real estate options, you should address this issue and potential solutions with your candidate – before signing.

Budgeting & the C-suite

As a CDO, it is your responsibility to set realistic expectations with the folks at the helm of the company. Shutting down unrealistic development goals is a must. Franchise sales is math: budget + time to close = projections, period. Also, budget notwithstanding, a franchise organization should only grow so fast. In a “hot” industry, keeping the reins on franchise sales while still taking advantage of growth opportunities is what sets apart the true professionals.

How To Be Ridiculously Productive by Implementing Tech in Your Sales Process

Michael A. Peterson — Tue, 23 Jul 2019 08:54:56 +0000

This article about using technology in the franchise sales process was originally posted at franchising.com as the second of a series of articles deep-diving into the franchise sales process. They didn’t get the cool picture of Michael in his tech space through! You can see the first article, Nurturing Franchise Leads, here.

I wrote The Ultimate Guide to Franchise Sales about a year ago. It covers, at a high level, the entire franchise sales process. This is the second in a series of articles that will cover several of the subjects from the guide, with a narrower, deeper scope.

The Author hard at work in his tech space

When I wrote the guide, I knew that the Technology section was the least developed, which is a bit ironic for me. Those who know me know that technology is my world. I live in a smart home, and from the time I wake up (“Hey Google, read my calendar and then play the news”) until I go to bed (“Hey Google, execute ‘Sleep Time'”), I interact with tech constantly. And, as further proof that I’m a tech junkie, I’m writing this article using dictation while I have three screens open on my desktop (see associated image!). Because tech is so infused into what I do, it was somewhere between difficult and impossible to capture the efficiencies it can offer in a couple of paragraphs. I’ll do my best here to explore the topic in depth. I divide franchise sales efficiencies into two categories: the franchise sales process and franchise development personnel training. Irrespective of the category that efficiencies fall into, they are centered around using technology to provide data or execute on repetitive tasks. In the franchise sales process, technology can be used to move the prospective candidate into, and then either though or out of your process in the most expedient way possible without in any way sacrificing the process itself. Let’s look at the life cycle of a lead:

Technology in the Franchise Sales Process

Into the Funnel

Lead processing is typically full of inefficiencies. If your lead marketing manager is sifting through emails each morning, putting them into your CRM, and assigning them, then efficient doesn’t describe your process at all. Here are some simple steps to streamline this process. These steps are applicable to the 1-person sales person or the manager of a 10-person development team.

Web-to-lead

Work with your website team and lead sources to get as many of your leads as possible directly into your CRM. This is often a challenge with broker leads, but input from both website and portal leads should be automated. Depending on your CRM, you may be able to auto-assign leads based on geography, or based on a round-robin method. But even if they just go into a queue, you’ve removed the data entry piece, which gets your leads into your sales team’s hands much quicker.

[bctt tweet=”I use a scripted Google Docs program with a time-based trigger for all of my broker leads, which pulls them out of my lead-capture email and puts them into a spreadsheet for fast manual entr” username=”franchisebeacon”]

Text messaging

Set up an automated text message to prospective candidates that confirms the receipt of their inquiry, the information you received (email, phone number, etc.), invite them to schedule a call (more on this below) with your development team, and ask them to indicate if they aren’t interested. On their second and fourth voicemails, my team typically says something like this: “Feel free to text me to let me know if you’d like to schedule a call or if you’ve decided it’s not quite the right fit.”

Advanced level: The folks at Naranga have a CRM that is full of automatons, and it has a text messaging platform built in.

Auto-responder

Of course you have an auto-responder. I encourage you to add three things to it: 1) a calendar link, 2) your minimum requirements (full-time/part-time/absentee level commitment, cash on hand, and net worth), and 3) a request to indicate if they aren’t interested. You should notice a recurring theme by now: I like to give my un-contacted prospects (not including broker leads) as many ways to tell me “No thanks” as possible. The calendar link allows the prospect to schedule a call with your franchise development specialist based on their own availability. Our internal policy is to make 6 calls and send 6 emails over 4 months (“6 in 4”) before writing a lead off. At approximately 3 minutes per call-email combination, that’s close to 20 minutes per lead, assuming no one answers the phone. Before adding a calendar link, a full 50% of our initial contacts were devoted to scheduling the initial call. Those calls take another 3 to 5 minutes of unnecessary time.

Let’s do some quick math. Assume that your team follows our 6 in 4 model; moves 20% of inquiries to actual leads (namely, they show a reasonably high level of interest on the first call and are qualified); contacts 20% of the remaining 80%; and NI/NQ’s them. Assume also that these calls take 5 minutes. Finally, assume that half of the inquiries that become leads required a call to schedule the initial conversation, and that the average development specialist receives 15 leads per week. Now, let’s do the math:

Eliminate the call-to-schedule-a-call: 3 minutes x [20% of 15 leads (~3 leads)] = 9 minutes Half of the NI/NQ folks self-select out through text: 5 min x [20% of 80% of 15 leads (~2 leads)] = 10 minutes Half of the never-reached folks self-select out through text: 20 min x [50% of 80% of 80% of 15 leads (~5 leads)] = 100 minutes Minutes per franchise development specialist per week: 9 + 10 + 100 = 119 (~2 hours)

Let me be clear: I’ve personally seen a 2-hour to 3-hour reduction in lead management time per week by implementing these strategies.

Advanced level: My team uses individualized videos for a more personal engagement. They aren’t overly produced. My team members use either their laptop webcams or their cell phones to shoot the videos. At a time when the world is flooded with over-produced content and super-polished emails and marketing materials, the “real” feel of a personalized video can quickly engage a prospect. This step should follow each initial call and is also sent by text.

Through the Funnel

As you work leads through the franchise sales process, you will find most efficiencies coming down to being process-driven. We all know that when we end a call with a prospect, the next steps should be clear with them. Most development professionals also follow up with an email outlining these steps. To kick it up to the next level, include in the email a calendar link that allows the prospect to schedule the next call. This allows you to space calls out a bit more since the ball is in the prospect’s court. And it gives you an easy go-to subject when you do call: “Jim, I noticed you haven’t scheduled your FDD review yet. Are you having problems getting through the document?”

Advanced level: Automation is amazing. If you have someone on your IT team who is comfortable developing desktop automatons, your level of efficiency will grow exponentially. When someone on my team begins leaving a second voicemail for a prospect, they click the “Second Voicemail” button. This logs the call with a timestamp, sends out the requisite second email, and schedules the third call based on our lead engagement policy.

Personnel training

Franchise development is both an art and a science. No two franchise development professionals have the same sets of strengths and weaknesses, which means that no two individuals need the same training. If you use technology during the mutual evaluation process with the correct CRM setup, you should be able to evaluate the individual strengths and weaknesses of your development team. For example, if you have two franchise developers who are both closing 1% of non-broker leads and 7% of broker leads, you might be tempted to train them similarly, but technology can help you recognize that one of them is closing 50% of people who make it to validation while the other is closing only 30%. You now have insight into their strengths or weaknesses. If the first person above gets 5% of people to validation, whereas your team average is 10%, you have separate, actionable, and individualized training data for both.

Wrapping it up

I firmly believe that your franchise sales process should be infused with tech. Staying on the cutting edge is part of a development team lead’s job. And keeping current will pay dividends in the form of closed deals and saved time.[/vc_column_text][/vc_column][/vc_row]

Nurturing franchise leads based on lead source

Michael A. Peterson — Mon, 08 Jul 2019 15:03:37 +0000

Franchise leads; Meeting People Where They Are

This article was originally written for and published by Franchise Update Media, and can be seen on Franchising.com here I wrote The Ultimate Guide to Franchise Sales about a year ago. It covers, at a high level, the entire franchise sales process. Because of its breadth, it couldn’t go deep on any one subject. This is the first of a series of articles that will cover several of the subjects from the guide with a more narrow and deep scope. We’ll start with a dive into franchise leads and the interplay between two related subjects: franchise lead sources and the ways that the source affects the nurturing process.

Franchise Leads: Where They Come from Determines How You Work Them

One of my personal mantras is, “Meet people where they are.” I do my best to mentally accept where someone is in life; mean or kind, selfish or selfless, engaged or indifferent. I act on who they are rather than who I think they should be, not that I don’t expect people to change. I simply accept that right now they are right where they are. This makes my personal relationships easier, and I believe it makes me a much better franchise development professional.

Where They Come From

Franchise leads can be broken into three categories:

Organic
Paid
Broker

Of these, I will spend the most time on organics; leads that are earned rather than paid for. These leads are often misunderstood, undervalued, and improperly nurtured, much to the detriment of franchise sales.

Organics

Organic leads are by no means free. They are often the result of extensive SEO work, content generation, and brand development. They are earned by having an authoritative and useful web presence, by being a subject matter expert, and by expanding your footprint.

Web Presence

Not all franchisors believe that content creation is a suitable use of marketing dollars. After all, being a national brand with a “hometown” presence is one of the cores of franchising. The national brand, however, is just as important as the local presence. For example, pet owners often prefer local caregivers for their animals, but a local caregiver coupled with a corporate website that has detailed, fact-based information about pet care portrays authority and knowledge, giving the owner more faith in the local business. For franchise sales, a strong web presence results in stronger organic rankings for franchise searches. For instance, the search results for “best preschool” and “best preschool franchise” are obviously going to be similar. Since customer-centric advertising is typically funded with ad fund dollars, franchise development gets a boost without a budget hit.

Being the Expert

A content-rich website will present you as a subject-matter expert, and researching the content will make you one. As a recognized subject matter expert, you will receive links to your content, guest post requests, interviews, and other brand-awareness opportunities. Consider this article; as a franchising subject matter expert, I am able to share my knowledge on a national platform which will likely result in increased name recognition for my company, and by researching and contributing to the franchise industry canon I keep my knowledge current and sharp.

Franchised-Location Leads

Initially expanding your footprint is a result of, rather than a cause of, franchise sales. As your brand grows, you can be intentional about them having a symbiotic relationship. Look at your franchised locations through the lens of franchise lead generation to increase this type of lead flow. Do you produce assets (flyers, posters, etc.) for your franchisees? If so, use a small piece of the real estate to list your franchise phone number. Do your franchisees use approved car-wrap designs? Include “now franchising” under the tag line. Bag stuffers, counterspace, napkins, cups, invoices; any point of interaction with the end user that you have control of can be a source of organic leads.

Where are they?

Organic leads are the most desperate group you will interact with. They may have been looking for franchising when they found you, or your marketing may have planted the seed. Irrespective of how they came across your business, your concept specifically moved them to make an inquiry (I will contrast this later), and they likely already have a basic understanding of what your customer-facing offering is.

How to work them

First, don’t mistake enthusiasm for qualification. An organic lead may have had an “aha” moment when they saw your model or recognized the value of your “secret sauce”, but may have only a minimal understanding of the investment it takes to open a business. If you allow yourself to get caught up in their fervor and skip your standard qualification process, you may find out, after several engagements, that they are planning on getting a grant, expecting to get an SBA loan without the requisite injection capital, or intend to “find investors” once they build a business plan. Ask qualifying questions quickly. If they are qualified, seek additional information to adjust your standard benefits presentation. How long have they been interacting with your brand? How much research have they done on franchising? What do they believe are your differentiators? For example, if they are a long-time customer of one of your franchisees your consumer-facing offering is likely clear to them, but the actual business structure may not be. If they are a fan of the industry but didn’t know there was a franchise in the space, they may have no clue how the model works. In my experience, organic leads are the fastest-moving group of leads. If you qualify them correctly, the rest of the process is often significantly easier than with other lead sources because organic leads don’t approach you with a “plan” on how to investigate your brand, and you are often the only brand they are looking at.

Purchased Leads

Purchased leads include portals, print, franchise shows, and pay-per-click exposure. Purchased leads are often derided. The reason is simple; they take work, and a lot of it. Where are they? I have worked with many portal leads which didn’t have a real interest in my brand, but rather checked the box on 10 or so franchises that caught their eye. These folks are typically shocked at the flood of calls and emails. At franchise shows, 20 or 30 franchisors may scan the same prospect, often with the prospect allowing this just to get the salesperson to shut up. When you first engage expo leads, they often won’t have narrowed their search to an industry, to passive vs active ownership, or even franchising vs going it alone. How to work them In one word: relentlessly. You must engage fast, and you must continue to engage for some time with no response. The best franchise teams discuss their follow-up process in hours from inquiry, not days. If you are not one of the first 1-2 people to engage them, you will have an uphill battle to fight just to surmount their franchise fatigue. If you end up being brushed aside or ignored, consistent follow-up can get you the deal down the road. I recommend a 5-6 call engagement over a 4-6-month period before considering a lead dead. (For more on this check out our proprietary franchise sales method)

Broker Leads

According to the 2018 Annual Franchise Development Report, broker leads accounted for about 15% of units sold. Based on my experience, brands with between 10 and 100 units will find this number to be significantly higher.

Where are they?

Broker leads are engaged. They follow up, they call you back, they respond to emails. They have narrowed their field of focus through a systematic process. They know what they can afford. They are also considering other concepts, and they have an outside advisor that influences the decision.

How to work them

Understanding how to work with broker networks and individual brokers is at least as important as knowing how to work their leads. Responsiveness is critical. I always tell a coach if I see a potential issue (territory, mismatch on lifestyle goals, financials, etc.) up front, and let them know that I am still more than happy to talk to the prospect if they want me to. I give them an easy way to bump me out, while simultaneously letting them know I am more than happy to be the “also shown” if they feel its beneficial. Get to any deal breakers with the prospects fast. I work diligently to make sure that just because I don’t award a franchise doesn’t mean they don’t get a placement. When working broker leads, remember that they are speaking with 2-4 other brands, and they are, at least on the surface, a good fit for those brands as well. Above all else be timely, disclose your process, and keep the broker in the loop. Your first call should not be about pre-qualification; that is what brokers do. That doesn’t mean you can’t ask qualifying questions, as most of them are also ice-breakers. You should recognize that this individual is qualified, however, and your questions should be more about how then if.

Meet them where they are

Every franchisor should have a well-documented sales process, no excuses. For next-level lead nurturing success, however, that process must, at its core, allow flexibility. Remember, meet them where they are, not where you wish they were.