Not being able to sell franchises can be disconcerting. But selling a franchise is entirely different than selling a pizza, preparing a tax return or doing whatever a business normally did before a company enters the franchise industry is entirely different than selling a franchise to people who are making major life-changing decisions. In the new business of operating a franchise company, new skills and abilities are required. To succeed, a company that enters the franchise industry must make adjustments and acquire new-found expertise, either by hiring expensive outside personnel or enrolling in Franchise Marketing 101. The first training module – Franchise Marketing 101 – teaches the critical organization and management differences as well as comprehensive techniques to sell a franchise. The second training module – Developing A Franchise Organizational Structure and Management Infrastructure – shows how to organize departments and people for results and maximum effectiveness in a franchise company.
Copyright 1982-2009, Kevin B. Murphy, B.S., M.B.A., J.D. – all rights reserved
In franchise marketing, key considerations for all new franchise companies include how to sell a franchise and adopting the proper media plan, schedule and budget. Only the cream of the crop should be allowed to join the franchise network. Eliminating applicants at the entry stage is far easier than waiting for inevitable and costly problems later on. An examination of franchise networks plagued by troublesome franchise owners (who, not surprisingly, ripen into franchise lawsuits) shows a lack of planning and attention to this relatively simple concept.
Given the unlimited personal liability risk inherent in franchising, companies neglecting this important concept, or those using franchise brokers, are simply asking for trouble. Before marketing efforts begin, your company should adopt a customized Franchise Lead Processing System that includes instructing key management personnel in:
(1) defining the profile characteristics of best prospective franchise owners;
(3) developing effective interviewing procedures, marketing materials, sales techniques and checklists;
(4) using a series of tests, psychological questionnaires and other measures to ensure that inappropriate candidates are disqualified before joining the franchise network;
(5) detecting (and then avoiding) red flags that arise in the franchise marketing cycle;
(6) conducting franchise Discovery Days; and
(7) adopting the appropriate media plan, schedule and budget so tens of thousands of dollars are not wasted on ineffective advertising.
One client engaged our firm to develop a more effective franchise marketing strategy. They didn’t seem to be generating enough quality leads and were anxious to develop the new franchise network. It turned out their franchise marketing strategy was rooted in traditional strategic thinking – trying to outperform established rivals and capture a share of existing demand. By considering an alternate, blue ocean strategy we identified a market segment of potential franchise buyers they never considered. By adopting this blue ocean strategy, they were able to create new, uncontested market space and franchise sales grew accordingly. Sometimes the only way to beat the competition is to stop trying to beat the competition. Called positioning or differentiation, it is critical in any business and especially the business of franchising.
For details on the franchise marketing workshop we offer, visit the Franchise Budget page of this website or click on the email link at the bottom of this page.
Another reason resources are wasted is many new franchise companies fail to adopt the proper franchise organizational structure as well as develop the critical franchise management infrastructure. Like a football team, a franchise organization is made up of people who must be properly organized to be effective. In most cases, money and lack of proper strategic planning are the culprits. Lacking funds because they overpaid the franchise development consultants, the emerging company can’t afford to hire a qualified, six-figure individual with competence in running a franchise company and managing franchise relationships. Or, a “why do we really need to do that – we can do it ourselves?” mentality prevails.
One franchise company mistakenly assumed they could do everything on their own, sold a dozen franchises, and when extra funds were available, hired a franchise marketing person to . . . sell more franchises. Unfortunately, franchise marketing skills have nothing to do with managing franchise relationships, and selling too many franchises too soon is a classic franchise marketing pitfall. Franchise relationship issues inevitably developed due to the firm’s lack of sensitivity and misguided direction. The seeds of franchise revolt fermented. Left unchecked, it culminated with the disgruntled franchise owners collectively hiring a franchise litigation attorney to seek a solution to their problems. The result: all franchise owners successfully broke away from the franchise network, leaving the franchise company in ruins. Tragically, this franchise owner revolt was 100% preventable.
Our firm offers comprehensive training in how to adopt the appropriate franchise organizational structure to operate the franchise entity. Also included as part of this training is identifying franchise management skills and incremental staffing requirements for the expansion effort. We also offer advice in how to substantially reduce annual auditing costs. This training module helps new franchise companies navigate the complexities of operating a franchise company and dealing with ongoing franchise issues without having to hire expensive, in-house franchise personnel. And just part of the savings in one year’s annual auditing costs more than pays for the cost of the entire training. In addition, ongoing advice on an as needed basis is also available via our Franchisor Mentor program. See our Franchise Services page for further details.
This how to franchise a business series continues with Franchise Compliance Programs.