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How to add new franchisees in a down economy


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A well-dressed young couple came up to the Franchise Times booth during the recent Franchise Expo South in Miami and asked about the status of a well-known franchise company.

"We wondered if they were out of business," the wife said, "because we called their franchise development office several times, and no one ever called us back."

"You must have been calling the wrong number," I said. "In this economy, franchisors are hungry for good leads. They always have someone call qualified candidates right back."

I was so wrong! Yes, most franchisors today are starving for prospective franchisees. According to recent surveys, 72 percent of franchise companies are not meeting their expansion goals. At the IFA Convention in San Diego, seven workshop sessions and 29 roundtable discussions were directly devoted to franchise sales. And in one session, titled "How Do You Stack Up on Lead Generation and Franchise Sales?," I learned that an astounding 58 percent of franchise companies surveyed failed to return phone calls from qualified candidates within 48 hours.

It's too late to apologize to that couple, but it's not too late for franchisors and area developers to improve their own recruitment programs. Here are two dozen franchise sales tips taken from presentations at the recent franchise convention in San Diego that you can implement today:

Respond quickly to all telephone and Internet inquiries

Assign someone in your sales department to contact all leads within 24 hours. Be sure to record the caller's name, address, phone number and e-mail address. If you can't afford such a staff person, use a lead-qualifying service to screen all callers or Internet contacts and to set up appointments for your salespeople.

Mystery-shop your system frequently, by having someone pose as a qualified candidate. If your mystery-shopper, like the couple at the Expo, never hears back, you have a serious problem.

Optimize your Web presence

Your main Web site should allow potential leads to get to your Franchise Opportunities site immediately. That site should broadcast the benefits a franchise with your company offers: Create your own destiny! Spend more time with your family! Earn a healthy profit! Your Franchise Opportunities site should also include:

  • Testimonials from successful franchisees
  • Compelling photos of franchisees interacting with customers
  • The step-by-step process a candidate follows to become a franchisee

Get a handle on your franchise sales process

The average amount of money a franchise company spent in 2008 to sign on a new franchisee was $8,200. Are you spending more? Less?

Where are your best leads coming from? If it's recommendations from other franchisees, increase the incentives you pay for referrals.

How many unique visitors to your Web site become leads? Actually purchase a franchise? You should track those numbers.

Keep track of other metrics, such as how long each step of the sales process takes, how many total leads it takes to get one sale, how many leads come from each venue (expos, print ads, online ads, brokers, etc.), advised Jeff Sturgis, vice president of sales & development for Fantastic Sam's in Beverly, Massachusetts.

"If you know you have to spend $7,000 to get one franchisee," Sturgis says, "and you need 100 this year, you'll know to budget $700,000."

Motivate your sales team

"Your salespeople are stressed, because they're not doing as many deals and they're earning less in commissions," said Geoff Hill, president of Cinnabon in Atlanta. "You don't want to lose a great person. In the last six months we took our whole sales team to a two-day sales boot camp. We had an upsurge in sales right afterwards."

Keep them calmed down. "When lead generation dries up, salespeople have a tendency to lunge at prospects and scare them away," said Gregory Longe, founder and managing partner of Automotive Franchise Systems in Warren, Michigan.

To keep your best salespeople, you may have to cull out the under-performers, said Stephen Joyce, CEO of Choice Hotels International in Silver Spring, Maryland. "Give stronger people more territories," Joyce said.

Try out non-traditional recruiting methods

"Network," said Lynette McKee, vice president of franchising and new business development for Dunkin' Brands in Canton, Massachusetts. "Figure out who you're really trying to attract, then go to (or offer to speak to) association meetings where you will meet them. Build relationships. Do the same with lenders."

Include information about your franchising program in all public relations materials, even press releases aimed at consumers.

Use social networking sites to promote your brand, said Brian Miller, president of the Entrepreneur's Source in Southbury, Connecticut. Post on Facebook; send videos to YouTube; contact people on job posting boards and advertise on Craigslist.

Obtain customer lists from current franchisees and send them e-mail blasts, said Sturgis. "Electronic marketing can track who opened your e-mails and who clicked through to your Web site."

Try television ads in certain markets.

Work with developers and landlords, said John Wuycheck, vice president of development for Kahala Group in Scottsdale. "Put a banner on an empty storefront that says, 'Own (our brand) here.'"

Understand what prospective franchisees are going through

People today are afraid, said Miller. "They're holding their money close and want to wait and see what will happen. Try to change their perceptions. Do you believe that working a job is going to give you the lifestyle you want? You owe it to yourself and family to see what alternate career options exist for you."

"New franchisees today require a lot of hand-holding," said Joyce. "You have to walk them through the process."

Although money is tight, do not discount your franchise fee, said Wuycheck. "It will cheapen your brand and it's unfair to your existing franchisees." Offer other incentives. "If someone needs a nudge," said Sturgis, "we'll stock their store with free products."

And a final tip from Ken Walker, CEO of Driven Brands in Charlotte, North Carolina: "The best way to attract new franchisees is to keep your existing franchisees in business."

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