Have a Nice Day
The evolution of discovery day; or should we say judgment day?
Somewhere in the annals of franchising, an unknown franchisor first came up with the concept of a Discovery Day. It had a nice, non-threatening ring to it. Prospects who might scare easily were put at ease by this getting-to-know-you day.
And many franchisors sold it like that. “Bring your spouse but leave your checkbook at home,” was the oft-repeated mantra. And since many franchisors would provide disclosure documents at Discovery Day, the salesperson might even throw in for good measure, “We couldn’t take your check even if we wanted to.”
The sales process involved building value around the Discovery Day itself—what the prospects would see, who they would meet, what they would get (often, the then UFOC) and what they would learn. The Discovery Day was then choreographed to be part sales process and part true prospect qualification—with the closing somewhere down the line.
Enter electronic disclosure.
Today, prospective franchisees often demand to see disclosure documents early in the sales process. By disclosing in advance of Discovery Day, some franchisors no longer need to wait out the 14 days (or 10 business days) that once made closing at Discovery Day problematic. As any franchise salesperson knows, time kills deals. And with this understanding, franchisors are turning to a different Discovery Day process in order to improve their overall close rates. For these franchisors, the purpose of Discovery Day is solely to close the sale. Some franchisors have aptly renamed it “Decision Days.”
In this case, the prospect is told to follow the franchisor’s sales process from the first call. Done right, the process that culminates in a Decision Day will take the prospect by the hand and guide them through a sequence of steps, often with a defined order and predetermined timeline. Once the prospect is pre-qualified, they are led through a series of steps that they are told will allow them to determine if the franchise is right for them. Often, the prospect is told up front that if all his or her questions are answered and both parties agree, the prospect will be invited in to the franchisor’s headquarters for a Decision Day, the prospect will do the final due diligence. And, at the end of this day, they will be expected to make a decision.
While the steps themselves and their order vary, they often include interviews with various members of the franchisor’s staff, reviewing the FDD, calling franchisees for references, doing market research, developing a business plan, obtaining financing, and obtaining a legal review of the FDD. The process aims to systematically qualify the franchisee, answer any questions, identify and overcome objections, and move the process toward a decision.
One advantage to the Decision Day approach is that it readily allows the franchisor to incorporate best practices into their sales process in a systematic way. And while some salespeople argue the process is designed for the franchisor’s convenience to the detriment of some prospects, others argue this systematic approach provides the franchisor with good insight into a franchisee’s ability to follow the franchisor’s systems.
Advocates of Discovery Days point out that while Discovery Day close rates will be lower; it allows the franchisor to see more candidates. Especially for the newer franchisor with less negotiating leverage, this “easier sell” may close more sales. The flip side, of course, is that bringing in more people to Discovery Day will also mean more management and staff time.
Likewise, franchise concepts targeting area developers or more sophisticated investors may find these candidates will reject the idea of any formal Discovery Day—especially a Decision Day that required them to jump through hoops just to get in the door.
Discovery Day advocates also note that while it is easier for the prospect to walk away following their Discovery Day, it is also easier for the franchisor to walk away from a candidate who does not appear to be a good fit. They also balk at the high-pressure, Charlie Hustle approach, believing it will cheapen the brand by catering to the less sophisticated. And, they will point out, if this streamlined approach reduces the time a franchisor spends with their candidates, it may do more harm than good.
For franchisors purely interested in the sale, Decision Days certainly see a higher percentage of closings than Discovery Days. Still, since Discovery Day practitioners meet with more total prospects, there is no statistically significant indication that a greater percentage of total leads will ultimately become franchisees.
Another recent development in the evolution of Discovery Days has been the changing nature of franchisor views on the issue of cost reimbursement. In the “good old days,” the mere thought of splitting expenses was considered heresy. Paying one’s own way to Discovery Days was considered to be a qualifier.
In today’s more competitive marketplace, however, more franchisors are offering to split expenses, and, in some cases, to fully reimburse the franchisee for travel and lodging expenses. This T&E money often will be accounted for in the marketing budget, as these franchisors are essentially “buying” the opportunity to tell their story to financially qualified candidates.
Again, there are no right answers. If, for example, a non-reimbursement policy contributes to the perception of exclusivity of a particular brand—and in the process increases franchise sales—then the choice is easy to make. If, on the other hand, this policy leads to a 10 percent increase in the number of Discovery Day attendees without a change in the close rate, a franchisor can do the math. And for most franchisors who anticipate any significant improvement in Discovery Day attendance, the decision will not even be close—even if some occasional freeloaders looking for a free trip slip through the cracks.
Of course, this analysis relies on a franchisor’s ability answer several key questions. Is there any brand cachet in not reimbursing? Will reimbursing some expenses increase the number of Discovery Day attendees? Will any of these incremental attendees ever buy?
Unfortunately, there is no statistically significant data to answer these questions.
The more things change . . .
Of course, some things remain eternal in the Discovery Day process. Best practices among franchisors who host Discovery Days start with a well-choreographed process designed to put the franchisor’s best foot forward while being certain to qualify the prospective franchisee.
But sometimes franchisors are blind to what they see every day and don’t realize how much room for improvement there is. Just as you would be well-advised to mystery-shop your franchise sales process, having a third party mystery-shop a Discovery Day will often bring problem areas into sharp relief. ”
The process deserves regular and thorough scrutiny—and the ability to adapt to change—if we are to survive and evolve.
Mark Siebert is the chief executive officer of the iFranchise Group (www.ifranchisegroup.com), a franchise consulting firm with consultants who have worked with 98 of the nation’s top 200 franchisors. Mark can be reached at 708-957-2300 or at email@example.com.