The tightening of capital markets in recent years has engendered significant changes in the traditional franchise sales process where funding was discussed as the last step. The almost complete disappearance of investment capital for small businesses has resulted in a severe decline of franchise sales for many franchisors. Only those franchisors that responded to new economic conditions with a different approach have kept franchise sales going strong. One of the biggest changes in the franchise sales process revolves around funding.

In order to sell franchises, franchisors have been forced to become more hands on about sourcing funds for their franchise candidates. The traditional broad list of preferred lenders no longer does the job. New relationships and strategies have to be forged to assist candidates through the current financing hurdles; and thus, while in the past funding conversations and education took the back burner, today they must be at the forefront.

More than ever before it’s critical to know as early as possible whether or not a candidate is fundable. This has always been a concern to some extent since franchisors don’t want to waste their time, but when the criteria for lending were changed prospective franchisees lost confidence. Fear of not having access to capital places franchise candidates in a holding pattern forcing franchisors to find ways to restore the level of confidence to keep the process moving forward. The traditional initial financial qualifications are no longer sufficient. Today franchisors and franchise candidates need to know with a greater level of certainty whether or not the latter will have the capital needed to fund the investment.

Proactive franchisors are either hiring funding strategy specialists or aligning themselves with partners to assist them with the current credit access issues. The role of these experts is to put together innovative financing packages for franchise candidates as well as to educate them about their options. Retirement funds have become a key component of these packages, but are not by any means the only source. The nature of the investment is dictated by the franchise business model and together help define the structure of the package. Only professionals with financial expertise are adept at finding ways to structure these packages according to the investment requirements and the candidates’ financial strength.

By engaging in the funding conversation early on in the franchise sales process, franchisors create a new level of confidence in candidates. Having hope restored keeps franchise candidates motivated and moving forward and franchise sales going strong in spite of the current economic conditions.

Related posts:

1. The New Breed of Franchise Candidates – Who Are They?
2. 7 Reasons to Franchise your Business
3. Are your Franchise Prospects Thieves?

The New Career Economy® is much different than what our parents’ generation experienced. Long gone is the era of working for Corporate America for 30 or 40 years toculminate our careers with gold watches and the security of retirement plans and a strong Social Security system. Unemployment rates have continued to rise in the last few years and layoffs and retrenchments have become the reality for more and more people.  Adding to these economic woes, the decline in the stock market has drained most people’s savings; and, the real estate crisis has eroded their greatest asset, in some cases leaving them owing more in their homes than they are worth. Just like nature evolves due to conditions in the environment, this grim economic landscape has given birth to a New Breed of Franchisee Candidates.

Many people have realized that their only option is to take their destinies in their own hands. They have become proactive and no longer rely on Corporate America for their financial security. They no longer trust the reactive investment market and are now becoming more proactive in finding ways to  take control of their economic future. These are savvy and educated individuals who have reached a point of frustration with the current economy that makes them willing to be more self-reliant. Tired of the ups and downs of the stock market, this New Breed of Candidate is looking to diversify their investments away from the reactive stock market into something they control.   The growing distrust of those in control of the financial markets has evolved into a renewed confidence in their own ability to generate higher returns than leaving their financial future in the hands of others.

The current economy has certainly redefined the term “job security.” Yet, these challenging economic conditions add fear to an already frightening process. Making important economic decisions during these uncertain times creates anxiety even in those individuals who habitually have beenmore risk tolerant; and of course, it increases the hesitancy of people in general. Traditional sales tactics and processes that put pressure on candidates to make decisions and move the process along are a sure bet to backfire. This New Breed of Candidates demands a different experience.

If you want to award franchises during this economic environment the pertinent questions are:

• Are you structured to attract this new Breed of Candidate?

The New Breed of Candidates wants more control over their lives. They are willing to take responsibility and educate themselves. If you are not using technology to streamline your franchise award process, you will never be able to attract these individuals.

• Are you using the same franchise sales process you’ve used for more than a decade?

If you haven’t changed your franchise awarding process to address the fear gripping emotions of the current economic landscape you won’t be able to engage the New Breed of Candidates. Processes that worked in the past have become totally obsolete. You need to learn how to improve your ability to “coach” individuals through the natural fear that occurs in our current environment.

• What do you need to do differently to create the different experience that the new breed of candidate demands?

You need to understand the consequences of the economic environment in which we live.  You need to learn to understand the New Breed of Candidates, their needs and expectations. You need to forget what worked in the past and seek new strategies that leverage technology to educated candidates. You need to find ways to remove the barriers created by the lack of funding and coach your candidates through financial pre-qualifications. You must start the discussion about funding a franchise much earlier in the process. You MUST stop selling franchises and start awarding them.

Related posts:

1. Talking Funding First – Why a Reversal of the Traditional Franchise Sales Process is Critical
2. Challenges of Selling the First Franchises
3. Looking for Franchise Leads? Start With Your Website

Franchising today is highly competitive.  More and more companies are choosing to franchise as their method for expansion.  This makes it critical for you to differentiate your franchise offering.  In today’s economic environment, you must make your franchise stand out so you can attract and recruit qualified franchisee candidates.

Differentiation of your franchise offering is twofold.  On the one hand, you must be different from other opportunities within your industry.  However, you also must seek differentiation when compared with opportunities in other industries.

1. Know your competition and how you stack up against other concepts:

When entering the franchise world, many small franchisors do not see the need to learn much about their competition.  However, if you do not know what others offer, there is little chance that you can be different.  Even when you are indeed different, you will not be able to effectively communicate how your opportunity is unique if you do not know what others are like.

It is important that you learn how your business model is viewed against competitors in the same industry and against other similar models.  In other words, what makes you stand out and why would someone want to invest in your franchise versus another.

There is a lot to learn when you franchise your business, and sometimes the learning curve can be overwhelming.  Yet, taking the time to research and learn other opportunities pays off in many ways; and being able to differentiate your franchise offering is one of these gains.

2. Know what makes you unique:

Once you know what others offer, you need to find out what it is that makes you different from them.  This can be difficult for a new or a small franchisor especially when compared to similar businesses.  Within the same industry, franchisors sometimes need something outside the business to be the differentiator.  This is because within the same industry the services your competitors offer and how they do it, the complexity of the business, the legal restrictions they face, the demands for their services, and the market they serve are fundamentally the same as yours.

You may not have a million dollar plus advertising campaign or a proprietary state of the art operating solution of a competitor, but perhaps you have other unique differentiators.   As the founder of your franchise company, you may have written the operating manual from your successful experience and developed procedures that expedite service and increase profits.  Or, perhaps you assist each franchisee in developing a marketing plan or in acquiring the first x number of clients.

Differentiating your offering starts with a brainstorm session in which the following two sentences are completed:

“We are the only franchise company that…”

“Our franchise opportunity …”

Involve as many employees as possible.  Give yourself and them total freedom. Put judgment aside and invite creativity.

For example:

“We are the only franchise company in our industry to provide you with your first 10 clients.”

“Our franchise opportunity does not require inventory of any kind nor does it require a retail location since we work at our clients’ place of business.”

3. Know how to communicate your uniqueness and your value:

Once you know how your opportunity is unique, you need to learn how to communicate its value to your prospective franchisees.  It is not about bringing up what your competitors do or do not do; it is about learning to break out of the pricing trap and demonstrate your value.  This is what we call commoditization.    Commoditization is almost a total lack of meaningful differentiation in products or services.  It’s about telling your prospects how the uniqueness of your opportunity will benefit them and what value it has for them.  It also means that you need to be ready for any possible objection.

For example:

“Starting your business with 10 clients means that you will learn the business right away and cash starts coming in from day one.”

A prospect may come back with:  “What happens after that?  How will I get more clients?” You need to be ready to answer in a way that creates a competitive advantage and deters the fears of the prospects.

For example:

“We teach you our selling cycle step by step and we accompany you to your first 10 presentations”

4. Know the “pain point” of your potential franchisees:

Knowing what gets your prospects excited as well as what engenders fear in them puts you ahead of the game.  It gives you a competitive advantage.  It also helps you incorporate into your system and presentation the information your prospective franchisees need to know.

Common coaching topics with new franchisors deal with their difficulty in understanding how franchisees think and see the world.  For example,  being entrepreneurs by nature, franchisors are much more risk tolerant than franchisees and thus many franchisors do not see the need to create a safe environment for franchisees.  Franchisors that do understand and offer this safety have something unique and desired by most franchisee candidates.

5. Know what you can deliver and stick to that:

When talking about the uniqueness of your franchise opportunity, do NOT over promise or over sell.  If you can not deliver, it will come back to haunt you in future franchise sales.  Truthfulness and honesty can get more results than an air-filled promise that will never be fulfilled.

For example:  “We would love to be able to advertise nationally; and in time, we will.  We are just not there yet, and probably will not be for years to come.  However, we have a winning local campaign and we teach our franchisees how to develop the local presence and name recognition they desire.”

To grow a franchise company you must understand the need to create and communicate competitive advantages to your franchisee candidates.  It is just smart business sense.  So, what makes your opportunity unique?  Grab a pen and start defining it.

Related posts:

1. How to get the first 5 franchisees.
2. I Can Hire an Attorney to Write the Franchise Agreement; Why Do I Need a Franchise Advisor?
3. Looking for Franchise Leads? Start With Your Website

This week I was catching up with Dan Rogers and Allie Mims founders of SEO Komodo. Every time I talk with these guys I learn a lot. We got into the topic of how to generate franchise leads in today’s environment and they had some awesome points that I want to share with you.

Franchisors should look at their websites as their virtual storefront.

Listening to this statement was an “aha” moment for me. I don’t believe I ever thought about websites this way and doing so makes so much sense. I have seen some poor websites of new, emerging, and even mature franchisors. Their quality operations were definitely not reflected in their websites. I wonder how different they would look if had thought about them as their virtual storefronts. What if they had asked themselves the question: Does my website give my customers the experience I want them to have when dealing with me?

Franchisors should have engaging content so as to improve their SEO rankings and thus attract and capture more qualified leads to them.

But, what is engaging content? It is information that grabs readers’ attention and which affects them emotionally. It is more than reporting facts; it is about telling stories. Some examples of engaging content include:

• Franchise Opportunity: How is it different from other franchise or business opportunities? What is the lifestyle, the customer base, the potential? Is this an owner operator opportunity or does it allow an investor role? How will this translate into lifestyle?
• Franchisee Profiles: What type of person is attracted to the opportunity and why? Is it lifestyle? Is it a mission? Is it potential? Is it the customer base? What are the stories of current franchisees? What jobs did they come from? How were their personal lives influenced by the opportunity?
• Testimonials: What are franchisees saying about the business? What are customers saying about the products or services?

The key to engaging content is to write a good story that connects with the reader’s emotion — a narrative that has similarities with their dreams, values and desires, and with which the reader can identify.

Franchisors need to continuously build their email list and send regular electronic newsletters.

Being in front of warm or even cold candidates is a step we tend to forget about, especially when our efforts are focused on the more serious ones. Yet, someone who is warm or even cold today can be very hot tomorrow. If we don’t keep in front of them someone else will. Collecting the emails of leads and sending regular newsletters is an important step in the franchise sales process. Make sure your newsletters have an “opt-out” and also a “forward to a friend” feature. The first one is required by law and the latter is just a smart move.

Dan and Allie know how to get traffic to your site. They know about franchising and always go above and beyond for their clients. I know; I am one of them. Want to learn more? Give them a call at 305-515-8598. Also visit their website and read about their Abrakadoodle franchise case study.

Related posts:

1. How to get the first 5 franchisees.
2. Is your website optimized to capture people searching for franchise opportunities?
3. Why should you consider franchise brokers to grow your network?

• Does this franchisee think that the business will bring him happiness?
• What are the conditions that made him so miserable in his previous job?
• Can the same or similar circumstances manifest in this business? How?
• What is he running away from?
• What is he running towards?

I think we tend to be too quick to grasp on to the misery a prospect shares with us as the “pain” that will get us closer to the sale of a franchise. We miss the point that if we don’t really learn more about this “pain” instead of just using it, it can show up again once the prospect signs up; and this time it can lead him or her straight to failure. We also seem to fail to see that if we don’t address these issues, they may interfere with the selling process and appear in the form of the fear that prevents a person to move forward.

Franchise recruiters and others executives involved in the franchise sales process must learn to really listen and ask the critical, even if sometimes difficult, questions right from the beginning. These issues must be further investigated when the franchisee joins the system whether or not they were asked during the sales process.

Success can only be achieved in a state of mind conducive to it. Coaching candidates and franchisees to gain awareness of these states is a must if we want them to succeed.

Related posts:

1. Are your Franchise Prospects Thieves?
2. Are Your Franchisees Able to Absorb the Information They Need?
3. What are Your Franchisees Afraid of?

However, their gifts don’t stop at just their decision to invest in the newly formed franchise; other significant contributions early adopters tend to make include:

• Providing you with tremendously valuable experience as you learn to be a franchisor and giving you the opportunity to refine your business.
• Having higher emotional commitment to the franchise concept.
• Exhibiting a stronger desire to contribute and to be involved in helping other franchisees be successful.
• Being the best spoke people for the organization.
• Showing a need for newer and better ways, demanding innovation and providing important feedback to you.

Early Adopters indeed have a lot to offer you and your company. However, they also get many unique benefits. These include:

• Paying less for the franchise since franchise fees tend to go up as the number of franchisees increases.
• Choice of territory, and sometimes even a larger territory than future franchisees.
• Complete individual support that can’t be provided as the system grows.
• Personal interaction with the founder and senior management that is unlikely to be available to the same extent to future franchisees.
• Recognition for their contributions and greater opportunities for involvement.

The benefits Early Adopters receive have to be commensurable with the gifts they provide you; otherwise the relationship will suffer.

Early Adopters usually have the following traits and characteristics in greater degree than future franchisees. They tend to:

• Be more entrepreneurial and visionary
• Take more risks
• Have stronger personality
• Be more assertive, independent and outspoken
• Seek higher levels recognition
• Demand innovation

Although these traits make Early Adopters great partners, they may become a real issue for you as your company grows unless you set some initial boundaries. Make sure you recognize the contributions of Early Adopters. Don’t take them for granted. This is true for all franchisees, of course, but critical for Early Adopters. Keep them as your advisors but set yourself as the leader otherwise you will not be able to manage the relationship.

As a senior manager of many franchise organizations I thoroughly enjoyed working with the Early Adopters. Their enthusiasm was contagious and their loyalty was unequal. These great attributes also made them powerful influences with the rest of the franchisees, so making sure they were content was a vital aspect of managing the relationship. Frequent communications were always a must.

What are your experiences with Early Adopters?

Related posts:

1. Are your Franchise Prospects Thieves?
2. 3 Things Your Franchisees Expect From You
3. Zors, Zees and other Franchising Lingo

Selling franchises, especially for a new franchisor, can be tricky. You need to find the balance between providing too much and not enough information. It is critical that you create and follow a systematic approach to your franchise sales process. Paranoia and over enthusiasm can both have the unpleasant consequences normally created by extremes. A system will keep these emotions in check.

People who want to steal your idea simply do not see value in what you offer as a franchisor. They normally have an overinflated ego and believe they can do your job better than you. This experience is more common for new franchisors whose brands are still building. Prospect with dubious intentions tend to be more entrepreneurial and probing in nature than most franchisees. They ask many questions and demand numerous details.

Watch out for questions similar to the following:

• How did you choose this location?
• How did you get it built?
• Who are your suppliers?
• What are your inventory levels?
• Where did you get the equipment? How much did you pay for it?
• How do you get your customers/clients?
• How do you make this or that (referring to a product)?

These are all good questions and you should answer them in a general manner. However, the more the prospect presses you for particulars, the less you should offer. Make sure that you reinforce the fact that the details will be covered during training and go over the level of support you provide to your franchisees.

People truly interested in your franchise opportunity are more likely to be concerned with how you are going to train them more than about how it is really done, at least at this point. The questions people ask, more than the statements they make, reveal a lot about them. Listen to your prospects carefully and pay attention at how they ask their questions. Stay within your presentation and do not just follow their lead at all times; yet make sure that you address their concerns as clearly as possible without revealing your trade secrets. Remember is all about balance.

Working from the premise “if they want to steal my concept, let them’ is arrogant and can cause you many unnecessary headaches. As a franchisor you have the responsibility to protect your concept not only for you, but for all your present and future franchisees. Creating and following a franchise sales process is the best way to ensure this protection.

Do you agree?

Related posts:

1. Are You Listening or Merely Hearing What Franchisees and Prospects Are Telling You?
2. 5 Tips to Creating an Effective Franchise Operations Manual
3. What Gifts do Early Adopters Franchisees Offer?

It is true that brokers and similar referral sources charge large commissions, but they also sift through many, many leads that most likely you would have ignored as tire kickers. They truly earn those commissions.

Before you dismiss the idea of using brokers to supplement your franchise recruiting efforts, review your objective. Is it to net the most money you can from franchise sales or is it to grow your franchise network? I know what you’re thinking; you’re probably saying: it’s BOTH. But, before you steer away from using brokers, consider the following 3 points:

• The franchisees that brokers bring would probably not have come to you through other methods.

I think this is one of the most important arguments for considering using brokers. People who tend to seek the assistance of others normally won’t use multiple approaches; that is, in general, they will let the broker guide them and won’t search on their own. And, even if they do, what are the chances that they will find your opportunity among the thousands of franchises out there? Additionally, most people who seek the guidance of others tend to be good at following a system and listening to others. These two characteristics make them excellent franchisees.

• Franchise fees are meant to recover your initial investment and recruiting costs; they are not profit sources.

Many franchisors forget this important point and turn franchise recruiting into their main profit center. This is a dangerous trap because it leads to disregarding the franchisee profile and granting franchises to any prospect who has the money. This lax approval process leads to failing franchisees which in turn ends up affecting recruiting. It becomes an ugly and expensive vicious circle.  Franchise fees do help every franchisor with cash flow, but profits must come from other sources for the franchise to be a sustainable enterprise.

• Once you have established a strong relationship with brokers, leads will flow without much effort.

The key to getting the desired results from brokers is in building strong relationships. There is a heavy initial time investment in getting to know them and helping them understand your franchise opportunity. However, once these relationships are established, maintaining them is as easy as checking with old friend.

Don’t prevent your system from growing as much as it can just because you want to hold on to the money. Have a multi-prong approach to franchise recruiting and add brokers to the mix. Successful broker networks include: The Entrepreneur’s Source (a coaching organization), FranNet, FranChoice, and MatchPoint. There are many independent franchise brokers as well.

Related posts:

1. Is a marketing plan to recruit franchisees a waste of time? You decide!
2. Looking for Franchise Leads? Start With Your Website
3. Are your Franchise Prospects Thieves?

You franchised your business because you wanted to have franchisees and a network of locations either regionally, across the country, or even globally. Now, do you have a plan to get you there? Do you know which roads you need to take? Do you even know exactly where it is you’re going?

A marketing plan to recruit franchisees does not have to be lengthy, fancy or elaborate, but it should answer the following questions:

1. How many franchisees do you want to have in 3 months, 6 months, 9 months, a year, and every year thereafter for the next 5 years?
2. Who do you want as a franchisee? See previous post about the Franchisee Profile. Do you have one? Is it written?
3. Do you have a preference of where your franchisees should be located? If so, are there any specific states you rather not go to? Do you want to have a franchise nework that grows regionally, or one that grows across the country? Is international growth something you’ll consider? If so, under which conditions will you expand outside the US?
4. How many people would you have to talk with before you can grant a franchise? In other words, what is your “sales” funnel? Most franchisors have to talk with 100 people to grant 1.6 to 2 franchises. There are many variables affecting this ratio, such as the total investment required, the type of concept, the viability of the business and its popularity as well as your experience in dealing with franchisee prospects. Obviously, the more experience you have, the higher your closure ratio will be and vice versa. How many people would you have to talk with every month to achieve the goals specified in (1) above?
5. Where will your leads come from? And, how much will you have to spend on marketing to get to the required number of leads?

The 2008 Annual Franchise Development Report published by the Franchise Update Media Group predicts that this year, 2009, franchise recruiting budgets will be spent as follows:

• 47%  in the Internet
• 17%  in Print Media
• 13% in Trade Shows
• 13% in Public Relations
• 10% in Other (Social Media, Craigslist, Blogs, and Videos)

They further predict that in 2009 franchise leads will come from the following sources:

• 66% Internet — down from 77% for 2008
• 16% Referrals — up from 14% for 2008 (Referrals are franchise brokers and consultants)
• 3% Print Media — unchanged from 2008
• 15% Other (Social Media, Craigslist, Blogs, and Videos) — up from 6% for 2008

Do you want to grow your franchise company? Take the time to create a simple plan that answers the previous five questions. Write down, act on it, monitor it every month and revise it as needed.

Related posts:

1. Social Media: How does it apply to franchising?
2. How to get the first 5 franchisees.
3. Are You Listening or Merely Hearing What Franchisees and Prospects Are Telling You?

Press releases can be (and should be) used to announce anything relating to your company that’s of interest to the public and to the media. There must be a story for the press release to work; otherwise it won’t be picked up by the media and you’ve wasted your time, effort and money.

I always knew that press releases were great tools, but until this year I was unaware of how powerful they really are. In trying to increase the visibility of a client, I suggested they write a press release and use PRWeb to distribute it. At that point (Oct. of 08) if you entered the name of my client’s company in Google, the listing appeared only once and low on the page.  After only three press releases in less than a year, they now have 26 pages of references to their website. Not bad for a less than $2000 investment for the writing of the releases and the fees to PRWeb for distribution!

The more references you have about your company, the greater the brand awareness you create. Further, the greater number of references increases your ranking in search engines; and a higher ranking means that you’ll be more likely to attract people who are searching for franchise opportunities to your website.

Remember, press releases work; but, they must include the right key words so that search engines will pick them up and they must tell a good story so that the media will embrace them. Opening a location is okay news but what the location means to the community is better news. 

Do your own experiment. Use press releases and watch your ranking and references grow. You will be amazed.

Related posts:

1. How to get the first 5 franchisees.
2. What Gifts do Early Adopters Franchisees Offer?
3. Social Media: How does it apply to franchising?