5 Steps to Differentiate Your Franchise Offering

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.