NFA Franchise Consultants
1Dec/17Off

Effective Franchise Sales Continued

Effective Franchise Sales Continued: Success In Franchising

Stephen S. Raines
President, National Franchise Associates
Atlanta-based Specialists in Franchise Consulting & Franchise Sales Strategy

Effective Franchise Sales

Effective Franchise Sales

In my over three decades of experience as a franchise consultant, working in franchise development and franchise sales, I am often asked, “What makes one company succeed in franchise sales while another doesn’t?”

Rarely is there a single reason for success in franchise sales. Here, I will examine one of the many factors that can help Franchisors create a winning franchise sales strategy.

If you looked at my October post, you know that typically, there are three options for who is going to spearhead your franchise sales efforts, including:

  • Using the franchise management team (usually the owners of the franchisor company) as the franchise sales force
  • Retaining an outside franchise sales representative, such as a franchise broker
  • Hiring an in-house franchise sales person

Let’s assume that the owners/managers of the franchise company decide they do not want to handle franchise sales. The next decision is whether you wish to retain an outside franchise sales representative, such as a franchise broker. Here are the pros and cons of this option.

Here are the reasons to consider retaining a broker to generate franchise sales for your new franchise company:

  1. The broker has knowledge of franchising, including what is involved in franchise sales.
  2. Most franchise brokers work on a commission basis. In other words, their services do not cost the franchisor any money until franchise sales occur.
  3. Most franchise brokers represent several franchisors at the same time, so they may have a number of “qualified” prospects in the franchise sales pipeline.

There are also several negatives to using franchise brokers:

  1. The commission a franchise broker charges typically ranges from 33% to 50% of the Initial Franchise Fee. This percentage can amount to $10,000 to $20,000 or more. Some brokers even demand a portion of the royalties franchisees pay the franchisor.
  2. Legally, brokers are the franchisor’s agents. The franchisor is responsible for any misrepresentations made by the broker, even if the franchisor didn’t know about such statements or specifically prohibited the broker from making the claims.
  3. Franchisors, especially new franchisors, should carefully study all aspects of their franchise sales program. Handing off the sales responsibilities to a broker removes the franchisor from knowing everything about their franchise sales program---what works and what doesn’t work. It is essential that all franchisors stay involved in the franchise sales program---especially during the critical first few years of operations.

More on franchise sales strategy next time…

5Oct/17Off

Franchise Sales Effectiveness

Franchise Sales Effectiveness: Success In Franchising

Stephen S. Raines
President, National Franchise Associates
Atlanta-based Specialists in Franchise Consulting & Franchise Sales

Franchise Sales

Franchise Sales

In my over three decades of experience as a franchise consultant, working in franchise development and franchise sales, I am often asked, “What makes one company succeed in franchise sales while another doesn’t?”

Rarely is there a single reason for success in franchise sales. 

Here, I will examine one of the many factors that can help Franchisors create a winning franchise sales strategy.

There is an old saying in business, “Fail to plan, plan to fail”. Nowhere is this adage truer than in franchise sales.

If you do not structure your franchise sales efforts, you will quickly lose control.

Remember, if your first few franchisees fail or are unhappy, it will be virtually impossible to sell more franchises.

We cannot stress strongly enough the importance of focusing on the success of your initial franchisees.  Part of this success is selling to the right people.

When planning your franchise sales strategy, ask yourself the following questions:

  • In what geographic area do I want to sell my first few franchises?
  • How many sales do I want to close my first year?  My second year?  My fifth year?
  • What qualities and skills will my franchisees need to succeed?
  • Will my target prospects change over time and, if so, how?
  • How can I market most effectively for franchisees?
  • What are the steps in the franchise sales process?
  • Who is responsible for each step?
  • How will we conduct each step in the franchise sales process?
  • How will we get from one step to the next in the franchise sales process?
  • If a desired prospect loses interest, how can I jump start the process?
  • How will I qualify a prospect before closing?
  • Under what circumstances should I say no to a prospect?
  • What is the most effective way to present my company’s story and benefits?
  • In the franchise sales process, how do we position the company against any competitors?
  • How can I judge the effectiveness of my franchise sales and marketing programs?
  • How can we track the sale from first point of contract to closing?
  • Once we close a sale, what steps should occur next and in what order?
  • How much time will we need to devote to getting a new franchise open?
  • After it opens, how much time should we allocate to assisting the franchisee?

As you can see, a casual approach to franchise sales is likely to fail.  The more carefully you plan out the franchise sales process, the more effective you will be both in franchise sales and the overall success of your franchisees.

More on franchise sales next time…