NFA Franchise Consultants
2Jan/18Off

In-House Franchise Sales, Good Idea?

Effective Franchise Sales: The In-House Sales Person

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

In-house Franchise Sales Person

In-house Franchise Sales Person, Pros/Cons

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 and November posts, 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 nor do they want to hire an outside sales representative.  The next option is hiring an in-house franchise sales person.  Here are the pros and cons of this alternative.

One of the pros for hiring an in-house franchise sales person is the control factor.  As a new franchisor, it is comforting to know at any point, you can go to your franchise sales person and immediately know the status of all prospects.  The success of a new franchise program often hinges on the ability to control the franchise sales process.

Another reason to consider an in-house franchise sales person is you can base the compensation package not only on the closing of a franchise sale but also on the success of the new franchisee. This adds an accountability factor to the franchise sales person’s responsibly to close sales with top quality candidates.

A third reason to consider an in-house franchise sales person is he or she will devote all of their efforts in selling your franchise exclusively.  An outside broker represents many franchise companies.  You should get substantially better results if the franchise sales person concentrates only on your franchise company.

There are also cons to utilizing an inside franchise sales person at the outset:

  • There is a substantial cost of hiring an effective franchise sales person.  As a new franchisor, a franchise sales person’s compensation package may not be affordable.
  • An in-house franchise sales person may generate too many sales too quickly.  Remember, you must have the infrastructure in place to enable you to provide the promised assistance to any franchises you sell.
  • Often, new franchisors want to close only one to three franchise sales the first year to allow them to streamline and polish their systems.  It is hard to justify the expense of an inside franchise sales person if only one to three sales are the target.
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…

1Nov/17Off

Franchise Sales Strategy

Franchise Sales Strategy: Success In Franchising

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

Franchise Sales Strategy

Franchise Sales Strategy

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 September post, you will realize the importance we at NFA place on planning your franchise sales strategy.  It is critical to set your franchise sales goals and then create a plan for reaching those goals.

Along the way, you must be able to measure the effectiveness of your franchise sales efforts.  You must also be able to identify any problem areas in your franchise sales program so that these areas can be improved.

So, you have created your franchise sales plan, set your goals and decided how to reach your goals.  The next area you must address is who is going to spearhead your franchise sales efforts.  Typically, there are three options:

  • 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

Examine the pros and cons of each option.  First, determine if the franchisor company is owned by people with sales ability.  The owners must also feel comfortable with and be available to implement the franchise sales program.  If they meet these three criteria, it can be advisable to utilize them, especially at the outset, because:

  • Often with a new franchisor, the owners are selling prospective franchisees on themselves since the new company does not have an operating history.
  • The more time spent with a prospect during the franchise sales process, the better the owners can judge if this is the person they want as the first franchisee.
  • The new company can keep the bulk of the initial franchise fee at a time when it is cash poor.

However, if the owners of the new franchise company are not available, able or willing to fill the franchise sales role, it may be best to either work with a reputable franchise broker or to hire a franchise sales person.

More on franchise sales strategy next time…