In-House Franchise Sales, Good Idea?

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