A successful franchise development strategy is one that will help attract new franchisees to your company, not scare them away. But a key component in getting them to invest is knowing why people hesitate to buy a franchise in the first place.
So, how do you walk that fine line in attracting the right franchise owners?
Last year, Curious Jane conducted a proprietary attitudinal segmentation study to learn more about the motivations of franchise owners. We surveyed more than 500 franchisees to better clarify the beliefs, perspectives, preferences, pain points and aspirations of franchise owners. The survey results have a 95% confidence level, a high level of confidence.
Our survey’s respondents were candid about what was going on in their minds, researching franchise companies they were interested in, and in this case, what turned them off.
Bang for the Buck
If you want franchisees to invest in you, you must be willing to invest in them.
In our survey, 73% of those responding said a franchisor’s high costs and fees caused them to hesitate to buy into a brand. So, what can a franchise company do to be a more attractive investment?
Sure, a franchisor must make money, and it’s understood there are going to be royalty fees and other costs associated with buying into a franchise. It’s part of the business. But what’s the value your potential franchisees are purchasing?
High franchise fees may be justified. Just make sure that if you are going to charge a high fee, you’re worth it and are delivering on what you promise.
Franchise companies need to make it clear to their prospective buyers what exactly they are getting and show its value. Reasonable franchise fees are to be expected, but a quick check of your competition’s fees can help you make sure you’re in line with your specialty. This isn’t the time to get greedy.
Also, consider how your franchise fee and royalty fees are used to provide benefits to your potential buyers. Do you offer training? How about ongoing support, website access or marketing assistance? These are all benefits that can convey your company’s worth to potential buyers.
Getting into the franchise business requires a significant personal investment. Often, this means franchisees aren’t able to enter the business until a later stage in their life. What can a company do to attract younger entrepreneurs to ensure the future of their franchise brands?
One way to make your franchise more attractive to entrepreneurs who need more cash is to provide greater financing options through lending partners.
Disgruntled Franchisee Representation
While you can’t make everyone happy, if you’re looking for a franchisee representative to talk to candidates about buying into your brand, we suggest finding one who is happy and embodies what you seek in the ideal franchisee.
Franchisees who have had a bad experience ranked second in our survey, at 64%, for reasons why someone would hesitate in buying into a franchise. In the validation process, you can bet that your franchisees will be candid about their experiences with your brand. This is an easy way to make sure it’s a positive process.
Additionally, setting clear expectations up front can help you down the road. As potential franchisees work their way through the process, make sure you pair them with one in your system who is relevant. Don’t pair a franchisee in a major metro area with one who seeks to open a rural location. Also, if you hold franchisees who have been in your system for a long time to different standards, make sure that is communicated up front or pair them with someone else.
Knowing what is expected of them as a franchisee should be communicated before moving into the more advanced stages of the investment process.
Turn a Frown Upside Down
The business world is rarely all sunshine and roses. Disagreements happen. Messages are miscommunicated. Mistakes are made. Life happens.
How a company positions itself in negative situations can have measurable impacts when it comes to franchise sales. Having a negative public reputation can have a significant impact on your franchise sales, according to 63% of those who responded to Curious Jane’s research.
So, what can you do about it? Managing your brand’s public image should be a priority. If it isn’t, get on it.
A good public relations strategy is essential. Social media, blogs and an effective SEO strategy allow you to tell your brand story. Earned media coverage stemming from press releases and pitches about accomplishments, features and events also helps portray your company in a positive light.
Incorporate third-party validation when possible. Be sure to leverage national rankings and lists, like Entrepreneur’s Franchise 500 or Franchise Business Review’s Best Franchises for Women. Placing the badges on your website and using them in ads, social posts and anywhere else that is relevant carries great weight with potential candidates seeking to invest. This third-party validation shows outside companies agree you are as wonderful as you say you are.