Franchise Update, 2008 Issue 1

by Steve Olson
| It’s Closing Time
Ordering Out for Sales?
Franchisors are changing their tune on outsourcing development

■ Tidbit Franchise Update’s annual Lead Generation and Sales Compensation Survey finds the average annual recru _of _{franchise was} _$165,0itment budget _s _{surveyed 00} _in _2006.

Stiffer competition with 1,000 new concepts in four years, elusive buyers, and lead generation challenges, have prompted franchisors to seek help outside their own walls. Fifty-three percent of franchisors reported not meeting 2007 sales goals, according to Franchise Update’s Annual Franchise Development Survey.

To illustrate this frustration, I received an email the other day from an overly anxious startup franchisor raffling off a free franchise to jump-start their development. Wow! A bit overboard, yet it does reinforce the need to get franchises up and running.

Options are available and franchisors can explore alternative recruitment models to drive their expansion. Whether you are amidst a turnaround effort or are a young franchise company, you now have choices for creating a high-performance franchise sales program. The type of business, fran-

“You now have
choices for creating
a high-performance
franchise sales
program.”

chise program, corporate re-
sources, leadership philosophies,
and other extenuating circum-
stances will influence which road
to take. Here are your choices:
1) Do it yourself – This is still the
most popular approach, but it re-
quires the ability to free yourself
from prior thinking that may no
longer work in the current market. For
startup companies, I recommend the
founder seek guidance from a franchise
sales consultant. Their success stories,
burning passion, and vision can excite po-
tential owners to be part of their ground
floor opportunities. Recruiting the first
franchisees is a valuable learning experi-

ence. But this is a transitional role, as the founder must shift attention to the growing organizational and support demands.

2) Hire an employee – Through industry referrals or franchise headhunters, there is some great talent available. Be open-minded and flexible. Don’t necessarily turn down a qualified candidate who doesn’t want to move to your headquarters. Thirty-four percent of companies now employ remote sales personnel, according to the Franchise Development Survey. And don’t overlook your inside staff. Sometimes potential talent may be right in front of you. 3) Outsource to a sales professional – “Hired guns” can frequently get you off the ground much faster. There are freelance sales pros who take on a few franchise clients and are willing to represent them on a temporary or long-term basis. This immediately provides you with seasoned talent who should produce sales for you once they build a pipeline of prospects. You can bring sales in-house eventually should circumstances prove more favorable.

4) Outsource your sales department – Specialty sales organizations can take over your entire recruitment program. However, the better firms are highly selective. Your concept must have “legs,” a good support team, and franchisee satisfaction. Recruitment budgets and goals must be reasonable, and management committed to supporting their sales efforts.

5) Contract franchise sales brokers – Franchise brokers or “consultants” have successfully spurred dramatic franchise growth for both new and mature concepts. These networks generate and screen qualified prospects, educate them about franchise ownership, and introduce them to your concept. You pay a fee only when you sell one of their client candidates. A quite hefty amount I may add, but it could be worthwhile since you risk no money up front.

Today’s franchising world offers a wealth of sales and marketing intelligence with development and staffing options that were nonexistent 20 years ago. With a viable concept and good franchisee satisfaction, you can successfully grow your franchisee system using inside and outside resources. Deciding the right way for you is always the multimillion dollar question!