Facing New Franchisees

Signing new franchisee contracts, expanding the business at a fast pace looks quite exiting to everybody looking at franchise business. It is definitely exiting. However only franchisors know how many long hours they have invested in finding potential franchisees, how hard it was to land every new sale and how much more work is out there in keeping their franchisees happy and successful.

Franchise business, as easy as it seems, is not for everyone. Certain people just do not fit to be franchisors while others cannot manage to keep up with the effort required to get into the business and develop it into a prosperous empire.

One of the most difficult challenges every franchisor faces is convincing prospective franchisees that opening their franchise unit is a lucrative opportunity. The situation is complicated additionally by numerous Federal and state regulations that restrict franchisors to discuss certain topics with their franchisees prior to signing a franchise agreement. Here are a few of the questions a potential franchisee may ask you.

Frequently asked questions by potential franchisees and how to answer them.

• What profits I may expect after signing up with your franchise? Be very careful if you are asked such question as well as any question regarding money, revenues, profits or other financial matters. Federal and state regulations strictly forbid discussing potential revenues and profits with potential franchisees. Make sure your staff is well trained in this respect as failing to comply with franchising laws can end up in thousands of dollars in fees and even some personal penalties.

• What kind of support you provide your franchisees? Your prospective franchisee is looking for security. It is normal that they are concerned about the training and support they are going to receive. Do not underestimate this question as whether or not you will sign a contract may depend on your answer. Explain in details what training programs are available for your new franchisees and their staff and what support you are going to be providing them with along the way. Hand over some informational materials for further reading and leave a contact number for any future questions.

• What future equipment upgrades are you planning to have? Your prospective franchisees are aware of the fact that you have an ongoing fee for upgrades and improvements and want to know what they will get in exchange for their money. Even if you do not have such a fee, a future franchisee may still want to know what they will expect in terms of upgrades and in what timeframes. Transparency is the best policy here, even if you do not have planned any technological or equipment upgrades in the near future.

• Why I need to pay an initial franchise fee? Initial fees are, in eyes of people, a great deal of profit for franchisors. As a franchisor you are more than aware of the fact that this is not true. If you have an initial franchise fee, explain that it is there simply to cover your expenses for getting each sale.

How to Market Your Franchise Business

A franchise business cannot become successful or grow rapidly unless it is marketed well. No matter how good your products or services are, no matter how good operational systems you have in place, no matter how devoted your management team is, you will never succeed if you do not employ a good marketing strategy.

There are many ways to market a franchise business. The strategy that you are going to implement should suit your business type, match your goals and reach your prospective franchisees. Here are some tips that can help you reach these objectives.

Franchise marketing tips.

• Determine who your prospective franchisees are. Similar to determining who the prospective buyers of a product or a service are, you need to determine who is likely to be interested in your franchise. There are many different types of franchise buyers and you cannot target them all. Segmenting the market and finding your marketing niche will help you a lot when you start preparing your marketing plan. Do this well in advance so that you can be 100% ready when you launch your franchise.

• Work on your credibility. Regardless of how good your marketing strategy is, it will not bring you a lot of franchisees if you do not manage to make your business credible. There are many factors influencing business credibility – how long you have been into business, how large your company is, what the quality of your products or services is, do you have superb customer service practice and so on. Make sure these are reflected in every single part of your marketing strategy and advertising materials.

• Do not underestimate the power of advertising. There are many different channels of advertising. You can promote your franchise by distributing brochures, attending industry exhibitions, posting magazine and newspaper ads, creating advertising for television and radio, advertise online. You should not ignore even a single marketing channel. Of course this doesn’t mean that you should use all possible advertising channels or at least not at the same time. Which marketing strategy you will employ will depend on your prospective franchisees, your goals and your marketing budget. You should also research how your direct competitors are advertising and see if you can do better.

• Internet. Internet is presenting franchisors with unlimited marketing opportunities, often costing just a fraction of traditional advertising. Put some effort into exploring these opportunities – create a nice company websites, contribute content to industry related web portals or advertise online.

• Word of mouth. Definitely one of the most powerful marketing tools is word of mouth. A happy and successful franchisee is worth thousands of dollars into advertising. Try to keep positive and good relationship with your unit owners and you will quickly see a lot of applications for new franchises. You should also be able to supervise closely how your franchisees are running their units to make sure each one is keeping up to the standards of your name.

Keeping Franchisees Happy – the Secret for a Successful Franchise Business

Every successful franchise business stands on a successful relation between the franchisor and the franchisees. This relationship is largely dependant on the way the franchisor has set their business but it is also relies on the communication between the parties involved.

Positive and constructive communication is one of the fundamentals for any business partnership. Unfortunately in many occasions franchisors and franchisees alike fail to keep a nice and fruitful communication channels. After this happens it is a matter of time when problems will start to arise. Strangely enough, a large amount of arguments and difficulties may be easily predicted and overcomes before they have even happened. All thanks to communication.

How to overcome this, at a first glance, easy challenge? The best way to overcome them is by seeking the roots of the problems. Here are some tips that may help you.

Franchise – franchisee relationship communication.

• Do not let yourself down the slippery road. Many franchise owners fail to notice problems until it is too late. And even than, they fail to recognize the real reason for the troubles they are experiencing with a certain franchisee. The first call to action is to get in touch with their legal advisor and look at the franchise agreement about ways to terminate the contract. And let’s face it – this is not a positive turn around for neither of the sides involved in the process.

• Step into your franchisees shoes. Many of the misunderstandings arising between franchisors and franchisees are actually “provoked” by franchisors themselves. A common reasons for conflicts is when the franchisee thinks the franchisor should do something but the franchisor doesn’t The actual “doing” may be just about anything – from increasing advertising to reducing the royalties on some products. Whatever the case you, as a franchisor should be proactive. Keep the communication line open, detect problems early note and real. It doesn’t mean you need to agree with everything your franchisees want, but at least you will be able to address the issues early enough and settle one way or another.

• Money troubles. Definitely the most frequent arguments between franchisees and franchisors are related to money. When a franchisee doesn’t seem to take off to start making money or when a franchisee stops to be profitable, franchisors simply pick up the phone and call their layers. Of course it would be quite unpopular decision to keep an unprofitable franchisee however you may want to look for the reasons why this is happening. Better yet, you may want to be able to detect that money problems are raising on the horizon for any of your franchisees. Saving a franchise unit, after all, means more profits for you.

• The flat line. There are cases when, whatever you do, no matter how proactive you were or how good the communication was between your franchisee and you, the business relationship has to come to an end. Make sure you are able to recognize these cases and close the unit down with minimum drama.

Challenge Your Franchisor Problems

Every day thousands of franchise owners experience the same problems and worries. Some of these challenges are pretty easy to overcome while other require a serious approach and hard work.

Detecting a problem is always the first step required to successful solution. Many franchisors fail here – they are either unable to detect the real cause for the problem or don’t address it in an appropriate way. Here is a selection of some of the most notorious franchisor problems along with the most appropriate solution for each one.

A list if franchisor problems and how to challenge them.

• Royalties payments. Many franchise business owners find it really difficult to control their royalty payments. Usually they need to way until the end of time, see the sales information of each store, calculate the royalties and than wait for payments to be made. If there is a large number of units, checking them all may really become problematic. A good way out of this is to try systemizing and unifying things as much as you can. Start to use software that will help you compile sales data and track payments.

• Communication. Often franchise owners feel their franchisees are reluctant to communicate effectively. Even if they can sense the problem, it is somehow impossible to open a good line of communication with the franchise unit owners. This problem can quickly lead to a business disaster. The solution is quite simple. You should train all your personnel to be able to detect some of the most common problems a franchisee may experience and approach them for a discussion and advice. If this doesn’t work you should be able to step in and open a conversation with any of your unit owners. Another approach is to use the services of a franchise counsel. These services have becoming very popular and they can really help when communication issues appear.

• Poor sales. If you detect that the sales of any of your franchisee have dropped, you need to step in and take action right away. There may be several reasons why this particular unit is not performing. The reason may be connected with competition, with poor customer management, poor product quality and so on. While the competition factor is somehow hard to tackle, the other two reasons actually point to incompliance with the franchisor operations manual and your business practices. Don’t jump to any conclusions before you reach the root of the problem. For example if your franchisee has lowered customer service, you need to try to understand what led to this situation rather than just shut the unit down.

There are much more potential problems a franchise owner could face. Rather than seeking ready made solutions, franchisors should learn how to prevent problems from occurring and how to tackle the issue in the best possible way. The strongest weapons in battling problems are the ability to detect problems early on, to teach your team to take action as soon as the problem arise, help all franchisee unit to perform as best as they can.

« Previous Page