How to Sell FranchisesSpeaker:

Tony Fitzpatrick 

Managing Partnerwww.franchiseyourbusiness.ie

Initial franchise fee This is a once-off buy in payment and it is

important to price it right. Too low and the prospect worries about

value. Too high and he can’t afford it. Don’t expect to make a huge profit on the

franchise fee. But don’t make a loss either.

Initial franchise fee

The fee should cover the cost of enfranchising that person.

You are not in franchising to make a quick kill. You are creating an income stream.

Think about value! Brand name and the earnings potential.

The value of the brand depends on the size and reputation of the franchise network.

The more valuable the brand the higher the fee

Initial franchise fee Make it reasonable for the earnings

opportunity being offered.

You can always increase the price.

Dropping the franchise fee is to be avoided.

It might be perceived as being worth less than other brands.

If they pay less to buy in, they are less invested in their business.

You’ll be starting every franchise relationship at a loss.

Negative effect of a low Initial Fee

Other fees

Management fees can be a fixed monthly fee, or a percentage of revenue, or both.

You may also want to charge an additional monthly fee (usually 1% or 2%) of the franchisee’s revenue to put into an Advertising Fund.

The Ladder

People thinking of buying a franchise gothrough several layers of interest. This chart shows the level of progression:

4. Commitment3. Active interest2. Passive interest1. Curiosity

The Ladder…

The chart is inverted because it is a ladder the prospect must climb.

Don’t waste time with the curious! Move them up the ladder—or move on yourself!

Move ‘em up or move ‘em out! Move them from one level to another by

asking questions. Do they understand how franchising works? Have they ever run their own business

before? What interests them about this particular

franchise? What do they want to achieve?

And… Can they afford to develop and sustain

themselves in a new business?

Franchising is not for everyone

You are looking for entrepreneurs.

Energy, commitment and financial capability.

When they stop climbing the ladder it’s time to stop wasting your time

What should be in your prospectusYour prospectus (Disclosure Document)needs to explain what is included in your

offering. For example: Company history and track record Term of the agreement Investment required Obligations of both parties

What should be in your prospectus Territory Use of Website Business Plan preparation Raising finance Training and ongoing support

Who are you looking for?Every franchisor looks for “People People”

with:

A business background Ability to work well with others Good organisational and leadership skills Determination and resilience Strong desire to achieve financial success

Good appearance and personal credibility Stable personal circumstances and support

of family Lots of energy and enthusiasm, and Can they sell?

In addition, these attributes are important:

How do you find them? Your business has to be promoted. Don’t wait

for prospects to find you! Promote it through:

Franchise section on your website Specialised “directory” web portals Newspapers and industry magazines Social media

http://www.franchiseyourbusiness.ie/

http://www.franchiseyourbusiness.ie/

The follow up Leads are precious and cost money to

generate. Don’t ignore them! Prospects should be followed up within 48

hours. Delays can cause annoyance. Leave the prospect too long and he’s either

changed his mind or gone to the competition.

The process1) Phone call Do they measure up to the profile of your

ideal franchisee? Are they articulate? Do they sound enthusiastic? What is their business background? Why did they apply? Can they afford this franchise?

2) First meeting

Are they someone you could trust Would they represent your brand well? Sign confidentiality agreement before

divulging confidential information.

The process…

Choose carefully

Chose carefully as they can make or break your business.

Recruiting is all about relationship building. You are going to be working closely with them for the next five years at least.

Franchising is not easy and it’s not a career that suits everyone.

What the prospect expects from you Transparency Leadership Sight of franchise agreement and Operations

Manual Meet the principals Financial projections Access to other franchisees Ongoing mentoring and support

Finally…

A franchise is not an impulse buy. It’s a relationship-building process, and several meetings are usually required before a prospect will make a decision.

Remember the five cups ofcoffee rule!