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How to Sell to New Franchisees (for New Franchisors)

Stan Friedman – President, Founder, RetroTax Shawn Spencer –COO, Fran Systems Worldwide Michael St. Jacques- CSO, St. Jacques Marketing Matt Friedman-CEO, Founder, Wing Zone

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Our Memories Of Days Past…God gave us memories that we might have roses in December. ~J.M. Barrie

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It’s Not your Dad’s Old Buick

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Introspectively…

• Who are you• Where do you need to be developing• Who do you need as a franchisee and why?• Shawn Spencer will enlighten you…

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Then What?

• Target Marketing• Proactively Generating Leads• Fishing in “Unique Ponds”• Michael St. Jacques is your navigator…

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After who and where… it’s How!

• Having a process and following it • Managing Expectations• Discovery Day• Due Diligence• Closing the Deal• Matt Friedman will guide you

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DISCUSSION AND Q&A

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How to Sell to New Franchisees(For New Franchisors)

Learn how to get it right the first time and develop your system with a rock solid foundation.

Shawn SpencerPartner

Fran-Systems, LLC

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The Foundation

How do you get the foundation Right?• The keys-

– Internal and External Evaluation– Franchise Structure– Franchise Systems

• BEGIN WITH – the SWOT Analysis

Internal External

SWOT• Grasping EXTERNAL dynamics

enables smart choices that increase chances for success.

• Understanding INTERNALcapabilities defines what you can realistically do.

• This is the foundation for your roadmap.

• Overview - Internal

A review of internal strengths and weaknesses relating to key areas of the company should be undertaken BEFORE YOU SELL FRANCHISES or move to the next level of sales from Mom and Pop Franchisees to Multi-unit Developers.

There are 6 main factors to consider in assessing a franchisors ability to reach national prominence & segment domination:

• What is Your Position In the Industry? Franchise Industry Trends- Franchisees are not Making Investment Decisions Based on “Sex Appeal” Alone.

Directly or Indirectly Prospect Decisions Will Increasingly Relate to These 6 Dimensions.

• Franchise Structure- Avoid System Breakdowns

THE TOP 5 REASONS SYSTEMS BREAKDOWN

• Departmental disconnects (people and tools)• Lack of internal systems and processes• Lack of data/information to team• Lack of accurate data (to analyze)• Lack of knowledge

Franchise Systems - Launch Your Systems

Source: Fran-Systems: © Copyright Fran-Systems, LLC All Rights Reserved 2008

What you Wrote

What you Sold

What they Learned

What they signed

What they should be

doing

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What does this mean for sales?• Performance comparisons are becoming more frequently used• Prospective franchisee decisions are becoming more business

driven• Gaining competitive advantages becomes the challenge

• 779 concepts have started franchising in the past 3 yearsSource: FranData, State of Franchising, Franchise Update Leadership Conference, October, 2007

The Stronger Systems, The Stronger The Franchisee

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Sales: Proactive Versus Reactive

Reactive: The candidate comes to you

Proactive: You go after the candidate

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Sources of Reactive and Proactive

REACTIVE PROACTIVETelephone inquires Sourced databasesE-mail inquiries Targeted networkingFrom the unit Market researchTradeshows Strategic alliancesBrokers and Portals Referral programs

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What are Franchisors Doing? What is the breakdown used?

• Reactive 90%

• Proactive 10%

Source: Fran-Systems Market Research 2007.

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How is it working for most?

53% report 2007 sales are below goals

20% report that they are exceeding goals

Source: Steve Olson, Franchise Sales Trends, Franchise Update Leadership Conference, October, 2007

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The Difference in the MethodsREACTIVE (2007) PROACTIVE

PR 12% PR 60%Internet 45% Tradeshows 10%Print 18% (not exhibiting)

Tradeshows 12% Databases/info. 10%(exhibiting) Special events 20%

Source: Steve Olson, Franchise Sales Trends, Franchise Update Leadership Conference, October, 2007

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PROACTIVE SALES PRACTICES1. Perform DMA Reviews. (Designated Market Areas- Neilson)2. Determine strategy/plan and stick to it – no dartboard method

growth! 3. Align PR with DMA Reviews4. Determine where your candidate goes – what tradeshows/events

and why5. Create referral programs with other franchisee groups6. Create events that work (hotel tours and cover letters do not

work)7. Create deals for multi-unit franchisees8. Teach individual franchisees how to become multi-unit

franchisees

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IN SUMMARY

Learn how to get it right the first time and develop your system with a rock solid foundation.

• Evaluate your concept both Internally and Externally• Define Your Systems and Structure • Establish a Plan and Process for Proactive Sales

A new franchisor selling to new franchisees must have each of the above to avoid future problems!

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UP NEXT:

A Proactive Lead Generation Process

Michael St. JacquesChief Strategic Officer

St. Jacques Franchise Brand Marketing

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A Proactive Lead Generation Process

Michael St. JacquesChief Strategic Officer

St. Jacques Franchise Brand Marketing

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Before starting any program ask:

• Who am I talking to?• What am I talking to them about?• Why should they care?• Where do I find them?

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Who am I talking to?

Characterize your target prospect• Geography• Financial• Business Inclination• Operational Orientation• Behavior/Personality

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What am I talking to them about?

What’s important to them• Goals• Sources of Stress• Self actualization• Values

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Why should they care?

Demonstrate how your system addresseswhat’s important to them.

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Why should they care?

Far too many communications speak from:“Here’s what I want you to know about me.”

Instead of answering

“How can we work together to help you get what you want?”

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“I have no franchisees, not even a pipeline, how do I determine my

‘Who’, ‘What’, ‘Why’ and Where?”

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Research

Process by which you collect objectivedata about your target audiences.

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Research

An Objective Data Set diminishes theSubjective nature of decision-making

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ResearchObjective data set informs

communications:

BrochureWeb site

AdvertisingSales PresentationsPublic RelationsLead Screening

Among other forms of outbound communications.

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Research

Objective data set informs communications:

And also informs where to place communications for generating leads

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Media Selection Rules of Thumb

Media choices should be:

1.Focused on next development

area(s)

2.As targeted to prospect

profile as possible

3.Exclusive

4.Multi-channel - concerted!

5.Measurable!

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Communications are now relevant!

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“The 5 minute Lead Generating objective,

strategy, execution plan.”Step 1: Objective: Geography & # of

Units

Step 2: Objective Data Set

Step 3: Establish Sales Process

Step 4: Develop Go To Market Strategy & tactics

Step 5: Execute

Step 6: Analyze

Step 7: Refine/Repeat in next market(s)

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“The 5 minute Lead Generating objective, strategy, execution plan.”

1.Many costs non-repeated once developed

2.Efficiency/ROI improves from market to market with reduced costs/increased learnings

3.Proactively recruiting higher quality franchisees yields longer term, higher recurring revenue stream

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Market tactics can range from very sophisticated to very basic.

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“I give away free ice cream cones at community festivals, local radio stations/publications and

town hall. After 16 years, I’m still amazed at what people will do for free ice cream.”

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Point is:Proactive lead generation means getting

targeted communications directly into the communities you’re looking to be a part of.

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Like any transaction, franchise sales governed by fundamental economic principle:

The Balance of Exchange:

Value > Cost – Exchange happens

Value < Cost – No exchange

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The Balance of Exchangefor Intangible Product:

Exchange happens when

Perceived Value > Aggregate Cost

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In Marketing Context:

Perceived Value = Brand Value

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Brand Value > Aggregate Cost = Franchise Sale

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Franchise Brand Value Secret

Inextricable link between:the perceived value of your brand

and it’s perceived strength as an opportunity.

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Build Your Brand

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Next:

Matt Friedman, CEO WingZone®

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How to Sell to New Franchisees(For New Franchisors)

Matt FriedmanCEO and Founder Wing Zone

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Learn how to properly manage expectations –yours, your prospects and your team’s

What comes first?

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Your ExpectationUnderstand what that is and how to manage it!

1.Defining the motivators on both sides – franchisor and franchisee

2.Creating a process to manage behavior – internally and externally

Critical to Success in Franchising is Understanding the Franchisor/Franchisee Relationship Dynamic

BALANCING YOUR PROCESS FROM THE BEGINNING

Managing Managing Expectations is Expectations is

Crucial to Crucial to SuccessSuccess

• Expectation Sales DimensionHow the SALES process is handled has a great impact on behaviors

Prob

lem

atic

Opt

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PURCHASE MOTIVATION

Following the SALE, how a Franchisor immediately interacts with a new Franchisee sets the tone!

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PURCHASE MOTIVATION

MOTIVATION TO SUCCEED

Expectation Outcome- We Reap What We SewIf the expectation is not set at the beginning, it is hard to turn around behavior and “churn”will begin.

Prob

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atic

Opt

imal

Your Prospect’s Expectation

The Franchisor/Franchisee

Disconnect

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Your Team’s Expectations

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IN SUMMARY

LEARN HOW TO PROPERLY MANAGE EXPECTATIONS

• Hire Level 5 People – “driving the bus – not riding the bus”• Define and set the culture with your team first• Establish a process that manages behavior – internally and externally• Set expectations during the Sales Process• Create an Orientation Process – right after the sale

A new franchisor selling to new franchisees must have each of the above to avoid future problems!

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Q & A