How do you find the right franchisees?

There are two important aspects of this question. The first is how do you find franchisees and the second is how do you find the right ones.

The PricewaterhouseCoopers Franchise Sector Indicator is an annual survey of franchisors with more than 20 franchisees. For each of the last 3 years franchisors have told us that their key challenge in growing is finding suitable franchisees. This doesn’t mean that they can’t find them but it does mean that they have to be smart and innovative about how they do it.

Finding the right franchisee is not that different to finding the right customer. Sales theory tells us that for a customer to buy from you:

• there needs to be a matching of their need with what you offer
• what you offer needs to compel them to buy; and
• they need to trust you.

Where finding the right franchisee differs from finding the right customer and is more akin to finding the right employee is that the franchisee needs to match your values and principles as they will be part of your organisation for a long time.

In order to attract customers, you would no doubt research who your typical customer is, what they want from you, where and how they shop, how they make their buying decision and what your competitors do. You would then design your marketing strategy and your sales process around this. Your approach to finding the right franchisees should be no different.

However, very few franchisors adopt this approach. Many of them just follow what others do. They in effect take a “shopping centre approach” to recruiting franchisees – they go where others are and hope that the traffic will create opportunities for them.

Whilst for many this can be a successful approach, it isn’t necessarily strategic or relevant and often leads to disappointment and confusion as to why franchisors can’t get enough good quality franchisees.

Successful franchising involves an attitude where everyone is either a potential customer, franchisee or investor. Hence marketing strategies to all stakeholders or potential stakeholders in your business need to be integrated.

The other common pitfalls in seeking the right franchisees include:

• continuing to do what had proven successful in the past  and not seeking to continually change and improve your process and approach. Best practice involves continually understanding your potential franchisee market and adopting recruitment processes that are relevant to it. There must be a continual review, assessment and action methodology rather than just set and forget mentality
• arrogance in relation to dealing with prospective franchisees via a failure to regard them as potential partners in your business, with the result that good candidates drop out of the process
• trying to do it yourself when you don’t have the skills or time to do it properly
• meeting prospective franchisees in an uncontrolled environment such as a cafe or public area. 
• setting unrealistic criteria for the preferred franchisee. Sometimes the criteria is a wish list of the perfect business person, sometimes it based on the traits of existing successful franchisees or store managers. What is often missing is a realistic assessment of whether people matching these criteria really exist in the numbers that the franchisor would like. If they don’t, then the franchisor should consider whether they should relax some of the criteria or, perhaps more importantly, change the franchise business model so that it does not need the elements of the criteria that are hard to find.
• Processes and practices that are unprofessional such as seeking the same information on numerous occasions, failing to keep appointments, no ongoing communication with the prospective franchisee, and failure to set expectations and explain the recruitment process adequately.
• Outsourcing the recruitment process to a third party provider without understanding the underlying drivers and issues associated with finding the right franchisees with the result that you don’t know how to assess the third party’s performance.
  

Franchisors tell us that the majority of their prospective franchisees find the franchisee through the internet or word of mouth from existing franchisees and suppliers and the majority of franchisors are investing heavily in their web and social media strategies in order to not only building their brand and attract customers but also to attract franchisees.

Best practice is to let all stakeholders know as often as possible that you have franchises available, whether this is via your web site, tweeting, napkins in your cafe or on the side of your car.

There is also an increasing trend to look within – encouraging franchisees and providing them with the skills they need to own and operate more than one franchise unit successfully, encouraging s head office or franchisee staff to become franchisees and also incentivising existing franchisees to recommend the franchise to their own network,

In summary the key to finding the right franchisees is to be strategic and remain adaptive and agile to the market. Know who you are after, assess the most appropriate way to market to them, and design your sales approach to get them to buy - just like you do with your customers.

Once you have found the right franchisee and they are excited about what you are offering them, there is then the challenge of closing the sale and getting them on board as a franchisee. This is a whole topic in itself that we will talk about another day. However, a critical component of this is the interaction that prospective franchisees will have with your existing franchisees as part of their due diligence process.

Having happy franchisees in your network that tell a positive story to prospective franchisees with regard to the level of service and support that you provide to them is a major plus to your recruitment process.