I often tell business owners that they can have the best operating model in their industry, but if you can’t attract franchisees, there is no point in franchising.
Business is competitive, and franchising is no different. As the two most franchised countries in the world per capita, Australia and New Zealand are the best markets to launch a franchise in. But this also means you will have some competition to attract franchisees. It's getting harder and harder for a business to have a truly unique value proposition, so to stand out in the crowd, it will be important to sweeten the pot!
In this episode, I will cover some of the ways you can make your franchise more attractive than the competition…including well-established brands;
1. Keep the barrier to entry as low as possible
That doesn’t mean you have to give them away, on the contrary, it is important that franchisees have ‘skin in the game’. It means don’t build unnecessary costs into the franchisee's set-up, such as insisting they purchase the latest Toyota Hilux when a 3 – 5 year model in good condition will do. In terms of their equipment and tools, create a ‘must have’ list and a ‘great to have’ one. This way, franchisees can build up to the ’great to have’ package as their revenue increases. Often, specialist tools and equipment that aren't used regularly can be hired.
2. Make your model attractive through practical support and operating efficiency
Do a little research and find out what support your competition provides to franchisees and do it better or offer more. Franchisees will look for support options that allay their concerns about being in business for themselves. If they know administration isn’t their strong suit, a franchise that provides support in his area will be appealing. You can also offer varying support packages to different franchisees depending on what they want, franchisees pay for the cost of this support and, down the track, can opt to start doing it themselves once they feel more confident.
3. Promote your franchises proactively
Along with a good digital and social marketing campaign, every conversation you have should be seen as an opportunity to recruit franchisees. Whether at a BBQ with friends and family or speaking with a supplier, actively promote your franchises and mention some of the benefits you offer. You should have an elevator pitch ready to go in all situations that outlines your key model strengths. Here are some examples:
- Can’t keep up with demand
- Strong profit margins
- You will provide franchisees with leads and enquiries
- You have customers for the franchisee to service from day one
- The head office handles customer billing, collection and disbursement
Everyone knows someone who hates their job and is looking for a change.
4. Start-up period royalty adjustment
This option recognises that during the initial period of operation, the franchisee may have higher costs in establishing their business and, at the same time, lower sales until they reach maturity. To assist franchisees through this establishment period, you may offer to eliminate or reduce the royalty rate. The amount of royalty not collected is either treated as unearned or may be considered as a deferral or loan to be paid at a later date.