With today’s franchisee demand for profitability, franchise sales execs must religiously vet prospective buyers to help ensure they have the financial requirements, culture
compatibility and necessary skill sets. Unfortunately, sometimes we overlook another key benchmark that could make or break a successful relationship with a franchisee… the reality that with your brand’s evolving growth there’s also an evolving transition of franchisee qualifications to consider.
The pioneer franchisee
Start-up franchisors often attract go-getters that are more independent by nature. They do not fit the classic franchisee model, but can be a good thing for newborn concepts. These operators tend to be self-starters, take greater risks, embrace new challenges, and look for first-to-market opportunities that can offer higher financial and personal rewards. They are seeking the American Dream and want to be part of your franchisee launch team.
If these prospects sincerely believe in your franchise program don’t immediately dismiss their profiles… especially if they share your vision and passion to embrace your concept, and reap the benefit along with you. The critical key to awarding these first franchisees is getting commitment to your business blueprint, policies, and procedures. They must understand their role is to execute your success formula, not to rebuild or change it. However, with best intentions from you and your franchise partners, there often is a start-up need to modify and adjust procedures as you work together in your quest for glory. In this case, market pioneers are more open to help you beta-test new approaches than future generation franchisees.
“First-in” successful franchisees can help jumpstart a fledgling system for future growth and shepherd new prospects into your franchise. Let’s face it, validation can make or break you at this early stage. Savvy young CEOs bend over backwards to support and motivate these business builders in any way they can. There isn’t anything wrong with this, as the future success of the brand hinges on their success. However, once you establish a proven and credible franchise program, these legacy pioneers will no longer fit your new franchisee profile… and it’s time for a change.
The opportunity franchisee
When franchisors conquer the “do or die” start-up cycle, recruiting more pioneer franchisees is asking for disaster. They’re the wrong fit now that your brand formula is successful and sustainable. Switch gears and seek franchisees that require proven systems and processes, and as lower-risk operators don’t want to be brand guinea pigs. They don’t mind being the first-on-the block but need the security of an established, predictable business model that has ironed out the kinks and offers opportunity for growth.
During this life cycle, franchisors are recruiting franchisees for new markets while back-filling gaps in existing territories. These more disciplined franchisees represent the sweet spot of your brand profile, as candidates are more systems-oriented and excited that prime locations are still available. More interdependent that their legacy predecessors, they are ready to march with you in the same direction, and follow your business footprint.
The logo franchisee
Many stage three buyers are the “me too’s,” whose security needs steer them toward household franchises. They want the Cheers brand “where everybody knows your name.” They are more conservative, keenly focused on franchise track records and consumer recognition. There are two very different types of these logo buyers: large, successful multi-unit operators that seek predicable, established brands for their portfolios; and small/first-time operators that are the most risk-adverse of all groups.
While multi-unit operators are highly desirable, they are the toughest to negotiate with and rightfully most demanding. New franchise candidates certainly don’t have the same leverage, but at times can buy an existing franchise through a resale, and/or take a less desirable location others have passed on. Franchise execs stress the need to carefully qualify these less experienced buyers, who may suffer from “brand dependency syndrome.” Expectations can run high, and they may over-rely on the efforts of corporate training, field operations and marketing to drive and retain their customers for them.
If you are a start-up or emerging franchise don’t try to compete for “logo buyers” that ask for the world and constantly compare you to the big brands. If they use big brands as their evaluation benchmarks, let them go because you just can’t win the race with them!
In closing, no matter what life cycle your brand is experiencing, stop for a moment and ask yourself, “Are the franchisees we recruited the past three years the franchisees we need today?”
This article is an excerpt from Amazon.com best-seller, Grow to Greatness: How to Build a World-Class Franchise System Faster by Steve Olson. For ordering information,click here.