START-UP FRANCHISING
Annual Franchise Growth
45 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 A Script For Success WELCOME AND INTRODUCTION
• How many potential franchisors are here today? • How many new franchisors are here? Did you have a great idea and become excited about it?
Is it something REALLY good?
Do you say to yourself, “I think I’ll franchise this, make a million, and sit back and count the money?” Can you back it up?
Can you keep it going? THE THREE M’S OF START-UP FRANCHISING
1. Method 2. Manpower 3. Marketing METHOD Has your current system been profitable for more than two years? Is your concept easy to replicate?
Can you open another one – test – do one more? Are your procedures simple enough, standardized and easily taught? You’re establishing a new franchise, and it’s a new business even though you have experience with your concept:
• New standards • New financials • New advertising • New issues Do you have a registered trademark or logo?
Do you have financing to cover all your expenses regarding this new franchising venture? Need a means and a method – to get past the phase of having a concept and bringing it to the franchise stage. MANPOWER Experienced franchise attorney Who is bringing you into the franchise world?
Do you need an experienced franchise consultant? Operational, marketing, training and real estate Best Case: Someone who can wear many hats. A franchise pro who can bring you right into the world of franchising. MARKETING Who knows who you are?
How will you get your name and concept out to the public?
What is it you’re offering, to who and why? A Key: Become bigger than you really are. Use a public relations firm; a franchise specialist. Where will your advertising and marketing money go first? Before going forward – ask? Do you have what it takes to be a franchisor? Is your product or concept unique?
Is there a demand for it? Is your current business profitable? For more than one year? Is there a market for your product or service? I’VE GOT A GREAT CONCEPT WHERE DO I GO FROM HERE? CRITICAL ISSUES TO CONSIDER AS A NEW FRANCHISOR . . .
• What are my goals for franchising? • What business structure is best suited to my goals? • Where should I sell franchises? • What resources do I need? THE IMPORTANCE OF SETTING GOALS
• Goals encourage planned rather than reactive growth • Without pre-established goals, you can’t measure your results as a franchisor • Your goals should reflect your personality, business philosophy, and budget • Goals are often shaped by the market opportunity that’s available to you ENSURE YOUR LEGAL DOCUMENTS REFLECT A BUSINESS STRUCTURE THAT MAKES SENSE FOR YOU
• Don’t always assume your competitors know what they’re doing! • The business decisions contained in your Franchise Agreement will be with you for a long time • Only use experienced franchise counsel to draft your UFOC and Franchise Agreement • Retain qualified trademark counsel to ensure your name is protected WHERE SHOULD I SELL FRANCHISES? • Where you offer franchises should be based on your business experience and capabilities for support • Maximize brand exposure by clustering franchise territories • Focus on markets where your first franchisees are likely to be most successful • Be accessible to your franchisees WHERE SHOULD I SELL FRANCHISES?
Q: What should I do if I get a call from a wealthy family in Bahrain who loves my concept and wants to buy the master franchise rights?
A: Thank them for their interest and tell them you’ll be in touch in a few years. WHAT RESOURCES DO I NEED AS A NEW FRANCHISOR? Legal checklist 9 Federal trademark protection completed or in process 9 Establish a new company as the franchisor entity 9 Opening audited balance sheet for the new entity 9 UFOC and Franchise Agreement 9 State registrations/filings/exemptions 9 Salesperson disclosure forms 9 Attorney and state review of marketing materials before you print them WHAT RESOURCES DO I NEED AS A NEW FRANCHISOR? Franchise Marketing Checklist 9 Marketing plan and appropriate budget 9 Franchise brochure(s) 9 Franchise evaluation form 9 Franchise sales process 9 Public relations kit 9 Website for the brand and franchise opportunity WHAT RESOURCES DO I NEED AS A NEW FRANCHISOR? Pre-Opening Support Checklist 9 Site selection criteria 9 Required lease inclusions 9 Design and construction requirements 9 Headquarters training program 9 Process for opening approval 9 Onsite training program WHAT RESOURCES DO I NEED AS A NEW FRANCHISOR?
Operations Checklist 9 Well drafted operations manual 9 Detailed list of approved suppliers 9 Clear guidelines on approved products or services WHAT RESOURCES DO I NEED AS A NEW FRANCHISOR?
Support Checklist 9 Field support strategy 9 Franchisee communications strategy 9 System for marketing approvals 9 Plan for managing the central marketing fund WHAT SETS A GOOD FRANCHISOR APART? • Leads by example
• Views their franchisees as customers
• Involves franchisees in the strategic development of the system
• Accumulates and shares information with franchisees
• Promotes communication between franchisees
• Evaluates the potential impact of all major decisions on the franchisor company, the franchisees and the value of the consumer brand www.fanchise.org
College Graduate? High Net Worth? Extrovert? Industry Expert? Absentee Owner? Husband and Wife Team? Entrepreneur? Aggressive? Sales Experience? Conservative? Owner Operator? Self Starter? WHO AM I LOOKING FOR? How to determine the ‘model’ franchisee DETERMINATION OF FAVORABLE TRAITS
• Psychographics • Demographics • Founder’s Analysis • Similar Concept Analysis • Successful Franchisee Analysis • Unsuccessful Franchisee Analysis MEASUREMENT OF FAVORABLE TRAITS
• Peer Reviews • Sales and Education Process • Tests • Salesperson’s Observations • Credit Report • Franchize Profile • Executive Summary • Extensive Interview Process TARGETED LEAD GENERATION FOR TRAITS
• Attracting Franchises with the ‘right’ traits • Market in the right ‘Media’ • Use the right ‘Bait’ • Give Them what they want to buy • Measure Twice, Cut Once Franchisor Marketing Dollars by Media Percentage of Total Expenditures: 2000 versus 2005
50%
40%
30%
20%
10% 2000 2005 0% Internet Print Trade Public Other Show Relations Source: Franchise Update Source of Franchise Leads by Media Percentage of Total Leads Received: 2000 versus 2004
70%
60%
50%
40%
30%
20% 2000 10% 2004 0% Internet Referrals Print Other Source: Franchise Update Source of New Franchisees Percentage of Total Franchises Signed: 2000 versus 2004
50%
40%
30%
20%
10% 2000 2004 0% Internet Referrals Print Brokers Other Source: Franchise Update Average Franchisee Recruitment Budget (In Thousands)
$300
$250
$200
$150
$100
$50
$0 2005 2004 2003 2002 Source: Franchise Update
WHY INVEST IN MEASUREMENT OF LEAD MANAGEMENT?
• Return on Investment (no matter how small) • Makes a small investment grow to a big investment • Don’t waste your money • Hone your marketing messages
• Forecasting & Budgets • This is where the entire system starts • Knowing lead flow determines the entire budget WHAT TO AVOID WHEN GETTING OFF THE GROUND DON’T THINK OPERATIONS = FRANCHISING
• Listen and Learn from other franchisors • Ask questions of other franchisors • Evolve with your strongest franchisees DON’T SKIMP ON THE BASIC BLOCKING AND TACKLING
• Public relations • FRANCHISING experience • Communications • Legal • Accounting DON’T ABANDON YOUR SALES PROCESS
• Don’t negotiate the agreement • Don’t take shortcuts • Don’t abandon your instincts • Don’t cheat • Don’t Lose Control • Don’t WASTE YOUR TIME!!!!!!! DON’T THINK JUST BECAUSE YOU CAN DO IT . . .
• Strong Operations Manual • Strong Training • Not all franchisees have the combination of skills • Not all franchisees have the combination of traits • Not all franchisees have the commitment • Not all franchisees have the passion DON’T LET YOUR FRANCHISEES LEAD THE WAY!
• Self-Doubts • Survival of the Franchisees AND Franchisor • Stay true to the vision • Stay true to the brand • Stay true to the mission • Empathy NOT Sympathy • Be a Leader QUESTIONS