Growth Strategies to Expand your Franchise
Developing franchises isn't easy. As with any marketing strategy, don't put all your eggs in one basket. Cast a wide net instead by utilising different channels and mediums.
Your franchise marketing plan can reach your audience in a variety of ways. This increases the chances of the right people seeing it, and offers them a choice on how to engage with your brand. There are many entrepreneurs out there who are interested in becoming a part of your brand, and with the right franchise growth strategies, you can make it easy for them to become franchisees.
Targeting one channel alone is myopic so do think of adopting a multichannel marketing strategy. That doesn’t mean you should target every channel. Select two or three channels that are most likely to resonate with your target audience. That way you can devote time and effort to each one.
Here’s a list of the channels you should consider to expand your franchise's reach:
#1 Franchise Brokers
Franchise brokers can either be affiliated with a franchise broker's network or work as an independent.. Essentially, they act like matchmakers, connecting potential franchise investors with franchise opportunities. They educate prospective franchisees on the different types of franchises. An experienced franchise broker can help franchisees find the right franchise investment based on their interest and investment level. Do remember though that a franchise broker represents a portfolio of franchises, and he or she is paid only if you decide to invest in a franchise that he or she represents.
Franchise brokers offer the following benefits:
- Leverage local network - Franchise brokers are essential because they have a local level network that many brands do not have. A brokerage's structure, with sales forces operating at the local level, allows brokers to build relationships on the ground. When it comes to acquiring new franchisees, it is a great way to expand your reach.
- Save cost and time - By working with a broker, you can ensure you only speak with qualified franchisees. It helps you save money and time.
- Expand faster - Finding the right candidates quickly can also help you expand into new markets and grow your business faster.
Work effectively with brokers by following these tips:
- Tie up with many brokers - Partner with several franchise broker groups to grow your business.
- Stay current - Your franchise listing must be current and meet the specific requirements that brokers need before presenting a brand to a client.
- Latest information - Keep the brokers informed about any new information about your brand.
- Build personal connections - Get to know your brokers. Try and meet them personally to help build a connection with you and your brand.
#2 Referral Schemes
Referral schemes are designed by franchises to motivate existing customers to bring their friends and family as new customers. It is easier to acquire new customers if your existing customers recommend your brand. This gives franchises access to a wider clientele. Since the initial investment is low, the return on investment (ROI) is substantial, making them profitable and cost-effective for your business.
Referral schemes have the following benefits:
- Trust factor - 84% of people trust recommendations from people they know, making referrals a powerful form of advertising.
- Generates business - Referrals account for 65% of new business.
- Higher retention - Offer 37% higher retention rate of customers than other methods.
- Higher close rate - Direct referrals are typically three times higher than other leads.
Before starting a referral program, make a list of your most loyal customers. This way you will design a more thoughtful outreach plan - how you approach close friends will differ from how you approach a new customer.
Consider a referral incentive program.A University of Chicago study found that non-cash incentives such as credits and discounts are 24% more effective than cash incentives.
Here are some tips to boost your referral scheme:
- Keep the customer happy - Referral schemes depend on customer experiences so ensure that you provide excellent service to your customers.
- Spread the word - Promote your referral schemes on your website, on the back of your invoices, and through word of mouth.
- Think out of the box - Employers, suppliers, and business associates should also be considered as resources too, besides franchisees and customers.
- Get franchisees on board - Include a clause in the franchise agreement that requires franchisees to promote franchise opportunities. A good example would be displaying corporate brochures at their operations.
- Incentivise referrals - A VIP referral program that rewards franchisees who participate in franchise development with additional recognition and rewards could motivate other franchisees to participate as well.
- Talk about it - Promote your referral program by providing franchisees with advertising, retail posters, stationary, and other tools to let new prospects know you are a franchise. TV and radio spots can also be used.
- Get tracking - Referrals made as part of your rewards program must be tracked. Using referral program software is an easy way to do this, like within Delightree.
A classic example of a successful referral program is Refer a Friend by HelloFresh, one of the largest meal-kit providers in the United States. Various referral options are available to HelloFresh customers in order to give them even more incentives to participate in their referral programs, such as:
- You can refer a friend by sending them a free HelloFresh box.
- They can also give a friend $40 off their first box and receive a $20 credit in return.
- For healthcare workers, there is an ongoing discount program which offers 50% off on the first meal box and 15% off on future boxes.
A large percentage of franchise sales take place online, so designing a good franchise development site is crucial. A centralized website allows a company to grow a brand and an online identity. The purpose of your website should be to act as an information toolkit to guide prospects about where to research your brand and define the distinct characteristics of your brand. It's important to nail the why you and why now on your website.
A centralized website offers the following benefits:
- Add new places - Information about new locations can be added easily.
- Promote offers - Allows for the efficient and consistent rollout of new offerings.
- Better marketing - Ensure effective scaling of digital marketing initiatives.
Tips for designing an effective website:
- Make it user-friendly - Should be accessible on desktops, mobiles, or tablets.
- Make it seamless - First impressions matter so make surethe user experience is fast and efficient.
- Make it interactive - Predict and answer questions users may have. You should also provide on how to become a franchise owner, the benefits of franchising, etc.
- Build audience connect - Your site can be enhanced by adding Twitter buttons or Facebook banners so users feel welcome to ask questions.
Check out Mighty Quinn's Barbeque's website for an example of a well-designed interactive, and accessible website. It highlights the restaurant's social media presence, referral schemes, and has beautiful food photography.
#4 Franchise Portals
Franchise portals, or web portals, collect and sell leads on a non-exclusive basis. You can find franchise opportunities on a number of websites that display franchise opportunities by investment size, location, and sector. Approximately nearly one in seven franchise leads are acquired through portals.
Benefits of franchise portals:
- Money-saving - They are cost-effective, do a good job of generating brand awareness.
- Popular with prospects Prospects often complete their independent research and then seek out the franchise recruitment website.
Tips to use franchise portals effectively:
- Keep it current - Regularly review and update the content listing.
- Maintain consistency - Ensure that your content is consistent across all franchise portals you advertise on.
- Should be prominent - Many franchise portals display a similar list of primary industry categories on their home pages. Your listing should be in the primary/secondary category for your business segment.
#5 Social Media
Many people spend a lot of time on social media, including franchisees. As of 2021, Facebook has 2.8 billion monthly users worldwide, LinkedIn, 363 million, and Twitter 206 million. It is therefore important to use these social media platforms to interact with your audiences in a non-sales-focused manner.
Burger King, the American multinational chain of hamburger fast food restaurants,. Is known for its creative use of social media. Take the successful Proud Whopper campaign in San Francisco. In celebration of the city's Gay Pride Parade, a special package of a Burger King whopper was sold in one outlet in San Francisco. The campaign was a hit, generating one billion media impressions.
Tips to help build a strong social media presence:
- Offers multiple platforms - Create a brand voice across social media platforms such as Facebook, Twitter, and Instagram.
- Devise a plan - To ensure franchisee cohesion, make a social media strategy.
- Track your franchisees - Monitor your franchisee's social media accounts on a daily basis. You can do that using SEMrush's Social Media Tracker. The tool allows you to enter your franchisee accounts as those of your competitors and extract all the relevant data.
- Ensure uniformity - Make sure your logo and brand colours are used correctly and consistent across all social-media channels.
- Monitor mentions - When you find negative reviews from authoritative sources, help your franchisees resolve them.
(Read more about the importance of “Managing your online reputation” here).
#6 PPC Advertising
PPC advertising allows you to reach the right person at the right time. You pay a small fee to place your ad in front of the right audience. It involves buying visits to a particular website or page. Through the use of search engine networks like Google AdWords and Bing, franchisors can target people in every stage of their search for a franchise
Tips for effective PPC advertising:
- Start small - Gradually increasing the budget can help measure the impact of the increase.
- Encourage feedback - Ask satisfied customers to leave reviews.
- Integrated approach - Boost your PPC campaign by integrating it with the organic marketing campaigns.
#7 Emails and Events
Franchisees can use emails to grow their businesses, but they must plan and track them. Focus on targeting prospects who match your criteria, rather than simply sending out one mail to everyone. Keeping track of response rates can be done using tools such as call tracking technology.
Events like trade shows are a great way to interact with prospective franchisees. It could be a franchise-focused trade show or one that is industry-specific. Don't forget to carry business cards and sales materials, and always collect email addresses.
#8 Direct Sales
Making cold calls and hitting the pavement hard still works. Direct sales are the best way to further develop a relationship developed at a trade show. Direct sales may not be as exciting as social media marketing, but they remain a powerful tool for franchise development and growth.
Franchise growth is tough, but focusing on channels that drive the best results and constantly experimenting and improving will ensure success. The COVID-19 pandemic led to a down year for franchises in 2020, but the industry is expected to rebound in 2021, with franchises' contribution to the economy expected to grow by 7%. The right time to fine-tune your franchise development marketing strategies is now.
Smart Ways to Market your Franchise
As a business owner, to see your venture grow and thrive is like a dream come true. It is even better when the business grows into a valuable franchise. However, the path to reaching there is long and entails a lot of hard work, planning, sweat, emotions and most importantly a good marketing plan and strategy. Although not every enterprise can become the next McDonald’s, Subway, or a Burger King; with the right marketing tools, plans and strategy they can be successful. We have discussed in detail about the franchising model and what all it entails here. But, how do you market your franchise and why is it important? What is Franchise marketing all about? There are two types of “franchise marketing”:
- Operational franchise marketing is an activity that both the franchisor and franchisees undertake in order to acquire and retain customers.
- Franchise development marketing is any marketing activity that a franchisor initiates in order to sell more franchise locations.
We will explore “Franchise development marketing”. The areas that need to be understood when it comes to franchise marketing are:
- How to market your franchise?
- How to build a strong foundation for a good marketing plan?
- Four principles of the “Franchise marketing success”
- Marketing channels used by franchisors
#1 How to market your franchise?
Marketing has always been complex and difficult due to the ever growing and innovating competition. The difference between a successful franchise marketing campaign and unsuccessful one is really about understanding the personas that you are targeting. Another important factor is using the correct channels to reach your target persona in a profitable manner. Developing a growth blueprint that allows you to fully understand your target audience should be the first step before making a marketing plan. This blueprint will help you find answers to the following:
- What makes you different from the competition?
- What unique value do you offer that others don’t?
- What does your short and long term strategy look like?
#2 How to build a strong foundation for a good marketing plan?
Before you start to build and develop your franchise marketing plan, it is necessary to get your business to a point that it efficiently and generates enough revenue to support a wide-scale marketing initiative. How do you get to that level? You will need to do the following to get there:
Standardise the products and operating procedures in use at all existing franchise locations. Define products and services that will be a part of your franchise's identity. Standardisation brings consistency which is a key factor in creating a brand image. A classic example is McDonald’s.
As per a Forbes report McDonald's adopted a fast and convenient menu in the 1960’s. They could identify the huge opportunity to service food needs of the baby-boomer generation, swelling ranks of teenagers and the rising numbers of female workers entering the labor market. Throughout the 1970’s and 80’s , McDonald’s adopted a global menu. By doing so it took the American way of life to many countries across the globe. By franchising to local entrepreneurs, it also adapted well to the social context of each county.
During the next two decades of the 1990s and early 2000s, McDonald’s managed to successfully restore its old corporate image by launching the “Fast and Convenient”. This was a radical adjustment in the company’s product portfolio to meet the emerging food industry trends. This also led to the remodelling of McDonald’s restaurants to achieve a branded, chic, new, and more natural and relaxed dining environment. The “fast” and “convenient” elements of the McDonald’s concept were enhanced and complemented by a “healthy” and “more natural” element. The brand achieved this by adding fruits, salads and carrot sticks to the menu.
By having a standardised menu, layout, look and feel of the outlets, McDonald’s has built a brand image and emerged as a lucrative franchise business across the globe. This re-iterates how important standardisation is for a successful franchise program.
b) Process manual:
The next step is to create a manual that includes step-by-step guidelines to ensure that every single location will provide a precise, repeatable experience to its customers. A classic example would be the Starbucks's beverage manual.
The manual has detailed instructions on how to craft every single product the chain offers down to the smallest detail. Few examples are, what will the different topping patterns be, what is the proper way to add whipped cream to a beverage, how much sugar, concentrate, ice etc. needs to be added. It also has instructions on how to customise each of it’s beverages. This way Starbucks makes sure to recreate the same experience for every customer, every time across all its locations.
c) Training and collaboration:
Besides setting standards and guidelines it is important to make sure that the employees responsible for maintaining those standards know how to work together to maintain those standards. This can only be achieved by providing rigorous training to all the staff members and encouraging teamwork. Having a franchisee training system, will help in the long run to mint successful new owners. These owners will ensure running new locations in a manner such that they maintain the same high standards as the original.
Once your business has a solid foundation it has reached a level where it can support a large scale marketing exercise. You are now ready to design and develop your franchise marketing plan.
#3 Four principles of “Franchise Marketing Success”
Your franchise marketing plan has two objectives:
- Promote the brand and create recall value in the mind of the consumer
- Attract potential franchisees
In order to achieve this goal you need to adhere to the following four principles.
a) Brand standardisation
Franchise marketing revolves around telling a story to the target audience to encourage engagement and create a brand identity. Creating a consistent experience at every touchpoint regardless of the franchise location facilitates a strong brand identity. When it comes to marketing your franchise to a prospective franchisor, presenting a unified brand message helps the franchisee to better understand your brand.
b) Social Media presence
For any business including those venturing into the franchising model, social media presence is an absolute must. It helps you communicate with your target audience like no other medium. As a franchisor you can establish a brand personality and create a two-way dialogue with consumers. It is imperative for franchisors to place great emphasis on their social media and online presence so they can make the most out of what is now a primary marketing channel. You can read more on the importance of online presence and its importance here.
McDonald’s again wins the race when it comes to social media presence. As per a survey report by socialmediatoday.com McDonald’s has a huge Facebook Audience of 27 million fans and almost 1 million followers on Twitter. Despite competing against some of the biggest and best-known brands in existence McDonald’s has carved out a unique brand position based on it’s social media presence. As a brand they have been able to leverage even negative press because of strong social media presence and strong marketing efforts.
c) Location-specific customisation
Maintaining brand standardisation across the entire franchise is important, but a little room for customisation is a great marketing strategy. Here McDonald's takes the cake. When they first entered India in the year 1994, they respected the fact that more than 50% of Indians were vegetarians. They were willing to customise the menu keeping Indian sentiments and taste palette in mind. Across the world the Big Mac beef burger is the company's signature product, however the signature product for India could not be beef based, so the Chicken Maharajah Mac was born. Read the complete report on how McDonald’s won Indians by customising its standards here.
Not only this they also equipped franchisees with the tools and knowledge they need to run their own, location-specific email marketing campaigns and direct customer outreach operations. Location specific customisation is therefore important for successful franchise growth especially when it comes to food chains.
d) Clear ROI for franchisees
Your marketing strategy should deliver consistent and provable ROI to franchisees. It is the franchisees who will build your marketing funds pool by paying marketing fees and royalty. Hence, the ongoing value of the marketing plan must be clear and quantifiable. Read more about franchise fees and royalties here.
Growing your franchise business in no cake-walk. But by making a ROI centric marketing strategy and using the right marketing channels to expand your franchise you can achieve a consistent and successful growth path. We have put together a list of marketing channels for you.
#4 Marketing Channels for ‘Franchise Expansion’
The marketing channels can be broadly categorised as “online channels” and “conventional channels”.
1) ONLINE CHANNELS
Your website is one of the most important marketing tools. In today’s tech-savvy world it is your business identity. A website is a 24x7 salesperson that helps potential franchisees discover your franchise and educate themselves about your business. A good website has the potential of converting a prospective partner to a partner franchisee. In order to develop your website as an effective channel to market your franchise model put:
- Content to educate prospective franchisees on what it means to own one of your franchises.
- Testimonials of existing franchisees.
- Engaging and interactive content to gather user data.
- A well designed adaptive site that is easy to browse on any type of device (desktop, tablet, mobile)
b) Social media
Having a strong social media presence is important. Most people including your prospective franchisees spend a substantial amount of time on social media. As per latest reports, a total of 4.48 billion people had social media accounts across the globe in July 2021. This number equates to a whopping 57 percent of the total global population. If we take into consideration the policy of social media companies prohibiting people below 13 years of age to register on their site, then globally social media users will account for more than 70 percent of the eligible global population. These numbers speak for themselves about how important social media is as a marketing channel. An active interaction in a personal and non-sales focused way will help you build your reach. This will in turn help you achieve a good franchisee pipeline.
c) SEO (Search Engine Optimisation)
With 63,000 search queries per second, Google is the “go to” place for many to find right answers to their questions. The numbers itself answers why search engine optimisation should be one of the channels of your franchise marketing, need I say more!
d) Pay Per Click (PPC) Marketing
Being at the right place and at the right time is important, especially in a competitive franchise market. PPC Marketing helps you do just that. As a franchisor you can target prospective franchisees at every stage of their research by enrolling with search engines like Google AdWords and Bing. By constantly appearing at the top of display network’s like Google’s display network, you can turn your PPC campaign into a lead generation machine. Invest in social media advertising like Facebook and Instagram. Their algorithms are designed in a manner such that they tend to show your ads to the right people at the right time.
2) CONVENTIONAL CHANNELS
Though online presence and marketing channels play a huge role today, one cannot undermine the traditional tried and tested marketing channels to expand one’s franchise business.
a) Direct Mail
Direct mail marketing is a tried and tested way and still plays an instrumental role in growing your franchise. To tap its full potential, meticulously plan your mailing activity and make sure to closely track it too. Have a mailing calendar in place and be consistent with your mail marketing activity. Use a laser focused approach to target potential franchisees that fit your criteria. Keep track of response rates with tools like “call tracking” technology.
b) Trade Shows
Trade shows have always been a great place to expand your network and meet new people. You may end up interacting with people who will become your future franchisees. When attending trade shows, always carry your business cards and sales material. Also make sure to collect email addresses and contact information of people whom you think might be potential future franchisees.
- It will help you gain credibility when compared to other franchises that are not a part of such associations.
- It will give you access to relevant educational and professional development resources such as webinars, seminars and conferences.
Franchise brokers such as the Franchise Broker Association is a great way to expand your reach with regards to acquiring new franchisees. Having a broker helps you ensure that you spend your time and effort only interacting with potential franchisees that are qualified.
Sponsorships may not directly promote your products or services but it is an important marketing channel. Supporting a cause or an event that your target customer cares for can go a long way in building a profitable business association. Sponsorships can help you build brand awareness, shape customer attitudes, generate media exposure, drive sales, increase reach, generate new leads, help you “stand-out” among your competitors, and enhance your business and VIP relationships.
f) Marketing Automation
The CRM (Customer Relationship Management) platform was made in-roads in the 1990’s. The technology emergence in the mid 2000’s finally allowed marketing gurus to integrate CRM into their marketing mix. Since then, marketing automation has become one of the most powerful channels that you should be using in your franchise marketing strategy. Marketing automation enables you to nurture each potential franchisee by providing them with timely and personalised touch points at scale.
g) Direct Sales
Some things, no matter how old they are, always work. Direct sales is like your “Grandma’s tips and tricks” ; it always works. It may not sound as tech-savvy like marketing automation or social media or PPC marketing but, it gets the job done. Whether it is doing cold calls, aggressive follow-ups or nurturing personal relationships from a trade show, direct marketing is a powerful weapon in franchise development marketing.
What all should you factor in when developing your franchise marketing plan?
Before you set out to market your franchise and build a marketing strategy, evaluate the following:
- Your franchise sales goals over the next 6 months to 1 year.
- Qualities and characteristics you desire in a perfect franchisee.
- Determine the value proposition of your franchise. This essentially means to determine what makes your franchise unique, and how it can add value to the lives of your franchisees.
- Money you are willing to invest in franchise sales over the next 6 months to 1 year.
- Identify vendors or brokers that you can trust on to generate interest to help you attract qualified franchisees.
- Evaluate your website. Does it communicate your brand story and the advantages of your franchise system properly?
- Add a lead capture form on your website that encourages prospects to identify themselves and reach out for more information.
Setting things right
As a franchisor, if you have built a solid foundation and created a marketing strategy keeping the four principles in mind there is nothing that can stop you from creating a business that is perceived in good light by your customers and potential franchisees. Creating a successful franchise marketing plan is no child’s play. But with the right strategy and marketing channels you can achieve your dream of creating a valuable and attractive franchise opportunity. Get going to create yet another success story like McDonald’s and Subway, the path is long but not impossible to cover 😁
Compelling Value Proposition for Your Franchise
“Food of a constant quality that is served quickly and consistently across the globe.” – McDonalds.
“Eat Fresh”. – Subway.
A value proposition is a promise of value to be delivered, communicated, and acknowledged. It is also a belief from the customer about how value (benefit) will be delivered, experienced and acquired.
In a fiercely competitive franchise market, where thousands of companies compete for the same prospects, your value proposition must be well crafted and deeply ingrained in the DNA of your franchise to make it stand apart. It should help you in propelling you ahead of your competition and creating a loyal base who would want to opt for your franchise and see it as a facilitator of their growth. Your value proposition should be what legends are made of, so think long term, think big.
With a robust value proposition, you can build effective brand communication, boost sales margins and productivity in many ways -
- Improved marketing strategy: With a value proposition you can get a better understanding of all other components that make up your marketing strategy.
- Branding that works: Value propositions enable effective branding. This will differentiate you from your competition and help you attract your ideal customers. Your brand's pricing power and profit margin will be stronger the more relevantly differentiated it is.
- Better sales: Value propositions communicate the unique qualities of your brand, promoting sales and eliminating the hard work of matching customers' needs and wants with products. They provide the customer with what they actually want.
A good example would be HelloFresh, the largest dish delivery company in the United States. This brand's USP is its ability to keep meal times uncomplicated, which it conveys in a simple and direct manner.
To summarise, communicating the unique value of your franchise will help attract more leads, increase conversions, and improve return on investment (ROI). Think about the words you want to use while talking about the benefits your brand brings to customers. Remember, your value prop is not a slogan, tagline, or mission statement. Your potential customers and prospects don't decide based solely on that type of copy. You need to dive deep into the problems you want to solve for buyers, and how your product or service makes them happy.
Make it Effective
- Crisper the better: Generally, it should contain one sentence that explains why your service or product is ideal for the customer.
- Get the word out: Marketing materials or the company's website are an effective way to communicate it.
- Stand apart: You should make it unique to your company.
- Be convincing: Be persuasive enough to convert prospects into paying customers.
Fazoli, the only premium quick-service Italian chain in the United States, is an example of how a strong value proposition can help a franchise maintain its position as an industry leader even during tough times. With launches such as the "5 Under $5" offer and the $19.99 Super Family Meal, Fazoli has quickly seen its business return to normal after the pandemic. All of these initiatives have remained the blueprint for continued success and increased sales for Fazoli.
Presentation is Key
Now that you know what goes into designing a value proposition, let’s look at how you can present it in an impactful way.. Some of the elements to think about are:
- Strong headline: The headline is important to grab the viewer’s attention and plays a crucial role in promoting the value of your brand. According to eye-tracking studies, most people glance at the headlines more than anything else. Keep it short and quirky.
- Details in subheading: The value delivered by your franchise and who it serves should be explained in detail in a sub-headline which is below the main headline.
- Bullet points: Identify and list the three most important benefits and features of your franchise for the prospect.
- Make it visual: Enhance your message with a video, infographic, or image to draw your audience’s attention. You should include a shot of the product or an image.
- Explain the purpose: Outline a clear path to delivering the promised benefit. McDonald's, for example, promises food of a consistent quality that is served quickly and consistently worldwide.
- Easily understood: In five seconds, the value proposition can be read and understood.
- Customer connect: Analyse how your franchise can meet your customer's needs and requirements. It's important to speak the language of your customers.
- Focus on the customer chain: Every franchise has customers at different levels with varying needs. Therefore, the value proposition must be diverse and nuanced. Priority and focus should be given to high value customers.
- Harmonise across channels: The growth of online and mobile shopping, as well as social platforms, must be taken into account when developing the ideal value proposition structure. It is important to consider how prospects interact across all channels.
- Show it off: Make sure the unique qualities and benefits that make your brand stand out are known to the world. Display prominently on the company website as well as at other customer touchpoints. It should be intuitive - the value delivered should be apparent without further explanation.
How to Make Your Franchisees Your Fans
"How much will I receive for my royalty dollars?" All prospective franchisees ask this question. A franchisee pays a franchiser a royalty fee on a regular basis. In most cases, this fee is paid monthly or quarterly and is calculated as a percentage of gross sales.
Franchisors have three distinct divisions: operations, marketing, and training. Technology, real estate, accounting, and supply chain management are some other silos typically offered to franchisees. The Franchise Disclosure Document (FDD) will help you identify any other silos you offer your franchisees. Franchisees must comply with these basic requirements.
Providing franchisees with what they want:
- Originality: Ensure you offer something unique that no one else can copy. A great example is Chick-fil-A, rated the second-highest grossing fast food chain in the United States. Chicken sandwich is by no means unique, but the company has combined excellent customer service with a widely reputed training program for rank-and-file workers. This explains why it receives over 40,000 franchise applicants each year.
- Business success: A lot of franchisors get into franchising because they see it as a low-risk, low-investment way to scale their business with the help of franchisees. However, the returns sometimes aren't enough to draw high-capacity franchisees. As long as the business model meets or exceeds franchisees' expectations, existing franchisees expand rapidly. Having existing franchisees has the advantage of already having expertise and is easier to support. Compared to a new franchisee, this results in higher profit margins.
- Perceived value: Franchisees must receive more perceived value from the franchisor than the franchisee receives from it in royalties. Subway, which operates on a 100% franchise model, motivates franchisees by giving out 'Franchisee of the Year' and 'Development Agent of the Year' awards recognising the accomplishments of franchisees. This could be adding new stores, building sales, increasing profitability and achieving excellent store evaluations. Franchisees are also provided with guidance in running their businesses.
- Sustainability factor : Stay competitive, keep up with the latest trends, and have a 10- to 20-year future plan to stay relevant.. Brands often sabotage themselves by tying up with specific trends and products. This means that as the product's demand drops, the brand's crashes. Take the gourmet cupcake industry. As Americans became more health-conscious and began shopping for healthier options like frozen yogurt, the cupcake craze lost its icing, leading to top cupcake brands crash landing.
If you don’t state why users should buy from you, you will lose most of them. Think about the unique value that you provide, that your customers really need, and that nobody else does as well. These questions can help you figure out your competitive advantage and help you frame the value proposition that best defines your brand.
Franchisees Journey from Lead Profiling & Nurturing
“We do a lot of one night stands in lead generation and not enough in long term relationships.” Michael King, Founder-MD, iPullRank.
Michael King, marketing strategy guru, advisor to Fortune 500 companies, and a man known for really smart tips, sums up what often comes in the way of effective lead generation. It’s that many marketers treat lead generation as a one-night stand. For lead generation to be effective, you need romance – flowers, candy, conversations, and nurturing a relationship with prospects. There’s more to it than just a smart sales pitch and moving in to close the deal.
For starters, to market your franchise effectively, you must understand your prospective franchisees. This is where market profiling and customer profiling becomes a key requirement.
Understanding Market Profiling
Market Profiling is essentially to research specific information about your business area. This helps you come up with a comprehensive outline that reveals business opportunities in the said area. Understanding the market profile is important to build a strong foundation in order to initiate marketing and sales activities.
How to build market profiling:
To build a market profile, meet and get to know the local community in an environment devoid of any sales pressures. Attending local community events like charity events will help determine the products and services that will do well in the market and help you build a local market profile.
How to build a customer profile:
The next step is to build a customer profile. By doing so you can tune your marketing to get quality leads. The following are the steps to build a customer profile:
- Step 1 – Know existing prospects: Revenue sources, referrals, return on investment (ROI), etc.
- Step 2 - Segment prospects: This is based on their preferences and behaviours for improving customer targeting.
- Step 3: Identify prospects: The first two steps will help eliminate prospects who are less likely to turn into qualified leads.
- Step 4: Create profiles: Now you are closer to arriving at your ideal customer profile.
Now, you can start developing a lead generation strategy to attract customers to your brand.
In marketing, lead generation implies initiation of consumer interest or enquiry into products or services of a business. In the world of online marketing, it may refer to activities including driving traffic to your website, social media campaigns (both organic and paid), content marketing initiatives, email marketing, of course SEO optimization among others. The goal is to find new leads, to connect prospects with your product/service through marketing.
As a franchisor, lead generation is one of the most important aspects of your role. It’s important to learn strategies to generate quality leads to help you grow your franchise.
Smart strategies to generate leads:
- Lead capture: A way to collect information from a lead, including name, contact information and other relevant details.
- Lead magnet: Find the incentive that motivates prospects to become new leads. For instance, some lead generation ideas for restaurants could be - “Get the recipe of our signature dessert,” or “Sign up for a chance to win a free meal for you and two friends”.
- Lead qualification: Uses the lead’s information to determine likelihood of buying.
- Lead segmentation: Segmenting leads based on their information and activities.
Once your buyer enters the sales funnel, which is the process that turns him/her from lead to customer, you can target them in multiple ways depending on the stage of buying.
- Top of the Funnel (TOFU) is where you have the most leads, but they're still researching and aren't making a decision yet. Be careful about moving in too quickly at this point. Don't be too aggressive. Focus on educating the prospect and building trust instead. Offering blog posts, research reports, e-books, and white papers are great ways to make this happen.
- Middle of the Funnel (MOFU) - At this point, you have eliminated some leads. Those with you at this stage have defined their needs or a problem and are looking for solutions to it. Stay focused on building trust. Offer webinars, videos, and podcasts to accomplish this. Engage in real-time interaction with prospects, answering their questions and objections.
- Bottom of the Funnel (BOFU) - Leads at this stage have done their research, defined their solution, and will have identified several vendors they're comparing. They should be ready to speak with you. Assist your prospect in reaching a decision. You can offer live demos, consultations, and case studies here.
Lead Generation + Lead Nurturing = Success
You have the strategies in place. Now, how do you get to the point where you're consistently closing? The answer is lead nurturing. Lead generation has to work with lead nurturing for your business to succeed.
If a business generates leads well, but does little to convert them into buyers, it will not succeed. In contrast, a franchise that does a great job of nurturing prospects but does not generate a large enough amount of leads to sustain a sufficient sales pipeline is likely to fail.
Nurturing leads involves creating and maintaining a relationship with prospects throughout the buying process. It is a part of inbound marketing, involving content marketing, social media, and other online communication methods to attract prospects.
Take the Lead with Nurturing
Like any relationship the more you put into nurturing a lead, the more you get out of it. When a potential customer finds your business, they may not be ready to buy but are just gathering preliminary information. What nurturing leads does is keep you on top of mind, so the prospects come back when they're ready to buy.
All this sounds like a lot of work, but statistics prove how effective lead nurturing is to drive sales, improve brand awareness, and maintain relationships.
- More sales: Nurtured leads lead to 20% more sales opportunities.
- Motivates leads to buy: Lead nurturing can increase sales-ready leads by 50% at 33% lower cost.
- Motivates large purchases: Nurtured leads often make 47% more purchases compared to non-nurtured leads.
- Prospects like it: 82% of prospects said industry specific lead nurturing content was more valuable.
For results oriented lead nurturing, you need to actively guide prospects through marketing and lead generation activities to a point where they become paying customers. There’s way more to it than sending out blast emails and weekly newsletters. You also need to customize your nurturing approach depending on the prospects’ situation and goals. One size does not fit all prospects.
How to Woo your Prospects
As a franchisor, you need to develop content that will serve your prospect at each stage of the purchase funnel. There are three types of nurturing programs that typically work:
- Engagement: Offer your leads relevant, straightforward, and user-friendly content that gets their attention and keeps them engaged.
- Education: Provide unique insight into how your prospects can do their jobs better and more successfully by exploring the benefits of your products or services.
- Active funnel: Target leads who have already begun their buyer's journey. You have to bring your marketing and sales efforts together to reach your end goal - a paying customer.
Punch Up your Lead Nurturing
- Understand the customer: Know your target audience well to identify the best ways to connect with the most qualified prospects in your pipeline. You are in a better position to guide your ideal prospect through the buying funnel if you know the needs.
- Customer journey map: This highlights what your potential clients think, ask, and do when interacting with you. Targeting marketing messages leads to better results.
- Build a customer database: Get a customer relationship management (CRM) system to gather prospect contact information. You can also track their activities and interactions with your brand. Create a CRM system with profiles for each prospect. Information such as how they joined your list, which pages they visit on your website, and how often they engage with your brand should be noted.
- Lead scoring: Using your leads' data, qualify each lead based on interest levels.Using a lead score, you can calculate the likelihood of a lead to buy based on the details about the lead. Leads can be scored based on demographics, budget, interest, and where they are in the purchase funnel.
- Create targeted content: Now that you have an insight into your target market, develop a lead nurturing campaign strategy. Create targeted content for each phase of the buying process as shared earlier.
- Customer lifecycle marketing: Go one step further and support customers after they purchase. This way your brand re-engages customers, helps them with their new purchase, and keeps you top-of-mind so they continue to return to your brand.
Starbucks has one of the most popular and well-regarded customer rewards programs. With their program, customers can earn free food and drinks, place and pay for orders, and receive personalised offers.
- Automated marketing: Using marketing automation, content is automatically delivered to prospects based on their quality score, activity, and position in the marketing funnel. You can align your marketing efforts and messages if you automate a workflow, meaning the right message reaches each lead at the right time.
- Website: Websites are great for capturing new email addresses, and they're also excellent for continuing and starting conversations.
- Direct emails: Lead nurturing via emails is still highly effective - and personalisation is even more effective. An Accenture study found 41% of consumers changed businesses because of a lack of personalisation. Whenever a visitor clicks on a link in your emails, downloads your gated content, visits certain pages on your website, or displays a high level of engagement, you can trigger an email for them. This way you deliver the right marketing messages to the right people at exactly the right time.
- Hook with social media: Using creative campaigns that think outside the box and sharing engaging social media posts can help you generate more leads. Prospects may enter your funnel by following you on social media rather than joining the email list. Plan your social media marketing strategy to promote shareable, valuable content for those targeted audiences.
A well known example is the social media campaign by Dunkin' Donuts asking fans to help select new iced coffee flavors in 2017 via comments on Dunkin's official Facebook, Instagram and Twitter pages.
- Retargeting ads: Retargeting lets you display ads or social media ads to website visitors or email subscribers. Advertising campaigns can be shown to prospects based on their activity, such as visiting certain pages (and not others), time on site, and number of visits. Start tracking users on your site by adding Facebook, Twitter, and Google Ads pixels. You can use retargeting campaigns to display ads to audiences after they visit your website.
- Align sales and marketing: Sales and marketing need to work together to nurture leads at the right time. Identify the exact moments in the buyer's journey that prospects should transition between teams. Consider lead scoring, workflow enrolment, and conversion events as possible triggers.
This may all seem like a lot of work to do before you close the deal, but effective lead nurturing can lead to long-term and profound success for your franchise. A successful program requires dedicated people, a powerful and strategic approach, solid technology, and a process that aligns actions from the start to the end. There is certainly a lot of work involved, but it is well worth it.
Adding New Franchise Locations Effectively
When it comes to expanding your venture, sky's the limit. There are many ways in which you can grow, expand, and take your business to new heights. I am most intrigued by the franchising model though. All this talk reminds me of what Thomas Lippman once said:
“The most stunning thing you can do is go to Riyadh [the capital of Saudi Arabia] and walk around the streets downtown, After you have had lunch at McDonald's, coffee at Dunkin Donuts and shopped at Saks Fifth Avenue, one has to wonder if they actually hate Americans or not.” - Thomas Lippman, Journalist Specialising in Middle East and Saudi Arabia
This statement packs in it the power of franchising and how far you can reach when you have a strong value proposition and the right marketing strategy. Expansion can be quite intimidating, expensive, and time-consuming, but by franchising your business you can make your life easier.
Examples of few of the leading “Food Franchise brands”
The franchising model helps you expand rapidly, some of the most popular food franchise brands globally are Starbucks, McDonald’s, KFC, Burger King, Dunkin’ Donuts to name a few. The names listed here are proof of how successful a franchising model can be.
However, before you take the plunge and take on-board a franchisee to start a new location take the following factors into consideration:
Franchising has a long-term impact on your business. Your franchisee is a partner with you in a marathon race not a 100 metre race. Keep your franchise success goals realistic. It is good to have a clear vision of your goals for the next 5 years at least before you start a new location.
What are your competitors doing?
It is important to position your franchise offering in a way such that it looks fair and a profitable proposition when compared with competitors. Your Franchise Disclosure Document (FDD) will disclose important cost metrics such as the initial franchise fee, the ongoing royalty rate, franchise fee obligations, territory sizes, and other legal and business factors that will impact the profitability of your franchisee’s operations and their overall rights. It is a good idea to research and evaluate what metrics and terms your competitors are offering. You can then work with your lawyer to ensure that your FDD is competitively positioned. Read more about FDD, here.
Make an FDD that is compliant for every state
If you are planning to open a franchise in different states, make sure your FDD is multi-state compliant. Simply put, it should be ready for registration and filing in every state. Having a multi-state compliant FDD will help you save considerable time in opening a new franchise location. Your lawyer can help you prepare a FDD on a “multi-state” basis by including state-by-state basis – required addendums and modifications so that it is compliant with various state laws.
Design a Franchise Offering suitable for both “Individual” and “Multi-Unit Sales”
What does it mean to have a franchise offering that is suitable for both “individual” and “multi-unit” sales? Some franchisee’s want rights to open multiple outlets in a certain territory/city/state with them alone. Some would only want a single franchise. Your FDD must be structured in a “dual structure” format to accommodate both the sale of an individual unit franchise to a single franchisee or if a franchisee wants to buy the right to open multiple locations, they are given a development agreement to that effect. In case of multi-unit sales you will also need to include a schedule that lists out the timelines to develop their additional locations. However, developing a dual structure implies additional upfront planning and work. Excluding this will however have high sales costs and competitive disadvantage in the long-term.
Learn franchising and build your network in the franchise community
Before you plan to franchise your business in a new location, educate yourself well about this model. Participate in franchise seminars and events. Build your network and get to know the stories of people who are already in the game. Take the help of your franchise lawyer to learn franchising and get you involved with franchise organisations, networking events, masterminds, and other professionals and suppliers that will be of value after your franchise launches.
Your franchisees will play a big role in building your brand when you go down the path of franchising to expanding your business. Remember, “You can't do well unless your franchisees do well.” - Richard Cole, Founder Geeks on Call.
Steps in starting a “New Franchise location”
#1 Evaluate your business:
Once your research about your target consumers, competition location is complete, analyse and evaluate your business. Is the location you are considering resonate with your kind of brand and business. For example, if you are fine-dining like “Victoria- Albert’s” it will not make sense for you to open a franchise in a student dominated area.
#2 Create your operations manual:
You have created a certain identity for your brand and you want all your outlets whether owned or franchised to have the same experience. For example, a person walking into a Dunkin Donuts’ outlet anywhere in the world has a certain expectation in terms of the taste of the donut, the way it will be served, level of cleanliness and hygiene, ambience etc. To ensure that sense of uniformity you will need to have an operations manual in place which will detail out the steps to do things the correct way or rather your way for every aspect of day-to-day operations.
#3 Register your trademark and logo:
When you franchise your business, you give the franchisee the right to use your brand “logo” and “trademark”. For example, in all McDonald’s outlets you will see the “M” logo prominently used everywhere. However, to allow someone else to use your logo and trademark it is important to get it registered. When setting out to franchise your business, this is an essential step which many ignore. In the United States you can register your trademarks and logos with the United States Patent and Trademark Office.
#4 Preparing a cost estimate:
It is important to prepare an initial setup cost or investment plan for your franchise business. Do you know, most top restaurant franchise business models owe their success to accurate cost estimation and cutting down on their food costs, wherever possible. Your cost estimate must have all the heads of expenditure you can imagine. Based on your business model the initial setup costs can be divided into the following sub-heads:
- One-time infrastructure costs
- Location costs (Rent for three months and initial security deposits)
- Interior work
- Kitchen equipment, utensils
- Electronic fittings and furniture
- Employee hiring costs
- Branding / Signage (Interior / exterior)
- Licensing & Establishment Cost
Your franchisee will need to apply for certain licenses and register for taxes. All of these have a cost attached to it, you need to factor in that in the initial set-up costs. Some examples of such costs could be:
- Local Municipal Licenses
- Liquor Licenses (in case, you plan to serve liquor)
- Franchise fee and Royalties
- Working capital requirements (for the first six months) which will include monthly rent, staff salaries, raw material costs, electricity and gas charges etc.
#5 Establish the Franchise company:
To be able to franchise your business you will need to establish a new franchise entity. This will typically be a corporation or limited liability company which will be in the business of selling franchises, supporting franchisees, and building systems to grow.
#6 Hire a professional to draft and register your FDD:
Starting a franchise business entails with it a lot of legalities and paperwork. Your already existing location is enough responsibility on its own. When setting out to franchise or open multiple locations, it will be next to impossible to accomplish everything alone. Managing day-to-day operations, drafting and registering your FDD, signing the franchise agreement will require professional guidance. It is advisable to consider working with franchise consultant groups and a lawyer to help with the operational and legal steps required to grow your franchise.
#7 Marketing and sales strategy:
Being the franchise owner, it is your responsibility to devise a plan for marketing your product to consumers and your franchise opportunity to prospective franchisees. Selling your first franchise and building a pipeline for ongoing franchise sales involves a lot of moving variables. It becomes imperative to develop a marketing plan to cost-effectively sell franchises. A well thought out robust marketing plan for both will keep you on track as you grow your brand.
#8 Training support:
When taking on-board a franchisee, you want to make sure they are well suited for your brand and mission. By training each new franchisee and their employees to follow the guidelines you have set will ensure the same experience as your own flagship outlet. Training plays an essential role in maintaining the standards of the product as the original franchise. Let us take an example of restaurant franchisees to better understand this.
When a restaurant franchisor franchises its business they usually provide training to the entire staff, right from the Head Chef to the busboys. It is advisable to induct and train new employees much before the opening of the Franchise Outlet. In order to make the franchise a success most franchisors prefer to recruit at least a few employees one month before the opening of the new outlet. These new recruits are given hands-on training at the existing outlets to familiarize them with the level of services expected from them. It is also a good practice to employ some of the old staff at the new outlet to train the new employees. Training can make or break your franchise business.
#9 Grand opening:
“Surprisingly, the stereotype that people don't like monolithic clones of McDonald's-type stores is ... so much not the case ... Part of the appeal [of Starbucks] is that it is the same everywhere -- you can go in and know exactly what you're getting.” - Robert Meyer
This statement about some globally renowned and successful franchises like McDonald's and Starbucks makes so much sense. When opening a new franchise location, keeping a tab on marketing, promotions and opening of the outlet will ensure that customer expectations are met when they walk-in to the place. You really do not want people to make an opinion that only owned outlets give the same experience and a franchise is not good enough.
Should you be working with a franchise lawyer when you think of starting a franchise company?
The simple answer is YES. To begin franchising the right way, you will need to work with a lawyer who specialises in franchising and is experienced in working with new and emerging franchisors like you, like Internicola Law Firm.
Every step from franchising your business to selling franchises – is regulated by federal and state franchise laws. Fulfilling these will require extensive coordination and integration into your FDD and the agreements between you and your franchisees. In the long run your most important “asset” will be your franchise agreements. These define the legal obligations between you and your franchisees, including ongoing obligations to pay you royalties.
Having a franchise lawyer to help you through each phase of the franchise development process and provide with franchise development insights and strategies have always worked for successful franchise brands.
Food for thought
Franchising your business is a big step. You put a lot on stake, as you cannot have a complete control of how things will operate on a day to day basis. However, franchising involves a lot of work in the initial phases. Embarking on this journey with a good franchise lawyer will help you better understand each phase of the franchise development process. Your attorney will provide you with franchise development insights and strategies that have worked for other brands. Having an attorney onboard will help you avoid the mistakes and pitfalls of franchising that many start-up franchisors don’t know about or, unfortunately, find out about too late.