Most Franchise Sales in the U.S. (87%) consist of Startup Franchises which are buyers who have never been in the business they are buying and learn the model from the ground up in purchasing the franchise.
When selling start-up franchises, the majority of the franchise leads will come from web-based lead generation portals. Which requires careful management and planning to navigate effectively.
Here is a great report detailing some of the more effective lead generation portals presented by emaximation.
Throughout the sales process, there should be a structure that requires the buyer to “Give to Get”. This concept is simple, to continue through the sales process, the buyer must provide feedback and show commitment to the franchise buying process in order to be progressed through the model. This could be as simple as requiring the franchisee to fill out a single application and evaluation form, or as complex as having them go through background screening, credit checks, personality testing and multiple franchise evaluation forms.
We recommend at a minimum a single evaluation form, that provides the Franchisor (YOU) with enough information to get a basic understanding of the candidate’s ability, work history and skill set. The form should also have a sign-off providing the Franchisor with the ability (legally) to run a credit check on the candidate.
In many cases, there are opportunities to sell conversion franchises within a particular industry segment. Think Blockbuster Video selling franchises to mom-and-pop video rental stores or local real estate offices converting to ReMax or Century 21 franchises. When presenting a conversion franchise, the following should be considered based on Alan George's commentary and presentation experience in selling conversion franchises:
What's in it for me as a current business owner:
A) Ability to use a LOGO to create a BRAND. Your current company will have a higher value being a recognized brand and therefore higher resale capabilities (Coke vs NO NAME Bottling)
B) Best practices create the best results - systems and procedures allow you to scale your business.
C) Selling power- Name recognition opens more doors. Getting in is 80% of the sale.
A) Ability to lower cost by gaining buying power - economies of scale.
B) Shared cost vs total purchase- Paying 1/300th of Super Bowl ad, as opposed to 100% of Super Bowl ad allows an operator to leverage bigger buying power and a bigger brand.
C) Off-loaded marketing efforts- franchisor owns the message and the content for the media. You save "creative persons" efforts and salary: advertising, product development, and site selection-all owned by the franchisor.
A) Franchisor is taking lots of risk in market/product innovation. Franchisee only sells proven products and services.