Franchise Leads Tips

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What is the process for franchise approval?

Create The Approval Process

A prospective franchisee wants to know the process for franchise approval and that means you better have one. It needs to be clear, concise and achievable.

When you're developing the process, think of what you can support. Check what your competitors are doing. Most companies that offer franchises also detail the steps to acquiring a franchise on their website. The information is there, all you have to do is go look.

Start with basic steps and customize them for your situation. Here is a sample process:

  • Read through the information on the corporate website.
  • Investigate other websites and competitor's information.
  • Contact us for an information package.
  • Do a personal analysis and determine if franchising is for you.
  • Submit a franchise application.
  • Begin the approval process: background, reference, credit checks.
  • Receive and review the Uniform Franchise Offering Circular (UFOC).
  • Ask questions. Talk to us.
  • Visit the corporate facility.
  • Move forward with a signed franchise agreement and franchise fee.
  • Create a market plan and timeline for opening your business.
  • Begin site selection and construction.
  • Grand opening!

   
Why are demographics important?

Determine The Demographics

Area demographics are critical to franchising. Not only will you depend on demographics for your market analysis, you'll rely on them when you determine the scope of the territory you're going to grant a franchisee.

There are a lot of companies that specialize in extrapolating U.S. Census information and for a fee you can get just about any report you need. Reports that are cross-tab or have nested requirements are very expensive and not too many companies can supply them. Be sure you know what you really need in a report before you request it.

Another option is to do your own research. Depending on how recent it is, you may be able to use the census data without extrapolating. Census data is available online at no charge.

There is also a great deal of information on state websites. You can usually find maps, population and industry data. Other sources include free demographic websites such as ePodunk.com. This site provides in-depth information about “more than 46,000 communities around the country, from Manhattan to Los Angeles, Pottstown to Podunk.”

   
Do I need to understand a franchisee's local market?

Analyze The Market

The prospective franchisee's personal and financial qualifications aren't the only things you need to consider. You also have an obligation to thoroughly understand the market in which the franchisee is proposing to operate. It does no good - and a great deal of harm – if you've got the ideal candidate and business in the wrong place.

You must analyze the proposed market area yourself. Don't assume the franchisee knows how to do this. Some questions to ask about the area are:

  • What type of neighborhood surrounds it?
  • Who lives there?
  • What is the area's household income?
  • Is the population growing or declining?
  • Are the families young with children or are they older families whose children have moved out?
  • How many of your desired target customers live in the area?
  • How many target customers live within five miles of the location you are considering?
  • Is your competition represented in this area? Where? How strongly?
  • Is your competition doing well in this area?
  • Is the economy stable, growing or declining?
It's the same kind of data you collected when you opened your own business, but for a remote location. It may be difficult to acquire and you should involve the prospective franchisee in data gathering. Once you have the market data be brutal in evaluating it. There's no room for sentiment in this assessment. There's always another location.

   
Is a background check on the prospective franchisee really necessary?

Check, Check, Check!

You have a personable, qualified prospect that also has a lot of cash on hand. What else do you need to know before you take the next step and offer a franchise?

You absolutely without question need to do a background check on your prospective franchisee. You should include a consent form for background and credit checks in your franchise application. Once you receive the signed consent form proceed with the checks. Whether it ultimately effects your decision or not, you need to have a thorough understanding of your prospect's background. A background check includes criminal, sex offender, bankruptcy and credit checks.

You can run background checks through a variety of online processors. LexisNexis is a respected vendor, and their website contains all the information you need to apply for an account with them. Note that they will require proof of your business license, professional license and corporate charter or similar certificate of organization.

   
What kind of files should I send electronically?

Secure Your Information

E-mail is a wonderful medium for distributing a lot of information in a very short amount of time, but it's also a medium that is rife with potential security issues.

When you send franchise information via e-mail to prospective leads, make sure you use .pdf files. These are files in a format that can be read but not changed. If you do not have the necessary software to save .pdf files on your computer you can convert files online at www.adobe.com. There is a fee for conversion, but it is reasonable and it protects you from unauthorized changes.

Another benefit of the .pdf format is that the files are smaller than most application files and thus easier to send and receive. You do not want to irritate a potential franchisee by sending huge files that they may not be able to download.

   
How much information do I provide to a qualified lead?

Send The Right Information

When a prospective lead contacts you for more information than you provided in your initial response, you need to give them what they ask for. Make a complete package of information and offer it either electronically or by mail. Try to offer the majority electronically – printing and postage add up! You should familiarize yourself with the kind of information your competition provides, and provide at least that much. Basic information includes:

  • Introduction letter
  • Franchise application
  • Description of franchise approval process
  • Benefits of franchising with you
  • Marketing materials
  • Call to action
This material should all be professionally presented and feature your name and logo prominently.

   
What information should I include in my initial response to a lead?

Sell From The Start

You need to determine what your initial response to people requesting franchise information is going to be. You may have a dozen or more requests every day. Are you going to call and talk to each of these people personally? Can you afford to do that in terms of time and money? Can you devote not only the conversation time but also the time to actually get hold of someone and not their answering machine? Can you be at your best and truly sell your franchise multiple times a day? Do the people making the requests want to talk to you?

Probably not. It's much more economical and efficient to generate an e-mail response. Draft a letter that's friendly and professional to thank the requestor for their interest. Continue with some background information on yourself and your business. Note that you have a great deal of information available to qualified people and that you'd be glad to discuss their interest further. Ask them to contact you via e-mail or telephone if they'd like more information.

That doesn't sound like it's enough of a contact, but it is. It's a sales pitch and it doesn't give away your confidential information for no purpose. Ninety percent of the leads you get aren't going to be valid. They'll be people fishing or wishing, not qualified prospects. Of the 10% remaining, 7-8% won't meet your requirements. It's the remaining 2-3% you want to spend your time and effort on selling.

Give enough information in the initial contact to spark their interest. Then get serious with more if they want it.

   
What is the profile of the ideal franchisee?

Screen For Success

You have hundreds of potential leads. A few of those are qualified candidates. Should you sell to the first person that can come up with the franchise fee? As tempting as it may be, you really don't want to sell a franchise to just anyone who has enough money. This is going to be an ongoing relationship and you have a vested interest in seeing your franchisees succeed. So do your part and screen for success.

You should determine the profile of your ideal franchisee up-front, particularly documenting the skills and talents required. The characteristics of the franchise business dictate the kind of franchisee needed.

You're going to work with this person. Make it the right one.

  • Do they have adequate capital? Is it liquid?
  • What are their business skills? People skills? Coaching skills?
  • Do they pay attention to details? How are their organizational skills?
  • Are they team players, or do they work better alone? (the ideal candidate is both a leader of their people and a follower of the franchise system)
  • Will they stay committed? What is their track record in business?

   
What information should a lead provide?

Generate Workable Leads

When you request contact information from a prospective lead you should request a level of information that is useful to you. Name, address and phone number aren't sufficient. You have limited time to respond to these people and you want to make the most efficient use of it and that means prioritizing who you contact first – and possibly at all. Absolute basic contact information includes:

  • Name

Address

  • Phone number

Best time to call

E-mail

Desired franchise location

  • Available capital

Timeframe for franchising

You may also want to request:

  • Reason for wanting to franchise

Qualifications for franchising

Planned sole owner or partnership?

  • Employment history

Financial information

Not everyone is comfortable imparting this degree of information, but many people are, and the more information you receive the better you can plan.

   
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