Attracting high quality franchisees remains a significant challenge for the Australian franchise sector.
It is hardly surprising the recruitment topic is a perennial favourite at events with franchisors and consultants fixated on discovering a new best practice or a tip they can implement in their own business.
So what are the some of the key things you can do as a franchisor to attract and convert prospective franchisees?
Show you are a reputable franchise brand
2015 was a year of adverse and sustained media coverage on the Australian franchise sector with several high profile brands subjected to intense and ongoing public scrutiny.
Prospective franchisees are attracted to quality franchise brands and top quality brands want to be identified as genuine and transparent.
Franchise Council of Australia membership and registration with the Australian Franchise Registry are two excellent indicators that brands are serious about their reputation and that of the franchise sector; recognising the importance of a unified, representative voice and the role improved information plays in supporting that representation.
Provide effective initial information for prospective franchisees
High quality franchise brands have nothing to hide and are generally willing to share detailed information packs to help prospective franchisees quickly determine if they are the “right fit” for the brand.
Key initial information for franchise buyers should include an overview of the brand’s history, footprint, products, brand values and the initial investment.
Help franchise buyers see how to achieve an acceptable financial return
This starts with clear guidance on the initial investment (including expectations around rental guarantees and working capital requirements) and a meaningful breakdown of what those initial costs are.
With the price of misrepresentation high, care does need to be taken with earnings or profit guidance but franchisees will look for some guidance to complete their own assessment.
Key drivers of revenue, actual and ranges from existing units, expense benchmarks, non-financial factors and connections with existing franchisees as soon as appropriate can all enhance confidence and the franchise buyer’s commitment to the transaction.
Be a “lender friendly” brand
Smart brands recognise the importance of good relationships with lenders to help prospective franchisees buy a franchise. Accredited status is generally granted to brands that meet certain minimum requirements and have been through a comprehensive review process. These brands are allocated dedicated contacts and their franchisees generally enjoy more consistent and predictable treatment.
Whilst only a minority of brands enjoy formal bank accreditations, a growing number have taken additional steps to make themselves more “lender friendly” by creating tools that help their franchisees obtain finance.
Position franchisees for early success
Prospective franchisees will take great comfort where they can see a structured training program is in place that will help ensure they get off to a good start.
“Hands on” training in one or more franchises can be invaluable in ensuring franchise buyers have a very realistic idea of what is required on a day to basis and build early confidence in the brand and their ability to successful run their own business
Building the business
Franchisees are looking for more than just compliance from field support. Franchise brands that can show how they have support programs that not only can detect early warning signs but also help unlock and drive real business growth opportunities provide great inspiration and appeal to franchisees.
Protecting a franchisee’s business
Professional advisors and lenders know that even the best systems have franchisees performing below expectations. Fear of loss is a great hurdle for prospective franchisees: business failure, loss of equity and loss of dignity can all figure prominently in their decision making process.
Being able to give real examples of when franchisors have helped franchisees deal with unexpected competitive pressures or business interruption threats deals with the fear factor head on.
Ultimately the old adage that “nothing succeeds like success” rings true. Ongoing investment in your brand and the success of your franchisees will drive both franchisee performance and engagement which will in turn underpin the success of your franchise.
Everyone likes to follow a winner and prospective franchisees are no different.