Traditionally, the primary measure of franchise success has been system growth. Whether in press releases or industry ranking reports, new franchise locations take’s precedent over other news. It’s rare when a franchisor or PR agency publishes news about an accomplishment other than the addition of a new location.
The emphasis on franchise system growth is as old as franchising, having been accepted as the indicator of a quality franchise. In most cases, fast growth franchises are typically judged to be superior to systems with slow or zero growth. This can be the case even though many fast growth franchises have had problems establishing and supporting a network of profitable franchisees. The fuel for generating fast growth is defined as prospective franchisee leads. This encourages most franchisors to apply the bulk of their resources to obtaining franchise leads which can result in neglecting key components of a quality franchise program.
Numerous surveys and franchise industry reports reveal that it takes approximately 1 to 1.5% of total leads to complete a new franchise sale. This low conversion rate indicates that most leads are either poor quality or includes individuals who have a casual interest in a franchise. Secondly, those candidates who are qualified often fail to see the value of investing in a specific franchise opportunity. Because of the low productivity of most leads, franchisors will usually rely on external marketing sources to generate their franchise leads.
Clearly, the approach to attracting quality franchise candidates and closing the sale requires a shift in strategy.
When establishing a franchise development strategy remember that it takes more than leads to sell new franchises. Although, prospective franchisee leads are important they are only one part of an effective development strategy. When a prospect visits a franchisor website they need a reason to stay on and pursue more information about the franchise. This requires providing reliable and interesting data that will set your franchise apart from the others. You need to give a prospect a reason to learn more.
When it comes to franchising, Murphy’s Law comes into play more often than desired. In many cases, a new franchise takes off slower than anticipated.
When franchisors strategize their system growth, the major focus is placed on the amount and quality of their franchisee leads.
In the franchise industry, franchisors can view comparisons and relationships between consumer satisfaction for the products or services a franchise offers.
These traits lead to low franchisee turnover, an attractive investment opportunity, outlet growth and brand recognition and consumer satisfaction.
Owning a business is hard. Each venture has its differences – different customers, different go-to-market strategies, different business partners.