How to find franchisees?
For many franchisors, only when existing customers approach them to talk about replicating their business will they ever think about franchising as a business strategy for themselves. This positive attention indicates you've set a high value standard in the community that people want to emulate – why not capitalise rather than compete?
Taking the first step
Rightfully preparing your business for franchising will require the development of numerous documents. The main two are the franchise agreement and operating manual. The franchise agreement is the legal side, whereas the operation manual serves as a kind-of ‘bible’ of how to run every aspect of the business.
You will need to define the conditions for joining your franchise network. What requirements will need to be met by the franchisee? Also, you will need to calculate the fees required to be paid by the franchisee. Getting these fundamentals right might be the difference between success and failure. As such, most first-time franchisors won’t take on this task producing all these documents themselves. Many will hire a specialised consulting company to help produce a clear and concise set of documents and processes. There’s never any harm in being over prepared.
Finding the right fit
A franchisor has to consider what traits are desirable in a franchisee. Ideally you want someone that understands what franchising means; someone who will abide by the rules of your network and understands why this is important for shared success. Business and financial knowledge is looked upon favourably. Keep an eye out for entrepreneurship skills and someone you think will have no issue constructing a business plan. This will often become apparent in a candidate’s ability to source a site location that meets the franchise systems criteria. Therefore, a solid level of engagement and devotion to the business early in the process is a good way to gauge if someone is both serious and has the traits you are looking for.
An important question a new franchisor may find themselves asking is, do I look for an industry candidate or a non-industry candidate? Unfortunately, there is no clear-cut answer whether a candidate’s industry experience will benefit your service point, or not. It really depends on the type of system and the know-how itself. Franchisors might look an industry partner if the candidate has access to good locations and a solid customer base. At other times industry experience may prove be a hurdle - where an industry newbie might be more valuable. For example, when it comes to McDonald’s, an experienced restauranteur might interfere with the process, as their system isn’t run in a traditional restaurant sense. The existance of industry knowledge and bad habits could creep into franchise point and cause issues and misunderstandings between the franchise and the franchisee. Therefore, business and people management skills are usually seen as more favourable under these types of strict conditions.
In a classic recruitment process the employer evaluates a candidate and makes a final decision. In a franchise situation it’s a two-way process where both parties will evaluate one another before making a final business cooperation decision. From a franchisee’s perspective, the franchisor should have a franchise package prepared and shouldn’t be afraid to show the franchisee a model contract. The franchisor should also prepare in advance with information about the candidate and should be able to answer any questions about the business and finances that arise.
Prepare the right tools
Before you start actively seeking franchisees make sure all of your ducks are in order. Collate all the basic information about your franchise and prepare your marketing pitch that will entice candidates to invest in your brand.
Pro tip: come up with a slogan to sell your franchise.
Here’s a list of information and questions a franchisor must be ready to answer:
- Site requirements (size of cities, area and location of the premises, etc.)
- Amount of investment required for franchise point (needed to launch and immediately after opening)
- Amount and structure of ongoing charges
- Estimated payback period
- Scope of support before opening
- Ongoing support from the franchisor
- Expectations of candidates
- Scope of the franchisee's duties
- Required security
- Information about other successful franchisees
World wide web
This should be one of the primary sources of information about your franchise. The candidate should find enough information on your website to preliminarily assess whether they meet the basic criteria for opening their own premises under your brand.
Your presentation is the next step to securing a franchisee and therefore should be more detailed than the materials available on your website. It’s also worth having a lightweight, non-editable summary of your presentation that can be sent to the candidate by e-mail.
Having a franchise folder is a useful marketing tool to use with potential franchisees. It’s not an essential item by any means, but if you’re going to lengths to produce one, make sure it’s graphically and textually consistent with other marketing materials of the company. Remember to stay on track with a target focused on potential entrepreneurs who want to do business under your name.
Imagery is an import way to sell the dream. While the numbers are most important, keep in mind that your future franchisee might like to see what their future store or service point will look like. Be sure to select a range of good photos of your products and services. Don’t underestimate the power of vision. If you’re not that tech savvy – get someone in to get some professional shots which can be used on your website and in your marketing material.
You can’t treat franchise advertising in the same way you treat other product advertising. The simple way to create a good franchise advertising campaign is to understand what a franchisee is, and what the licensee is due to expect from a franchise. The advertising of a franchise has to relate directly to your business – referring to future profits and the speed of returns on the investment. You’ll want to show the business at their fingertips in a promising market, with the safety of regular support of the franchisor. It pays to promote the dream of owning your own company. If the brand isn’t widely known, make sure your advertisement shows what the business is all about. In a franchise advertisement, we expect to find the most important advantages of the system, a slogan, and website aimed at evoking positive feelings.
Franchise public relations (Franchise PR)
Of course, you have to proven and profitable business to have any success in franchising. But credibility sits at the core of franchising. No fancy packaging or sales gimmick is going to sell and maintain your success. Research from the PROFIT system consulting company shows it takes several months between the first contact with a curious investor and them signing the final contract. During this time, the candidate will read, check, compare and… think about their final decision. This buffer of time gives you a chance to establish your image of a proven and safe franchise to join. Try use a clear and systematic communication style to deliver your offer.
Systematic communication of the franchise offer is otherwise called "franchise PR". This is not the same as franchise advertising, as it requires specificities, numbers and facts from the franchisor. It’s based on systematic information about the development of the network, modifications to the franchise system, the company's results or the successes of franchisees - especially those with more than one branch. It’s worth mentioning that franchisees already operating in the network remain an important element of franchise communication. In the eyes of the candidate, another franchisee is a more reliable source of information than the owner or head office of the franchise system.
For a would-be franchisee, it’s probably easier to identify with a current franchisee who has already been through the same process. Basically, they are taking the same risks down a similar path. Besides, the operating franchisee is technically an independent entrepreneur and not an employee of the network. Offer the best franchisees to participate in the process of acquiring new partners. Don’t be afraid to include them in the recruitment process - offer their assistance and participation in meetings or allow direct contact. McDonald’s does this with great success.
As mentioned earlier, credibility goes a long way when trying to convince a potential franchisee of your business idea. The candidate is looking for all the signs you are a proven, profitable and safe concept to invest with. In search of a credible business concept, candidates will often check if the company is registered member of their local franchise organisation. As these networks adhere to the European Franchising Code of Ethics, a membership adds weight to the case you are the real deal. Members of the organisations receive credibility certificates if they have good feedback with multiple franchises continuously operating for two years under their franchise system.
Warsaw Franchise Fair
The most international and important trade fair event on the calendar in Eastern Europe is the Warsaw Franchise Fair. Held at the Palace of Culture and Science in Poland every October, over 200 franchise brands play host to over 7,000 visitors.
Eastern Europe is still one of the greatest growth markets in the world, with Poland leading this charge. This makes the Warsaw Franchise Expo a prime place to exchange contacts and meet potential business partners. It’s a truly excellent opportunity for franchise companies to meet potential franchisees and develop their businesses in the region. Expo visitors are mostly entrepreneurs and SME owners who are looking for good franchise opportunities.
Large franchisors are mixed in with new and foreign brands and will try their hand at connecting with new players at the Warsaw Franchise Fair. Regular exhibitors of the Franchise Fair include: McDonald's, Subway, Lodolandia, Biesiadowo, Bricomarche, Carrefour, Żabka, Yasumi, Bank Millennium, PKO BP, Santander and Metrohouse.
The Warsaw Franchise Fair is accompanied by the Own Business Forum. This is a place where future franchisees can meet successful and famous business personalities who run their own businesses. Current franchisees of exhibiting companies will also speak at the forum. They will spill the beans on how they’ve run their own business under the franchisor's brand, how they rate their cooperation with headquarters, and what support they can count on, etc. This is a great opportunity to get first-hand information about the daily work of a franchisee. Don’t forget to bring a list of your questions!
There is an electronic ticket system at the Franchise Fair. Readers of FRANCHISING monthly can download a ticket free of charge after registering on the website bilety.franczyza.pl and entering the promotional code available in the September and October issue of the monthly. Candidates invited by exhibitors also receive free admission tickets.
Exhibitor's show guide
- Show the franchisee what their business might look like – make the stand resemble a store or service point as much as possible.
- Be professional - provide good and accurate information about your franchise, including financial terms of cooperation and the benefits of the franchisee.
- Publish the event invitation on your website and social media. Perhaps some of your customers include prospective franchisees?
Franchise Expo Paris
Paris holds the largest European franchise fair in September every year. It is yet another recognised world franchising event where franchisors can meet potential franchisees or master licensees from around the world. Franchise Expo Paris gathers nearly 500 exhibitors and expects over 36,000 visitors. A visit to this fair gives a full overview of license offers and allows you to learn about the latest trends in franchise markets around the world.
Other fairs in Europe include, London, Frankfurt, Milan and Katowice. They are much smaller and local in character. Visitors to these fairs generally prefer franchise concepts known from their domestic markets.
Your own backyard
Regardless of the size of your marketing budget and the scale of your franchisee acquisition campaign, don't forget to advertise in your own backyard. You can post information about franchising on your social media, or through targeted social media marketing. Even a humble poster saying, "Do you want your own store?" could be easily hung up on premises. If you, or your managers build up strong report with the right customers, you can also remind them that if they love your store, there is potential to own their very own.
By conducting a little bit more research early on, you can save a lot of time down the line. Simply getting a candidate’s CV may not be enough to establish if they fit your criteria. We all know sending out a basic CV only takes a minute. Don’t let that minute turn into hours. Therefore, by sending a questionnaire to the applicant in response, we quickly weed out the ‘not-so-serious’ applicants, while gaining some new valuable information.
If the candidate is serious about joining the network, they’ll make the effort to get back to you. If not, the lead is removed and we focus back on real applicants. In a well-prepared questionnaire the candidate provides the recruiter with information that won’t be found in a CV; motivation to buy a franchise, capital held, financial liabilities, their willingness to work at a franchise point. All this information will help the franchisor in choosing the best candidates.
Don’t hesitate to contact us
How long does it take you to get back to interested parties? Not responding in a timely fashion is poor look for any organisation. Would-be investors might get cold feet, assuming the lack of response is a reflection of the support from the franchise company. Good franchise practices say candidates should receive feedback from the franchisor no later than 24 hours after submitting the application. If you’re too busy or not up for it, we can help!
Meetings are important in the creation of a working business agreement. It will be the first time both parties come together with information you’ve both received from one another, so don’t forget to stay professional. No single person is in charge of the meeting. For the sake of their investment, they are judging you as much as you are judging them to represent your brand.
The first questions will be: where will the meeting take place? It doesn’t have to be at your company's office. To make them feel more comfortable, you could suggest the meeting be the city where they would like to run their business. You could also use that opportunity to assess the suitability of the location region and or site.
Try not to surprise the candidate with documents that need to be signed. Let them know in advance if you want to sign a contract at the first meeting, and of course give them a chance to look at the documents before the meeting. Keep in mind there is no universal franchise recruitment model. Some franchisors limit themselves to one meeting (especially in simple and cheap concepts), others will propose more.
- Franchise Fair Warsaw
- Franchise Fair Katowice
- Franchise Expo Paris
- Training for franchisors (including the recruitment process)
- Consulting services in the franchise of PROFIT system
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