Franchisors need to have financial standards for their franchise candidates. In fact they are a 'must have' in your franchising sales and recruitment process.
And your franchise candidate financial requirements for net worth and liquid capital (cash or cash equivalents) should match up with the Item 7 Estimated Initial Investment in your Franchise Disclosure Document - FDD. And be bankable by meeting or exceeding bank lending requirements.
Now I look at a lot franchise sales processes and a big area of opportunity to generate more franchise sales is your application. Most franchise salespeople don't think of their franchise application as a candidate attraction and sales tool.
I think you should. And here's how.
You should use the 'Joe Friday Dragnet Approach" of "Just the Facts Ma'am". You want the 'bare essentials' at this stage and most franchise applications ask too many questions gathering information the franchisor and sales team will not ever use.
Let me ask you how many times do you look at the franchise candidates application after you have confirmed they meet or exceed your requirements?
Okay here's the quick fix list of do's and don'ts.
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Do make it easy to fill out the application. Get it to 20 minutes or less.
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Don't ask for Social Security numbers at this stage. You don't need to.
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Do get the 'bare essentials' of net worth and available cash. You need to know they qualify.
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Don't let someone in the Finance or Accounting Departments control this part of the franchise sales process. You need to. Franchise sales is your thing.
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Do keep your franchise application to one page. You'll get points for this with candidates and more will apply.
Remember it's the financial wherewithal of the candidate that's important. And the trust you build at the beginning of the sales process. It's not about making people do more work than is necessary. You're not the Department of Motor Vehicles.
Have the right financial requirements for your concept. But make it easy & dead simple to apply.
We fix gaps on franchise sales processes. And if you need me to look over your franchise application process call me at 443.502.2636 or [email protected].
This is valuable info, Joe. It's important to think like a prospective franchisee. I talk to these folks all the time and much of what many franchisors do just turns them off -- and unfortunately, unnecessarily.
Franchisors would be well served by remembering "different strokes for different folks". I always think in terms of DISC personalities -- and the S and C personalities are NOT going to complete most franchise "applications" or "requests for information" because they are intimidating. Not everyone sees that application the same way.
This is an area where franchisors can easily pick up more sales -- they turn away sales because they put up these unnecessary roadblocks that get in the way of certain prospects -- and create fear.
Of course it's also important to know IF the S and C personalities make top-producing franchisees. If not, then forget what I said!
John -
I have heard franchise salespeople at IFA roundtables and break out sessions say to the assemblage that -
'I won't even talk to a prospect if they haven't filled out an application'
'If the lead can't complete an application they really aren't that interested'
And they crowd praised the VP of Franchising with grand applause for having 'high standards' and for not getting pushed around by people he thought were time-wasters.
I have frequently said, Joe, that all franchise opportunities are not created equal . . . and all franchisees are not created equal . . . and now we also know that all VPs of Franchising are not created equal! . . . a couple of my clients -- one has been a client for more than 12 years; the other for more than 20 years -- both sell more franchises in a MONTH than most franchise companies sell in a year . . . and if they ever heard one of their franchise sales people express the opinions and ideas that you mentioned -- that person would be fired. Interestingly, now that I think of it, these two clients do not allow their franchise salespeople to attend IFA meetings -- but the VPs do, and are also involved in IFA functions. There's nothing wrong with IFA -- IFA was my client for many years -- but there is something fearful about what some of the roundtable leaders and speakers say at IFA (and elsewhere) -- and some franchisors do not want to expose their employees to those ideas, understandably.
Now that I think of it -- I have more to say about this!
At the IFE last year three of my young students from Kuwait attended, and they were having trouble getting the attention of the franchise sales guy at a brand that they wanted to buy and bring to Kuwait. The students came and asked if I could help them. So I went to visit the sales guy, who I had never met.
The sales guy didn't think my students were "that interested" -- actually, he didn't think they were qualified because they were students. Little did he know, any one of the three students could have bought his employer's company many times over. (You can't tell a book by its cover).
Eventually the sales guy "disclosed" my students -- he really didn't have to do that given that they are not US citizens, but this sales guy was now trying to be "helpful" and, frankly, didn't know any better. Ultimately I would have told my students to ask for the disclosure anyway. Meanwhile, I told my students NOT to reveal their financial information because I knew what was going to happen.
Students are students -- they are not all created equal -- and they decided, on the airplane ride home where they filled out the application, that they should provide an "honest" response regarding their financial capabilities . . . and what did the franchise sales guy do when he saw that information? He went from wanting to sell them nothing, to suggesting that they buy 10 units with more than $1-million upfront. My students had already told him that Kuwait is a small country (like many Americans, he probably thought Kuwait was in West Texas) and that the country could not handle more than 3, maybe 5, locations.
When I met with the students at lunch the next week they asked me if I thought the sales guy had "integrity" -- a big word here in Kuwait.
Kuwait has dozens of American franchises -- in fact, we have dozens of international franchises, many that you never see in the USA -- but one that we don't have is the one represented by the sales guy who clearly had no integrity.