Franchise Development, which entails recruiting, selecting, vetting, and qualifying franchisee candidates, is likely the most essential task for franchisors. Failure to cultivate successful franchisees can result in a decline in franchisee financial success and a shortage in franchisor royalty revenues.
Effective franchise development allows franchisors to finance and expand their franchise organization, build franchise brand recognition, and bring value to both the franchise brand and franchisees. Whether a franchisor employs in-house development personnel, franchise brokers, or a combination of both, the procedure is essentially identical.
Steps to Successful Franchise Development
1. Franchise Target Territories
Identifying the franchise areas with the highest demand for the franchise’s products or services is the first step in the franchise creation process for example is this place is best for an auto insurance franchise or not. Targeting franchise territories is a procedure based on meticulous research rather than hunches. Key factors should give the franchisee with a path to profitability by analyzing the territorial demographics pertaining to the number of potential franchise consumers.
2. Establish the Franchisee Profile
After determining the regions available for franchisees, the franchisor must develop an ideal franchisee profile to find the most qualified candidates for franchisee recruitment. A franchisee profile is a list of characteristics and credentials that the perfect candidate for the best franchise to own should possess. In the past, candidates for franchises were frequently examined only on the basis of their financial qualities.
3. Recruiting Candidates for Franchises
Recruiting franchise applicants is the method franchisors use to encourage qualified individuals to reach out and apply to be franchise candidates. Franchise lead generation is an alternative term for franchise lead generation. The franchisee profile will be crucial in selecting where and how to recruit franchise prospects.
4. Process and qualify franchisee lead information
Following the generation of franchise leads, the next step in the franchise development process is the processing and qualification of franchisee leads and queries from potential franchise candidates. This stage refers to the strategies and procedures franchisors use to identify the most qualified and capable franchisees for the franchise system. The following phase, after receiving a completed franchise application, is for the franchisor to analyze the application to assess the person’s franchise eligibility. Franchisors employ the process of qualifying the franchise prospect to fully approve an individual’s qualifications to be granted a franchise.
Qualifying franchise candidates is an integral part of the franchise development process, since nothing may be more disruptive and challenging for a franchisor than a poorly qualified franchisee who cannot operate their franchise effectively.
5. Communicating with the Franchise Prospect
Engaging the franchise candidate is the process by which a member of the franchise development team can present the franchise candidate with essential components of the franchise opportunity and collect further information about the candidate. Once prospective franchisees have been qualified and given the opportunity to study the FDD, they will be contacted by the vice president of franchise development or another member of staff who can lead them through the franchising process. In larger franchise firms, the individual that contacts the prospect is typically a franchise development or sales professional. This is an opportunity to address any questions the candidate may have after reviewing the FDD for the first time.
The engagement process is essential to the development of a franchise since it allows the franchisor’s representative to learn about any issues a candidate may have about the franchise. This can also reveal information about a candidate’s qualifications that were not evident from the franchise application. It is necessary to assign a particular franchise staff member to work with a franchise candidate. This could improve the communication between the franchisor and franchisees and reduce the likelihood of a candidate receiving contradictory responses. Ultimately, this arrangement can foster a positive relationship between the representative of the franchisor and the franchise candidate.
6. The Franchise Exploration Day
Discovery Day, the sixth step in developing a franchise, is a meeting between the franchise candidate and the franchisor’s corporate headquarters. Discovery Day is the initial face-to-face encounter between the franchise candidate and franchisor management. It is essential that the franchisor’s team may meet the franchise candidate, evaluate their qualifications, and makes a final decision regarding the candidate becoming a franchisee. This is also the last opportunity for the franchisor to confirm the applicant’s qualifications. Before concluding the franchise purchase, every franchisor asks prospective franchisees to visit their corporate offices.
Discovery Day is designed for franchisor personnel to meet the franchise candidate after the candidate has met with franchisees, examined the FDD, and gotten knowledge of the franchise program. It is also an opportunity for the franchisee candidate to meet franchisor management, study the franchisor’s corporate culture, acquire answers to any unanswered issues, and negotiate any open franchise agreement matters.
7. Conclude the Franchise Agreement
Preparing the franchise agreements and establishing a closing date is the final stage in finishing the franchise transaction. Before the closure, it is essential that the franchisor thoroughly examines all of the documentation. This should be done to prevent errors such as omitting ancillary agreements such as personal guaranty, non-compete, and non-disclosure agreements.