The changing face of franchise recruitment

Peter Fiasco, Hairhouse Warehouse

Meeting the challenges of an evolving market

Franchising remains one of the most popular choices when people look at going into business for themselves.

The concept of ‘working for yourself but not alone’ still appeals to prospective business owners and, in this sense, little has changed in the world of franchising.

However, many franchisors have fallen into the trap of believing that there is no need to change the way they recruit new franchisees. If the old way is ‘not broken’, then why fix it? The information available to prospective franchisees, how they research brands that interest them and the many avenues of access they have to this information has changed over the years. People have information at their fingertips, they are savvier than ever before, and have researched your brand in depth before they even make contact with you.

Yet the strategy for recruiting new franchisees has not changed, with many franchisors stuck in their old ways – casting their nets wide and hoping to attract a large number of leads that will eventually dwindle down to a few franchise buyers. Experts agree, there needs to be significant  change in how new franchisees are recruited.

Getting it right

Corina Vucic, Director of FC Business Solutions, a consultancy service to the franchise industry, cites a number of organisations that are hitting the mark.

“The Barry Plant Group has implemented great succession planning within its current offices,” Corina says. “They recruit organically from within by training, empowering and up-skilling senior sales people who can then partner with existing franchisees.”

She also notes Zambrero, a Mexican restaurant franchise group that has set up area developers in various regions to recruit franchisees; Hudsons coffee – a multi-site ownership model with HR structures designed to help grow the group through existing franchisees; and Back in Motion, whose in-house recruiter targets physiotherapy networks, since franchisees must first be physios.

Corina also notes the change in Hairhouse Warehouse’s strategy. “What I am seeing out of Hairhouse Warehouse at the moment, is that they understand how franchisees become successful, and are bringing that to the forefront of the recruitment process,” Corina says. “There is a  pro-active approach and outside of the box thinking. I have seen them try new ideas that I have never seen used before by other brands.”

Prioritising recruitment

As franchisors, we need to think of recruitment not so much in terms of recruiting franchisees, but of finding the right partners for our business.

For many franchisors, recruitment is a high priority, however, there is little investment of thought, strategy and time. Rather than being part of the overall strategy, it plays second fiddle to outlet locations, marketing and other considerations. Some franchisors engage external companies to handle recruitment, or they rely on brochures, sales flyers, or a tab on their main website which tends to be lack lustre.

“While franchisors understand the need to spend money on recruitment, the amount they set aside is often insufficient, haphazardly allocated and poorly executed,” Corina says. “Many don’t set aside an appropriate budget to stimulate sales at the other end,” she says. “The budget should include human capital, marketing dollars, and a recruitment software tool or CRM to capture information.”

Franchisee recruitment needs to be part of a brand’s main strategy, not just an add-on or after thought. It is as important as any other department within a franchise business.

For too long it’s been a second-thought strategy. The old way of just generating as many leads as possible and trying to find the diamond in the rough is inefficient and old school. We need to cast the net in a more targeted way, to ensure the people coming back to us are more of the right people. The aim of the recruiter should not be to increase the number of leads, but to increase the quality of the leads that match the brands requirements. You may get fewer leads, but the strike rate is higher, with better efficiency and higher quality of candidates.

The high cost of getting it wrong

Not every person is cut out for franchising; of those who are, not everyone will suit your brand. An unsuitable franchisee does not have a high chance of success, and can soon find themselves indebted, in an emotional and financial crisis, not to mention the issues that it can cause within the brand.

“A struggling franchisee can do a lot of damage to a brand,” Corina says. “Their negativity rubs off on those around them, until other franchisees begin to question the franchisor and its model. It can cause restlessness and poor performance within the entire group.”

Recruiting the wrong person will cost the brand more over time than it would to recruit the right candidates. An effective recruitment strategy is long term, not the short term fixes which sometimes plague recruitment in franchise systems, and needs to take into account the bigger picture.

There is no precise timing, or formula for recruiting a franchisee. It depends on the prospective franchisee themselves. There are times when we go from enquiry to settlement in two months, and there are other times when this is pushed up to 12 months. Each situation is different and the prospective franchisee has to feel right about the purchase. It’s important to keep in mind that this is possibly the largest, or at least the second largest, purchase in a franchisees lifetime.

Clearing the path for new growth

It is even more difficult to recruit new franchisees to new sites when your brand has a lot of existing stores on the market. A brand should never have more than 8 – 10 per cent of its outlets on the market at any given time, with an optimal target of five per cent. Having too many outlets for sale can flood the market. We need to first clear out the backlog by supporting those who want to move on, and then make way for the new franchisees and new sites. If you have more than 10 per cent of your franchisees trying to sell their business, a prospective franchisee
will rightfully ask you why so many are trying to leave and as a franchisor you need to be prepared to answer this question both truthfully and precisely.

The impact of the digital age

Today’s consumer is better informed than ever before, and those looking to buy into your franchise, are no different. People have a myriad of avenues from which to gather information. It should come as no surprise that the internet is the greatest source of information available  whether accurate or not, and it can be your best ally or sworn enemy.

Many franchisors choose to undersell the franchising opportunities on their main website, with franchising information buried amidst a quagmire of other information, or not provided at all.

“It can be like trying to find a needle in a haystack,” Corina says. “When you finally locate the tab you want, the information is daunting, poorly communicated, or there is a lack of information. So what does a prospective franchisee do, they will look elsewhere or give up all together.”

How will prospective franchisees learn about your brand?

Some franchisors feel that detailed information about their business should be veiled in secrecy, and are reluctant to post the kind of information that potential franchisees want. Franchisors often ask interested parties to fill in an online form before they’ll divulge relevant information, this unwillingness to provide information creates a barrier to entry.

Franchisors tend to be hesitant about putting information out there, but as franchisors, we can no longer afford to be secretive about our brands. We cannot sell a secret. People want the information before they make any commitment and divulge their personal information to us. We need to strike the right balance of what we put out there and provide upfront and what we divulge at the right time. Having little to nothing for a candidate can be seen to be elusive. This may not be the franchisors intention, but it may be how it comes across.

The importance of online content

When potential franchisees are searching the internet to learn about your brand, what will they find? In the electronic age, content is key.

“Franchisors need to be clear about how they get information on their brands out in the marketplace,” Corina says. “People researching brands online will find information, whether it is good or bad. It’s up to franchisors to ensure that the information they find is the information you  want them to have. If you don’t keep abreast of what is out there, they are letting the world wide web pick what people find.”

Social media has given consumers and disgruntled franchisees an outlet to post comments and opinions about brands, with franchisors having little or no control over what is said. Without some kind of counter strategy, negative content rises to the top in search rankings and prospective candidates will keep finding that information. If a candidate can see past this and still contact the franchisor, as recruiters you will need to be able to answer questions clearly and truthfully, whatever is asked. Our strategy at Hairhouse Warehouse has been to direct marketing dollars to areas where we can generate as much online content as possible. That includes videos, articles where our brand name is mentioned, and a channel dedicated to franchising. So, when someone searches online for the brand or the industry, the right information is also found by prospective franchisees.

A way to take this a step further, is to create a website dedicated to the franchising of your business. The site should be packed with useful information for the would-be business owners, to help them to not only ascertain whether your brand is the right brand for them, but whether they have what it takes to be a franchisee in your brand. It should be the portal for the right information that supports your recruitment strategy.

Making the connection

People interested in franchising will research online and find all of the information that is readily available to them. If they only find a small amount of information about your brand, they are less likely to take their research further unless they have another reason that is driving their interest in your brand. On the other hand, those that find a decent amount of valuable information online about your brand, are more likely to make contact with you to ask more questions and further their knowledge. The question in both cases is, what have they found online? Candidates that have done research like this, tend to make better quality candidates. They have put thought into their enquiry, and have made the effort to make contact.

The days of trying to sell to people are over. It’s about providing information to help them with their decision-making process and business purchasing opportunity, while at the same time building a relationship with them. It’s up to recruiters to take them on a journey that makes them feel they want to be part of the brand – to feel an emotional connection to the brand. The more that is done to enhance that connection, the more it will make a prospective franchisee feel that this is the business for them.

“People like to do business with people they feel they can trust, so building the relationship from the start with any prospective franchisee is crucial to their eventually becoming a franchisee,” Corina says.

At the end of the day, it is about the connection that the franchisee makes with the brand that will determine success. There is no one set and precise method to achieve this connection but rather a tool box of resources and approaches that can be used. As a brand, the question we need to ask ourselves, ‘do we understand the path a prospective franchisee takes to becoming a franchisee in our brand?’

Peter Fiasco, Franchise Development Manager, Hairhouse Warehouse.