Franchisee Recruitment: The times - they are a-changing

Robert Toth | Partner | Marsh & Maher Lawyers

Robert TothFranchising recruitment has changed considerably over the last five years. The days of consultants offering franchisee selection services, which were not highly successful, don’t work now.

Mature franchisors are finding it more difficult to recruit quality franchisees and newly established franchisors are finding it hard to attract the right new franchisee. So where do you find your prospective franchisee?

They may be right before your very eyes:

1) Your existing customer that loves the brand and services that you offer;

2) Your existing manager and/or staff, who enjoy working in the business; and

3) Your website and social media use such as Facebook, Twitter and LinkedIn, all avenues to market and promote the brand. Contacting editors of journals and magazines (like Joanne!), and getting advertorial content is also useful in announcing your new business brand and opportunities in the market. As they say, if you don’t sing your own praises, no one else will.

Franchise Expos

There are a number of franchise and business expos these days (some might say way too many so choose wisely!)

A mobile franchise client recently attended the Specialised Events Melbourne Franchising Expo and received 13 leads from which he secured two prospective franchisees. Although attending franchising expos is costly and involves time and attention including marketing collateral, it can be an effective way to gain brand exposure and interest, but there is no one magical solution so it may be a combination of all the above.

How to secure long-term successful franchisees

Here are some tips:

1) Don’t rush! It takes time to properly develop and establish a franchise system. Cutting corners will land franchisors in hot water with the ACCC for failure to comply with the Franchise Code and possible litigation. A recent case last week published by the ACCC highlighted the need for franchisors to ensure they give full and honest disclosure.

You cannot contract out of the 14 day disclosure period so if you have potential franchisees interested they need to be patient and wait until you are ready and fully compliant!

2) Don’t aim too high! The days of rolling out 12 franchises in quick succession are gone.

Focus on rolling out 2 or 3 franchises in a controlled and supportive way to ensure your first franchisors are successful, happy and financial. They are your best marketing tool. Slow and steady is the message.

3) Choose your franchisee carefully! The applicant who has the money may not be the right franchisee, so don’t take their money.

If you feel at the outset they are not right for the organisation then don’t take them on. The 80/20 rule applies - that is – 80 per cent of your time will otherwise be spent on the wrong franchisee, leaving 20 per cent of your valuable time to support the rest.

4) Franchise entry costs - is your offer att ractive and competitive in the market? Franchisees can now readily compare new systems and offers without leaving their home or office.

The trend is to reduce franchise fees not increase them.

The market has changed and the franchisee’s expectations have also changed as to what they expect a franchise system to deliver. Franchisors should be mindful of their obligations of disclosure. The recent commentary by Dr Michael Schaper in the recent ACCC proceedings against Morild Pty Ltd (Pastacups) and their former director need to be borne in the mind of all franchisors where he said, “People who decide to buy into a franchise system often put their savings on the line and, in doing so, should be able to make informed business decisions on the basis of full and accurate disclosure by the franchisor.”

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