Controlled Growth Key to Success for New Franchise Concepts!

Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…

Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.

The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.

They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.

Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.

However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.

As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.

Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.

While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.

It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.

So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.

Social Media: Looking Back to 2010 – Has Anything “Really” Changed?

Four years ago, I submitted an article for the International Franchise Association publication, Franchising World. The article was about capitalizing on what was then a relatively new but increasingly mainstream technology, social media. When looking back at the article I quickly realized that not much has really changed from my philosophy in effectively utilizing social media, and especially in a franchise environment. Sure, some of the platforms have changed and some social media have gone by the wayside while new ones have popped on the scene, but from a strategic standpoint, my philosophy remains in-tact as does the [potential] value social media brings to franchise organizations. But, I’ll let you decide for yourself as you read on and I look forward to your feedback…

Simplifying Social Media for Optimum Results
As published in Franchising World – August 2010

The key to effective technology usage is developing an integrated plan, choosing the most complementary tools and implementing well-planned strategies.

Integrated Franchise MarketingSocial media technology is evolving at a rapid pace. New tools enabling increased communication with various constituencies are being introduced on a frequent basis. While the franchising community is not yet embracing social media at the levels of the public-at-large, its members are beginning to understand the multi-tiered value that social media participation can provide to their firms. This value includes:

• Creating or improving brand awareness that drives business to franchise locations,

• Creating interest in franchise opportunities or franchise-candidate lead generation, and

• Establishing or improving communications and information-sharing throughout the franchise organization.

A frequently-cited impediment to the franchising industry’s adoption of social media is the perceived time commitment required to achieve optimum results. There are many implementation methods and technology tools that can be utilized to execute a firm’s social media program in a way that will maximize ROI, minimize time requirements and achieve complete integration into its overall marketing strategy, all of which will serve to achieve optimum results.

Saving Time

A big part of the challenge with building a substantial brand presence on social media is the need to ensure that a brand is reaching its target audiences on the various social platforms where it is participating, and since the number of social media platforms now numbers in the mid-hundreds, it’s obvious why this can be perceived as a daunting process. Participation on any platform necessitates building a profile there and then adding new content on a regular basis to keep the brand’s audience interested and engaged. While firms do exist that will concurrently build a company’s profile on up to several hundred sites (for a fee, of course), these tend to be very generic profiles that will not serve to attract the interest of a target audience and are therefore not recommended.

A better plan is to begin by identifying the top 10 social media platforms where a franchise will find the audience it is seeking. Typically this will include one or more of the top three platforms: Twitter, a micro-blogging platform with wide and diverse appeal; LinkedIn, a networking platform for a business-oriented audience; and Facebook, which began as a way to communicate with friends and family, but has evolved into a leading marketing platform for brands large and small to communicate with a potential audience of over 400 million members.

Many other social-media platforms exist including those that are targeted to specific geographic areas and those that appeal to specific demographic targets. A good place to start reviewing platform options is the blog, “Marketing with New Technology.” After a brand has been established and built a following on the originally selected platforms, then it can consider whether it wants to begin exploring additional social platforms to broaden its base of followers.

The second step will be to build the firm’s profile-corporate pages on each of the selected top 10 platforms and to concurrently authorize the development of any employee or franchisee-managed profiles that will be linked to the franchise account.

The third step is where the franchise will begin to achieve significant time-savings by using social media. This is to incorporate the use of a social-media aggregator into the social media program (see list on Page 14 of the digital August 2010 Franchising World).

A social media aggregator will allow a firm to attach the selected social platforms to one account and then upload content only once, but publish it to all of the selected platforms, thereby avoiding the need and the time to move from platform to platform to make posts.

The best aggregators will allow a firm to be very selective about which platform each piece of content publishes to, enable the attachment of multi-media content such as photos or video, permit the identification of a specific date and time that the item will actually post and finally, allow a franchise to incorporate multiple levels of authorized access so that several people can post content, but only certain ones can actually authorize it to post to the social media platform.

This type of tool allows the workload to be distributed while ensuring compliance with franchisor branding and messaging guidelines. Aggregators are available at costs and functions ranging from free, with very basic services, to more than $25,000 per year for enterprise-level programs which provide the highest levels of functionality and security. Some of the aggregators even incorporate the ability to post blog entries, e-mails and text messaging.

Read the complete article HERE.

Franchise Candidates: A Changed Mindset

This article was originally posted on August 13, 2009 as Franchise Candidates: A Changing Mindset. Well, I guess we can revise the title slightly to reflect candidates’ current views – A Changed Mindset. Nevertheless, the article may be even more relevant today as franchising attempts to rebound from the economic downturn and continues to explore more viable lead generation strategies that will attract today’s franchise candidate. Many continue to explore social media and have realized its position as an integral and effective component of these strategies… of course, when utilized according to a plan.

caution-01A look at today’s franchise candidates will reveal they are more sophisticated, better educated, and more technologically advanced than ever before. In addition, and even more so because of the economic downturn, they are extremely cautious.

Today’s candidates are spending more time researching opportunities, and doing so at a much slower pace. In order to be diligent in the process, more time is spent online pouring through page after page of information, constantly bookmarking, and moving back and forth from new information to saved information. They’re comparing notes with other franchise candidates on social networking sites. As well, they’re gaining invaluable insight monitoring online discussion groups and forums.

Ultimately, today’s franchise candidate desires and needs to be certain the franchise opportunity is as close to perfect for his or her situation, as humanly possible. In the past, and especially after previous recessions, franchise candidates took their capital gains and invested in a franchise opportunity. Many times leaving the principal investment untouched. There was a sense of throwing caution to the wind because they were investing profits. Many times ungodly profits, at least by today’s standards. Does anyone remember when money markets kicked out 17% profit margins?

Unfortunately, many individuals looking at franchise opportunities today are looking at things differently. They have to. Many are transitioning corporate executives staring at the back end of illustrious careers trying to squeak out just ten more years before retirement. Facing the challenge of younger talent, new technology, and a rapidly changing business environment, many opt to “buy” a job and explore franchising and small business ownership.

What Changed?

Here’s the difference between today’s recession, and of those in the past. As huge fortunes have been lost, and large gains have not been realized in current financial markets, today’s candidates are forced to invest all or part of their remaining nest egg in order to enter the world of business ownership. Of course, everyone knows and fully understand the risks involved in owning a business. But in yesterday’s business environment, many franchisees and business owners were “gambling” with profits.

Certainly, no one wanted to lose money in a business venture. But, many had fallback positions with funds still in retirement accounts and of course, if they had to, employment. For many of today’s candidates, failure is not an option because fallback opportunities are fast becoming non-existent. Actually, I believe many of today’s candidates might not have even considered franchise or small business ownership in the past.

So, as many individuals explore their options, they will focus more and more of their efforts online. Franchisors must embrace this fact, and dedicate more resources to the internet and look to social media to complement, not replace, their traditional franchise marketing strategies. By doing so, they’ll realize multiple benefits for their entire system including:

– Creating or further developing brand awareness with franchise candidates and consumers alike
– Generating franchise leads that are genuinely interested in exploring what franchising and small business ownership has to offer, and how a particular concept may be the vehicle to achieve their goals and objectives
– Establishing an interactive environment of communications and information sharing that will become the backbone of future franchise relationships throughout franchise systems

Last, many franchise candidates previously viewed franchising and small business ownership as a way of achieving their wishes, hopes and dreams, regardless of what those may have been. Today, it’s more about goals and objectives, and necessities. We, as an industry need to fully realize this, and understand the mindset of today’s franchise candidate.