Franchise Development Process: A Guide for Franchisors

[00:00:03][Music] representing franchise secrets eric von horn [Music] if you're not a part of the franchise secrets facebook group what are you waiting for it's franchisesecrets.com facebook i cannot believe how valuable this group turned out to be when someone asks a question the feedback is honest authentic very helpful and it's from multiple perspectives if you're not sure that you're getting the most accurate information about franchising then check out the largest most helpful facebook group in all of franchising whether you're a z azor a buyer or investor join our free facebook group at franchisesecrets.com facebook welcome to the franchise secrets podcast eric van horn here today is a solo episode we are going to be talking about selling franchises and i can just hear some people squirm when they hear that because franchisors love to say we're not selling franchises we're awarding franchises and then i talk to franchise awards behind closed doors and they're like we're absolutely selling franchises but i know what they mean by awarding franchises a lot of the best brands out there aren't just selling they are selecting awarding franchises to really good franchisees but it's a sales process and we're going to be talking about that today from the franchise awards perspective but that will be really good for franchise buyers and franchisees who are going to be buying a second or third brand or maybe negotiating for another territory or two or three from an expansion standpoint so i always think it's really good to understand things from the other side's perspective whether you're in a business partnership or you're in a franchisee franchisor franchise vendor franchisor relationship when you understand the other side's process and their mindset and what they're going through it helps you go through that in a better way and that's why there's books out there about the franchisee franchisor relationship and that's why so many emerging franchisors have a difficult time as they start out with franchisees understanding the franchisees mindset and even understanding their own mindset as a franchisor but today let's hop into it we're going to be talking about the whole franchise development process from a franchise awards perspective and by the way if you enjoy this and you're a franchisor that's wanting to get better at your own franchise development process go to franchise secrets dot com forward slash franchise development training because i did 90 minutes with a powerpoint on this exact thing and during that power of that presentation i just scratched the surface on the franchise development training and today i'm just going to give you a taste of that but i think it's going to be very helpful for everyone so again if you're a franchisor you're going to love this or you're thinking about getting into franchising you're gonna love this as well so this um is gonna be followed up with another one about the franchise buying process from the franchisees perspective so we're gonna be talking about the selling process and then the next episode i'll be talking about the buying process i'm going to go over the same stuff but two different perspectives so again if you want um if you want more information on the franchise development training just go to franchisesecrets.com forward slash franchise development training but let's hop into it i'm going to talk about the team so if you are a franchisor a lot of times what happens is you need to develop a team and and you don't have a team to sell franchises right away so you are typically the founder that is selling franchises and there is a very efficient way and non-efficient way to do this because as a founder you have so many other things to be thinking about worrying about versus just selling franchises but franchise sales are is is really how all franchises become great franchises so you probably need to be selling right away and i help franchisors who are selling i help them understand how to do that in an efficient way but if you're selling it's okay and that's you just need to know you need to get yourself out of selling and typically it's around once you have 10 franchisees then maybe it's time to start removing yourself from that process you'll always be involved in the process but you are not going to be the franchise development team start developing the team so as you go from that shoestring budget to a bigger budget you can have you have the opportunity to bring in new inexperienced franchise development reps or bring in experienced franchise development reps and there's a massive difference between the two it's not easy to help it teach somebody especially if you don't have a lot of experience teaching them how to sell franchises even though they may have a lot of sales experience and it may even they may even have experience selling high ticket items because that's what this is this is a high ticket sales process because you're selling something that's worth a lot of money and um and it's a six to eight week process so it's a high ticket six to eight week pro sales process um so you also have the opportunity to bring in experience development reps now with experience they they might have experience doing it a couple times for a couple different brands and they may be good and they may not be good um there's a lot of things to consider with that but if you bring in a really good experience franchise development rep you're gonna be paying a lot of money for them but uh they're worth it um if you are at the point where you're ready to scale and sell a bunch of franchises that year so what i would suggest start out selling franchises yourself then bring in an experienced franchise development rep let them start to sell for you you work with them and then you just work your way up to having multiple reps and a team there's also other ways to do it you can have a part-time or seasonal or a fractional franchise development person where they are helping you but they're also helping other brands i really like this option they're hard to find i know who they are but they're hard to find um because they're selling for somebody and they're looking for other brands to represent but there's very few of them out there actually in my mastermind i have a new mastermind for franchisors and i'm going to make some of those available to those that are in that mastermind so if you are a franchisor you are thinking i want to level up i want to be around other emerging brands i want to be around experts that have done uh what you haven't done in franchising before then check out the new mastermind that i'm starting go to franchisesecrets.com forward slash zorr z o r because you're now a franchisor so franchise secrets dot com forward slash zore so i like the part time the fractional development rep uh because they really only make money when they're selling franchises and then finally you've got the franchise sales organizations out there and they when you're ready to grow really fast and you don't want to do it in-house that's when you bring on the franchise development or franchise sales organization and they can just blow up a brand in a good way or in a bad way if you're not ready to scale like that um here are some of the things that i see a lot of new emerging brands get wrong when they are starting to sell franchises so by the way again i'm going to go over all this in a new podcast from the franchisees perspective or the franchise buyer's perspective so everything i'm talking about now is from the franchisor's perspective so we'll go over over that from a buyer's standpoint what does that how does that what does that matter to you if you're dealing with the ceo or the founder versus a franchise sales organization um it's a it's different uh it's a different mindset as a franchisee going or a new buyer possible franchisee working with the founder versus working with a franchise sales organization but let's get back to the topic for this podcast and you want to be able to stack the deck in your favor as a franchisor and a lot of franchisors get it wrong from an emerging brand standpoint just because they've never done it before anytime you do new things it's it's difficult to be really really good at it it's also difficult to be really confident in the thing that you're doing because you've never done that thing before and that thing is selling franchises awarding franchises it's also finding good franchisees so most people that have never done this before are not very confident in the process let me just say this it's a six to eight week sales process by the end of that time you as a franchisor should be very confident that you've given them everything that they need to know and understand to be able to make a decision to either buy or not buy and if they're not able to make a decision there's two things that that will be the issue one you didn't do a very good job of giving them the information or they're just not a buyer they can't make decisions and they're never going to buy anything and if that's the case the last thing that you want them to do is actually buy your franchise because they're not really good at making decisions but for you to be confident in that you need to know that you have a very good solid robust franchise development process that you take them through and then here's the other thing do you need to know buyer's behavior it's it's everyone that goes through a process will say that they're a buyer that say they're ready to buy but most people really are not ready to buy so whenever i'm dealing on i'm helping uh advise my private clients who are wanting my help with them understanding franchise development and kind of doing a done with you service that i do for my private clients i help them understand buyer behavior because talk is cheap but most franchise development people are just listening to what buyer people are saying and they believe what people are saying i really don't believe what people say i watch what people do and that's why you need to have certain things in your process for people to do and if they do those things you know that they might be a buyer you also know if they are doing the things that they say they're going to do that you want them to do that you've laid out in a system for them to do then likely they're going to do the same thing as an owner as they did during the franchise development buying process the thing that you need to do is set the expectation on the first call of what they're actually supposed to be doing so it's a six to eight week sales process there's a lot of things that you do on that first call but you need to tell them it's a six to eight week sales process and buyers out there i'm going to be going over this with you on this next podcast i'm trying to rest restrain myself from getting into the buyer's perspective on this right now um there's so much to do with how you stack the deck i've got a couple slides on this i'm going to zip right past that and get right into the franchise development process but i do need to say one thing stacking the deck in your favor on the franchise development process you need to have the right partners and one of the partners that you absolutely need to have are lenders think about it this way if you are a car dealer and you have a hundred people coming to your hundred buyers they're ready to buy a car coming to your car car dealership and they are ready to buy a car and they get to the very end of the process and they need to finance that car and they're like well i'm gonna go find a banker to help me with this or you can just say hey we talked about this from the first call what are you qualified for we have our in-house finance team and they're going to get you all set up with that that's what car dealers do and as a franchisor you need to be able to help your franchisees do the same because if you get to the end of the process and there they say i need to find the money somehow and then they go talk to their local bank and their local bankers like i don't really like franchises or i don't like that model or i don't really know anything about it i need to get educated on it well you've just delayed a closing at the at the best at the worst you just had a good buyer not buy because it was destroyed by a lender that doesn't know your brand now the best case scenario is you have a relationship or two or three with different lenders that know franchising and they get introduced to the candidates looking at franchi your franchise early on in the process and they will pre-qualify them they know what they're qualified for they're going through that process and when it comes time to buy your franchise there's no hiccups well the truth of it is there will usually be some hiccups with lending because that's just the way lending works but now you have a vendor a partner that's helping your new franchise partner get their lending in order and the reason that i like some of these different ones there's gaiden financial there's fran fund there's been a trends there's so many good ones out there they know franchising and if they know your brand they've already vetted it out and they know lenders that like your brand and they can help with that so when i talk about the right partners that's just one of several partners that you should have to be able to stack the deck in your favor because if you don't have this the person next to you that is wanting to uh wanting to sell them a franchise that's your competitor probably has a process like that and you just missed out all right so let's get into the franchise development process um you it's it's a i'm giving you a guide here this is just a guide um you're going to tweak it and change it based on your team your brand the industry that you're in so many different things that will that you will use this as a guide and then it will be customized is the one this is one of the things that i help my private clients with we'll get into a little bit into in the franchise or mastermind but um it's the customizing of this that will make your process just amazing or weak but a lot of people don't even have a basic process to start from so that's my goal is to give you a generic process that should be extremely customized based on your unique brand your team and what you're really good at one have a call center they set up they set up the intro call then you have the intro call that's call number one and then you have some type of operations or marketing call that might be recorded what might come before that is a unit economics call so we'll get into that then you have team validation and there's reasons that i like team validation this might be with your ceo the founder the ceo the chief marketing officer this might be live or recorded or both and then you have franchisee validation and i've got a list of a hundred questions that um that are out there so go to franchisesecrets.com and they'll be somewhere on there where you can find those hundred questions to help your franchisees uh your buyers validate then you got discovery day or confirmation day there's so many different ways to say it preparation for that and then you've got the actual day the discovery day or the confirmation day whether it's virtual or in person it's important to have that and then you have a closing and you have a closing date and a closing process and that's important as well so i'll go through each of these briefly you've got the call center and i think it's important to have a call setter one if you're the call setter you probably don't um you if you are the founder or the main person um selling franchises and you don't have a call center one of a couple things is happening you don't have many leads coming in at all and if they are coming in um you don't have a you're probably doing other things so these leads are not getting called right away franchise leads just like any other lead just like you would want your franchisees to follow up on leads you need to follow up on them right away there's some services out there like client tether that that lead comes in they will call you like the sir the the crm will call you and say are you ready to talk to this new lead and you click uh one or and and then you are bridged in and that they start calling that lead so you are insured to make sure that this lead is called right away a call center they shouldn't be there to answer questions a call center is like a secretary they have one job this call center has one job well two jobs pre-qualify and uh and to get them set up on a call so that's their main thing uh is to pre-qualify and to set them up on a call and there's a number of different things to pre-qualify just real quick i'm not going to get into this too much there's a number of things i'll just give you a couple liquidity you just need you need to get their liquidity because if you have a brand and let's say it's 50 000 liquid then they should be um asking that right away and there's another number of other things that you need to ask there's really like four things one of the other things that i really like asking is timing how soon are you ready to buy how soon are you ready to buy everyone is going to have a different answer to this but they don't know what your expectations are my expectations when i'm working with the with my private clients or talking to franchisors it's six to eight weeks if they say if they're if they're if they say three to four months then ask why you don't say sorry you can't we're not working together ask why because that it might be uh that's when they're selling a house it might mean that's when their job is done and if that's when their job is over they can still buy it before they in their mind they're thinking that's i'm not ready to open for four months or open for six months and if you're in a retail concept where they have to find a location a lot of times they're not going to be ready to buy for um or ready to open for nine months so they might be thinking i'm not ready to buy or start for nine months when in reality they need to buy the franchise first and that's when they get that's when they get going so there's a handful of questions that that call center asks call setter ass to pre-qualify them and then they set up that introductory call now what could happen is they could send out a 5 to 30 minute video before this call that answers the most common questions that you typically get on a first call and this is what i coach my my private clients to do um it if you uh take a bunch of calls first of all anybody in franchise development should be taking a bunch of calls um they should have when i was doing franchise development early on i was doing a hunt i was dialing out a hundred times a day calling out a hundred times a day and then as i would get into a new brand and i was uh developing the franchise development process for them i was in the weeds doing it and so i remember for for a month straight i was on the phone all the time because i wanted to understand every question that was getting answered then i could put together a a process to take people through to get those questions answered so at the very least what you need to do is listen to that first call find out what their questions are put those in a video and and and then let them listen to that beforehand and this is the reason why whether it's a five-minute video a two-minute video or a 30-minute video this is the reason why the call center says please listen to this before you get on the call because it's because once you get on this call with so and so um they want to make sure that you've listened to this so they can really be prepared to answer any of the questions that you have about that so the point of it is is not what you're looking for is for them to get this information and where they can sit down and listen to it you want to know that they actually did what they were supposed to do if they continue to not listen to things before they get on the call with you that's probably a pretty good indication of the type of franchisee they're going to be or they say i'm ready to buy i'm ready to buy i'm ready to buy yet they're not listening to these things are they really ready to buy it tells me they're not really a buyer or nine times out of ten they're not a buyer and then here's the other thing that you this is another reason why you want to do this because you want to build rapport with the franchise buyer you just don't want to regurgitate information all the time and and at least i i get i used to get really tired of saying the same thing uh 30 minutes of the same thing 10 times a day um to people and i'll tell you what there is one of those 10 calls that i crushed it i gave great information i was high energy i did everything i was supposed to do and then there was one of them that i was low energy stumbling just you know i know that i was a level 3 of 10 and there was one that i was a 10 of 10. why don't you just record those when you're at your best give that to candidates they listen to it they watch it and they can they can really be ready to hop into that first call engage and that's what you want you want them to walk in engaged and there's more things that we considered that you should be considering in that first introductory call and i went into i i talked about that on that uh that franchise development training so next call uh it's either gonna be operations and marketing or unit economics so it could be one or the other and it just really depends if you have a weaker item 19 or no item 19 you might want to wait to hold the economics or basically the financial opportunity uh for a for the third call versus the second call if you have an amazing item 19 which i'm a believer in doing as much as you can in the item 19 to give candidates and buyers as much information as they can get then then put that up front but let's say you don't have an amazing item 19 you don't have much to show for that then do an operations and marketing call this could be you doing it this could be a live call that's done once a week recorded so maybe you have your ops person uh on for 30 minutes and your marketing person on for 30 minutes and and it's a live call and people are on there listening to a presentation having some q a you can record that and give that to people to uh engage with uh after that call too so maybe they have five different recordings that they can listen to this is what i like about that again if people listen to all five recordings you know that you've got someone that's extremely bored with nothing to do or they're extremely interested and they want to keep diving deeper into your brand so i i i like to watch buyer behavior again not what people say so there's a number of things that you want to do within those two within the ops in the marketing again check out that uh training that i did on that unit economics um franchisors you need to listen to your legal advice uh that you get from your legal counsel on this you need to follow the item 7 and the item 19 and not stray from it so there's things that can get you in trouble here and there's things that you can do very legally so my suggestion is do what you can to be able to um communicate the item 7 and item 19 to these candidates so they can start to put together the pieces of the puzzle to come up with their own pro forma their own budget and whatnot to be able to make a really good educated decision on the franchise opportunity that you have for them but this um again you need to talk to your attorney they will let you know what you can and cannot do sometimes the things that you think you can do are the things that you can't do and the things that you can't do are the things that you you know you want to do but really shouldn't be doing so after this unit economics call this is when typically you send out that franchise disclosure document and again by the way um in the training i went over this a little in more detail but a lot of people that know franchising are going to want that item 19 or and see the item 19 and ask for that franchise closure document on that first call they might even ask the call center for it if that's the case you know someone you know that they have experience um doing that and investigating franchises before so number one if they ask that ask what documents they've looked at why they like looking at those documents what are the most important things that they found so you know what you're dealing with and then you let them know you're gonna get it after the second call or after the third call because that's your process and you're confident in that process because you're my private client or you've had a coach that's helped you along the way or you've just done it for so long that you know that that's the way that it goes again you will get so much pushback from people but you've got to stick to your guns and you have a process that you take people through and stick to it make them stick to it all right so after that is when um i like to do team validation team validation and what this is so this might be after your second call or after your third call and again there's so many different ways to do this and depends how great your team is if you have an amazing team do this after your second call you might want to have a a ceo call uh it's it's a live zoom call that's recorded your ceo will present or your coo or your cmo will present or maybe your training department will present somebody will present and then it's recorded and then that gets left up so they can continue to engage in the content the information that that team member is giving so one week your ceo is doing it the next week your ceo and then your cmo and then the founder and then a trainer or somebody is doing something once a week so you've got candidates engaging in really good content um from your team and now they can um if they're uh tire kickers involved in your process they'll never watch any of this stuff they'll tell you how they're a buyer and how great they are and how how much they love your concept but if they're not doing these things then they're just they will happily get on a call and waste your time but they won't get on a validation call like that and so just make sure you're watching buyer behavior there's so many things that go through this so if you have a bigger team there's different ways to do it um but again you want to highlight the best of the best of your team and i always love to have q a on that on on those as well because different franchisees have different questions and again you just stack this wherever you need it maybe this is stacked on your second call you have an amazing founder or an amazing ceo and they're able to deliver information or brand overview that nobody else will so maybe you have that as a once a week standing ops call or marketing call or whatever it is so again i hope i'm uh i'm giving you a framework but within that framework there's so many different ways that you can go all right now this is what you said in the very beginning it's a six to eight week process now that you're three to four weeks in it's time to uh look at discovery day and or meet the team day and here's the thing back in my day uh it was always called a discovery day and then somewhere along the line it was called meet the team day and then um and then it got changed to confirmation day and i know a lot of the old school franchise development people are now calling it confirmation day so and i like that the best i personally like confirmation day the best but you'll still catch me saying discovery day just because it's it's a it's a habit i'm trying to break it so you will want them to uh get prepared for that so whether it's doing it virtually or in person there's a process that they go through and again i like confirmation day because they're not discovering anything new and i would tell people this you're not going to discover anything new because we're getting everything up everything that you need to make a decision before discovery day or before confirmation day so you're not going to discover anything you're going to confirm everything and then you just set there's so many things that you do to set the expectation i'll just hit one or two of them within a week after discovery day it's decision time and it might be a a verbal confirmation at discovery day it might be a verbal confirmation a couple days after confirmation date but you're going to want to get a verbal from them and again i want to start talking to you buyers out there but i'll do this on the next podcast so you want to get a verbal from them it doesn't mean that it's a done deal but you want a verbal and then you want to close within a week because you want to see if people can make a decision you've given them everything that they need to know you as a franchisor are making a decision they're either they're in or they're out and guys i tell you what i've seen it firsthand many times people are getting uh are not getting approved because they did something stupid at discovery day or they are just not the right fit and it became clear i've seen i've seen it and once you do it it's gonna it's going to empower you when you don't approve somebody because you're like yes i didn't approve them and now i know that i'm willing to say no to a franchisee because they weren't the right fit and it's empowering from that standpoint and really you're doing the best thing for them but you just there's there's a there's a list of things that you need to do before that meet uh the before that confirmation date actually takes place so that they are prepared to be able to make a decision and this is where france new emerging brands and existing brands get it wrong they don't have a very good process to get to that point so they're not so when the candidate squirms it's like i think i'm ready but i need to understand this i think i'm ready but i need to do this well if you've done your job taking them through a really good process you they have that information or they don't need it it's not it doesn't it doesn't matter so that's where confidence in the process comes in because they will squirm how do i know because i squirm whenever i'm buying a new brand i squirm how do i know i've been as a franchisor i've seen it and i've seen people squirm i've seen the people that i didn't think would squirm at that point actually squirm so you need to get a verbal yes and then as a process to be able to follow up right after that so this is at discovery day just a couple quick things on discovery day and guys discovery day i could spend i could spend a whole day coaching teaching dissecting helping you put together the right discovery day and then continually tweaking it after you do your first one your second one your third one because this is so important and there's so many different ways to do it um there's there's there's there's many different ways to do it there's a few days of ways to do it right but there's so many things the nuances of that day make a really big difference but here's a couple little tips do something the evening before that's not just presentations if you just jump straight into presentations people are going to think they're getting sold because you just naturally know that you're going into presentation mode and you're getting sold and so that's going to be the mindset and they unconsciously think that if you break bread beforehand you're having dinner you're having drinks you're enjoying you're getting to know them on a different level that's when the guards naturally come down because you're not selling them something you're getting to know them tell me more about your family it's that type of stuff and so people don't think they're getting sold when you're talking about family and you're just getting to know their goals and their dreams and their desires and their background because you're not selling them you're getting to know them so break bread because the next day there's presentations there's there's a question and answer that is when you are putting your best foot forward as a franchisor and making sure that they are confirming everything that they thought through the buying and the selling process so i think i like to show them things not just tell them things on at discovery days so there are certain things that you could show them then show it to them and versus just telling it to them um and then again after discovery day like right after discovery day have a hey are you in or are you out meeting as a franchise or say you know what you're not approved or we don't think uh you know we're you just be honest with them and ask them to be honest with you you know knowing what you know now are you are you ready to move forward um because if you are we'll set up a signing call and um and we'll get things moving along and it's just a verbal yes we know that there's going to be things that you need to get done of a checklist but let's make a checklist of the things that you need to get done it's a verbal yes let's move forward you start to get those things knocked out within a week they are a new franchisee you are their franchisor that's a partnership that's formed and you're off to the races where people get it wrong is they're not confident in their process after disc after discovery day it's a disaster because they don't really know how to close and because buyers don't know how to buy it's just the way it's just the way that it is so of a good franchise or you'll have that verbal yes you'll use that to prepare for an official closing i would suggest having an official closing call a welcome on board call that way everything is absolutely crystal clear so that really is the franchise development process high level brief overview but hopefully that helps some of you out there because um there's just a lot of bad habits wrong ways that people are going that that young emerging and existing franchisors are doing things when they could be doing things a lot better so use this as a framework if you want my help with it uh then just reach out to me at eric erik secrets.com and just say hey eric i'm interested in some in some coaching being a private client if you're interested in the franchise or mastermind check out franchisesecrets.com forge zor thank you everyone for listening i think you're really going to enjoy this next one coming up that is going to be a buyer's perspective of everything that i just outlined today from the perspective thanks for listening to this episode of the franchise secrets podcast whether you're watching or listening please make sure to subscribe to my youtube channel and to whatever channel you're listening on if you want my help with anything from buying a franchise to franchising your business please visit franchisesecrets.com