12 Takeaways from Franchise Update Conference

Each year, the best thought leaders in franchisee recruitment gather together for a couple of days to discuss what is and isn’t working regarding franchise sales. My strategy for attending these conferences aside from learning additional best practices and networking for new clients, is to also determine what is changing. For instance, I ask myself, “What is being emphasized which wasn’t in the past?” and “What was emphasized in the past which seems to have disappeared today?” Here are my answers to those questions.

  1. Those thought leaders who see it as the franchisee recruiter’s role to determine the candidate’s quality of fit and likelihood of success appear to be winning the philosophical battle over those who advocate “Sell everyone and let God sort’em out.” Banks are paying more attention to the franchisees’ ability to succeed and repay loans, pushing franchisors to do the same. The hard charging, hard selling franchise sales animals are either hiding out, laying low, or becoming extinct.
  2. There is a greater emphasis by franchisors to protect the franchisor’s corporate culture. While this was always a hot topic among CEOs, corporate culture never appeared to be a major concern of the franchisee recruiters until now.
  3. Much more attention was being paid to the relationship and impact of franchisees’ performance and unit level economics on franchisor’s ability to grow.
  4. The credit crunch seems to be driving a “back to the basics” approach to franchising. Banks are holding franchisors accountable for better loan performance, meaning better franchisee performance.
  5. There is greater awareness that the franchise sales process needs to evolve from “mostly conversation” and “franchise salesperson as gatekeeper of information” mentality to “content is king” and “franchisee recruiter is the ambassador of the brand and facilitator of the investigation process.” More and more of the franchisor’s story and recipe for success is being demonstrated through multi-media content rather than transferred through conversation.
  6. Franchisors are starting to pay more attention to franchisor economics. Darrell Johnson, CEO of Frandata emphasized that not every royalty dollar paid to the franchisor has the same margin attached to it. Struggling franchisees consume more of the franchisor’s time, money, and financial resources than successful franchisees while contributing less. In these tough economic times, more franchisees and franchisor’s struggle. Struggling franchisees need help, which means franchisors may need to invest more money in support resources at a time when they need to be tightening their belt and conserving cash. Poor recruitment choices become more evident and detrimental to financial resiliency of the franchisor.
  7. As a cost-cutting measure, more franchisors appear to be considering outsourcing franchisee recruitment to professional recruitment teams who work more on performance-based compensation.
  8. Greater need of franchise sales specialty CRM and marketing systems such as Process Peak, Captivate, and Emax.
  9. Although each year over 40% of franchisors being mystery shopped discover they never follow up on their mystery leads, their number one concern still seems to be lead generation rather than franchise sales processes and skill development for recruiters.
  10. More franchisors appear to be using Item 19 Financial Performance Representations. While I’ve heard only about 30% of franchisors publish a FPR, about 80% of those attending our Mastering Franchise Sales 3-hour training workshop did.
  11. More franchisors seem to be using behavior profiles and values assessments to get a clearer picture of who franchise candidates are, further demonstration the franchisor’s greater concern with the franchisees’ fit and likelihood of success.
  12. 2010 will spell the beginning of the end of franchisor mediocrity. In order to thrive, franchisors are need to commit themselves to master the business of franchising which can be defined as recruiting, training, developing a cohesive community of peak performing franchisees.

And one bonus tip. If you attend a conference like this, don’t carry around notepad with a black leather binder like I did. It might get picked up by accident when your back is turned and then you have to write blog posts from memory (which is never a great idea.) I should have learned my lesson from the black Samsonite luggage set I once purchased and no longer use for exactly the same reason.