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Franchising Your Business: Recruiting Franchisees

Recruiting franchisees is probably the hardest and most expensive job for franchisors. New franchisors have conversion ratios of serious enquiries to appointment of around 10:1 Established franchisors have a conversion ration which is often higher than 50:1 sometimes higher than 100:1.

The recruitment mechanisms open to you are:

Franchise exhibitions

Be careful to avoid those where your reputation could be spoiled by association with bad franchised businesses.

Newspaper Advertising

Some national newspapers have developed an active franchise market.

Trade Magazines

There are three franchise magazines two of which are available through newsagents. Their support can be important.

Referrals

Existing franchisees have friends, colleagues and customers. If they are happy with their business they will encourage others.

British Franchise Association

The bfa website has sent in excess of 40,000 franchise leads to its members.

Franchise Centres and Brokers

Beware of any arrangement which places a financial incentive on a third party to recruit franchisees for you. You will be in danger of taking on the wrong people. Ensure that the selection process and the relationship is directly between you and each prospective franchisee.

Specialist advice on profiling the best candidate for your business can be very helpful. The British Franchise Association can help you find the right advisors - there is a list of bfa affiliated advisors on this web site.

Becoming a Franchisor

There are several steps which potential franchisors should take:

• Seek expert advice from the British Franchise Association (BFA). The bfa's Franchisor Guide is invaluable in providing a wealth of unbiased step-by-step information for potential franchisors.
• Attend a session of the bfa's one day Franchisor Seminars
• The bfa can provide introductions to consultants, solicitors and accountants experienced in franchising and accredited by the bfa to meet bfa ethical franchising standards and help you identify whether or not your business is suitable to franchise.
• Research the market to ensure that products and services are competitive and distinctive enough to be franchised and that customer demand is sufficiently widespread.
• Produce a Business Plan outlining proposals in full and including a detailed SWOT analysis.
• Protect all intellectual property rights by registering trade marks, trade names and patents with the relevant trade mark and patent offices.
• Test the franchise in the form of a pilot operation lasting at least 12 months - ideally longer if the business is in any way seasonal. The pilot scheme should be undertaken at more than one location in order to test the concept in different geographical areas. A comprehensive pilot operation will prove the viability of strategy and approach, highlight problem areas, and enable the franchisor to fine-tune the package before committing fully to developing a network.
• With the pilot operation running successfully, the franchisor can prepare and launch his network. At this stage the franchisor should instruct a solicitor familiar with franchising operations to draw up a comprehensive franchise contract setting out the obligations of each party - including how the fees, mark-ups on supplies and any other payments from the franchisee are to be calculated. These obligations should be made clear at the outset of any agreement with a franchisee, to prevent possible conflicts in the future.
• Produce a prospectus to attract suitable franchisees, and to determine the criteria for the franchisee selection.
• Produce a comprehensive operations manual and training programme for franchisees. This will enable the franchisor to set and maintain standards of customer service throughout the network.
• Establish a central management function and possibly field support staff to support the franchise network, and set up a system to monitor the performance of franchisees.
• Finally, develop a marketing, sales and advertising strategy to promote the franchise network, especially when competing with rival companies that potential customers are fully aware of the services on offer.

The franchisor will need to commit substantial amounts of time and money before their income stream begins - for market research studies, pilot schemes, promotional material explaining the benefits of the franchise to potential franchisees, the selection and training of franchisees, the production of an operations manual, the formation of a central management team, initial stock and equipment, the launch of the franchise network and advertising.

Once the network is up and running, the franchisor and the central management team need to constantly monitor the performance of the outlets, to ensure that quality levels are maintains and to identify and assist any franchisees who are in difficulties. A franchisor's on-going commitment, through training, product development and other support, is vital to the success of the franchise network.

Join the BFA

There are many advantages to joining the bfa. The details of benefits and conditions are given on the section Joining the BFA.