Even in a positive economy, finding franchisees remains the No. 1 challenge to franchise development for New Zealand franchisors. We take a look at how innovative franchisors are meeting this challenge and best practice in franchise recruitment around the world. 


Franchising in New Zealand and around the world is on the up – so why then is finding franchisees still the No. 1 challenge for franchisors? We take a look at how innovative franchisors are meeting this challenge and best practice in franchise recruitment around the world. 




Source: Franchising Confidence Index, Franchize Consultants, January 2015, and at right, HIS Economics, January 2015

 

 

More importantly, what are franchisors around the world doing about the challenge? To understand this, we turned to the Bible – the 2015 Franchise Sales Benchmarking Study compiled by FranConnect from a survey of more than 4,000 franchise CEOs and sales executives.


Some of the results were surprising.


First, more franchisors were satisfied with their results than in previous surveys. We wondered whether this was because it is easier to sell franchises in the current economy or they were doing more things right when it came to the sales process. Interestingly, 87% of those who said they were Very Satisfied or Satisfied used CRM systems. More on this shortly.


Source: 2015 Franchise Sales Benchmarking Study, FranConnect




The second surprise was that Franchise Sales Departments were smaller than we expected, with only one Franchise Sales Manager employed at one in three franchises and less than six Franchise Sales Managers employed at a full 84% of franchises (this is the United States we’re talking about).  





Source: 2015 Franchise Sales Benchmarking Study, FranConnect


Franchise Sales Departments may typically be quite small, but Francorp notes there is a stronger trend than before to incentive the sales representatives with bigger commissions and other incentives.






Source: 2015 Franchise Sales Benchmarking Study, FranConnect


Given the number of franchise brokers operating in the United States, we were blown away to see that fewer than one in four franchisors outsource their franchise sales. In fact, that proportion is 14% down on the last survey.






Source: 2015 Franchise Sales Benchmarking Study, FranConnect



How many franchise units are experienced sales managers expected to close in 2015? The numbers hadn’t shifted much since 2014, and obviously targets vary by franchise type and maturity, but there was a drop in the 11 – 20 unit segments and a corresponding rise in the 21 – 50 segment, indicating greater confidence.




Source: 2015 Franchise Sales Benchmarking Study, FranConnect



We were a little gobsmacked to find that while most franchisors set specific franchise sales targets, as you’d expect, over one in five didn’t. Why? Maybe their sales managers are so good, they just keep bringing home the bacon. Or maybe it’s just a case of “Just have a go and see what happens”.







Source: 2015 Franchise Sales Benchmarking Study, FranConnect

Source: 2015 Franchise Sales Benchmarking Study, FranConnect



Even the people at FranConnect were “astounded” that 20.5% of respondents didn’t use a CRM system in their sales process or didn’t appear to know what one was!




Source: 2015 Franchise Sales Benchmarking Study, FranConnect


Lead generation is a key issue for most franchises, and in this graph, referrals and websites stand out as being the best sources of leads. Good old traditional print advertising seems to be in decline, with more franchisors reporting it to be Somewhat Ineffective or Not Effective than those who found it Somewhat Effective (few found it Most Effective). Other “traditional” sources such as Internet Portals and Brokers received mixed reviews, while Trade Shows were in marked decline. Given the hype around Social Media and Content Marketing, we would have expected to see stronger results, but perhaps it is still early days for these sources.




Source: 2015 Franchise Sales Benchmarking Study, FranConnect



Referrals are always going to be the most effective lead source for any franchise, but websites run a close second. Because franchises’ consumer websites do not directly meet the needs of prospective franchisees, a growing number of franchisors now have a dedicated recruiting site, up 4% over last year.









Article by Robin La Pere, No Ordinary Business and Franchise Consultants

Contact me at robin@noordinary.co.nz.






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Robin La Pere of No Ordinary Consultants has been involved in franchising for many years, as a franchise manager and franchisor, and has sold many a franchise. As a consultant, he now advises on franchise recruitment strategy, lead generation, dedicated franchise recruitment website development, franchise sales CRM and processes, and franchisee selection. In his spare time, he enjoys sailing, skiing and creative writing.



 

 

 

 

"Robin had a significant and positive
impact ... on Signature Homes as a whole, as evidenced by the fact that our business became one of the fastest growing businesses in New Zealand, winning a Deloittes Fast 50 Business Award in 2003, seeing total sales soar by more than 500%."

 

          Gavin Hunt, Signature Homes