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How to Sell Franchises - 3: Making the Sale

Posted by Francorp Middle East on Sep 8, 2016 1:12:43 PM

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The marketing and selling of franchises differs from the traditional marketing and selling you do as a business owner. For one thing, it usually requires making three sales simultaneously. First, you must persuade the franchise buyer that a market exists for your product or services in the area they intent to locate. 

Sometimes that’s relatively easy to do, but sometimes it requires considerable research. Second, you must convince the franchise buyer that specific aspects of your business make it a worthy investment. And thirdly, although it is becoming less and less necessary, you will sometimes have to sell franchising itself. After all, most of your prospects will never have owned a franchise.

Difficulty can occur when a sales person, on commission, finds what appears to be qualified individual who is ready to buy. The sales person introduces the candidate to you and during your interview you discover personal characteristics that you feel could prevent that person from being a successful franchise owner. You are now in the position of having to (1) disappoint the prospect and (2) disappoint the sales person.

At the same time, you have to check whatever the franchise fee happens to be sitting on the desk in front of you. In such situation, we have no good way to console you – except to say that the penalty down the road for accepting the candidate can be far worse than the penalty of losing the sale.

First, you may have an unsuccessful franchise and thus blight on your record that is visible to any new prospect. Second you may eventually have a disgruntled franchisee eager to salvage some of his or her investment by suing you. So be firm. Do the right thing. Of course, you can avoid this type of situation by employing sales people who are properly trained.

If it is any consolation, you should know that 89% of the 229 franchisors who responded to a marketing and sales survey conducted by DePaul University and Francorp said they had turned down candidates who were financially qualified. The reason for the turned down was because of their principal reasons: personality/attitude and unsuitable background.

Here are the basic steps to be followed in marketing a franchise sale:

  • Use a lead sheet to keep track of inquiries.
  • Devise (or obtain) a questionnaire to be used in qualifying prospects.
  • If, during telephone conversations, the prospect appears to be qualified, arrange a face-to-face meeting.
  • At the first such meeting, deliver a Disclosure Document to the prospective franchisee.
  • Arrange a meeting at your headquarters no earlier than ten days from the first meeting when the Franchise Agreement will be signed and you will receive a check from the candidate.

If this process seems simple, indeed it can be. But the new franchisor should be prepared for times when it is not.

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Topics: Franchise Your Business

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