Having established the structure of the franchise and prepared yourself to take on your new role as franchisor you will need to begin the process of generating enquiries from prospective franchisees. This is the first stage of bringing all your plans to their fulfilment. The process of marketing is aimed at getting franchisees to communicate with you with a view to finding out more about your franchise. It is a forerunner to your recruitment process and is what drives that process forward.

THE MARKETPLACE

The demand for franchisees

• There are currently between 750 and 800 franchise systems operating in the UK and this number has increased consistently over the last decade. Not all will be actively recruiting new franchisees at any one time but you can be certain that you will have many hundreds of systems in competition with you when you launch your marketing and recruitment process. It has been estimated that each year some 60 new franchise formats come to market although this represents a net increase in franchisor numbers of around 30 since each year a number of franchise systems drop out of the reckoning for a variety of reasons.
• In 2005 2,300 new franchised units began operating with a further 1,200 units changing hands through a resale process. If all these units were being operated by new franchisees it would suggest a number of around 3,500 franchisees joining UK networks during the course of that year. We know, however, that a significant number would be existing franchisees extending and developing their businesses, leaving perhaps, only 2,500 ‘new recruits’. Set this against the number of franchise systems operating (in excess of 750) and it would suggest the average UK franchise recruited less than four new franchisees in that year.
• A random survey of 100 franchisors identified that they each hoped, on average, to recruit 17 new franchisees in the following year. Given the numbers recruited in 2005 this would appear to be a very challenging target.
• If you are to succeed in competition with these established franchisors you will need to have a compelling offer which is well communicated to your potential recruits.

THE ECONOMIC CYCLE

• A healthy economy can be both good and bad news for a franchisor looking to recruit new franchisees.
• Good pay rates for people in employment may deter them from taking the step into self-employment where the salary they are able to earn is totally dependent upon the success of their new business venture. Improving standards of living may make them more risk averse and they may even have committed to a lifestyle that would not be supportable by a start-up business venture. Equally, good rates of pay might provide employees with the opportunity to generate some equity that will allow them to invest in their own business. This equity may come in the form of savings or an increase in value in their house that may be released through downsizing.
• High levels of employment and a sense of security in the employment situation may encourage people to ‘stay put’ in their current job or may be the stimulus that allows them to take the risk of ‘going it alone’.
• A less healthy economy may increase the perception of possible job losses, and redundancies may provide people with both the incentive and the financial capital to invest in their own business. Beware, however, of the redundant person who sees starting their own business as a way to buy a job. They are unlikely to be focused on developing the business to the full, may feel that it is the only option left open to them, and may be using the franchise option simply to cease being unemployed.

HOW MANY FRANCHISEES DO YOU WANT TO RECRUIT?

• In developing the structure of the franchise you will have made some assumptions on the number and size of territories that you will make available to franchisees. This in its turn will determine how many franchisees you need to recruit and when you hope to recruit them. Your first franchisee is often the most difficult to recruit as there will be no-one to endorse your offering to potential recruits. If you have one or more pilots in operation, and these have been successfully developed by franchisees, it will make the recruitment process easier as prospective franchisees will be able to talk to existing ones.
• Converting enquiries into recruits. The purpose of your marketing programme is to generate enquires from interested prospective franchisees. However, you should be aware that not all enquiries will result in a recruitment meeting. In fact many experienced franchisors suggest that in order to recruit one franchisee you need to have up to 100 initial expressions of interest. We will look later at how you can get the best conversion rates from enquiries to recruits but we mention the situation at this stage to highlight the fact that in order to recruit, say, three franchisees you may need to generate around 300 initial enquiries.
• Lead generation will become critical to the success of the recruitment programme, but the way you follow up those leads in the recruitment process is perhaps more important. (See Chapter 11.)

WHY A FRANCHISE?

A recent survey of franchisees asked why they chose to operate a franchise rather than setting up their own business from scratch. Not surprisingly, the answers included:

• lower risk (54 per cent of respondents) While no franchise can ever guarantee the success of their franchisees, all the evidence suggests that following a franchise model is more likely to generate a successful business.
• marketing/training (48 per cent of respondents) The existence of the franchise operating system means that franchisees can learn the fundamentals of running the specific business in a relatively short training period. Moreover, the existence of elements of national or local marketing activities by the brand should enable franchisees to grow their business more quickly.
• long-term ambition (41 per cent of respondents) The relatively high number of respondents citing this reason suggests that they had done some reasonable levels of research into the options over a period of time.
• using a known name (34 per cent of respondents) Trading with a recognised brand name will give the franchisee the benefit of all the successful history behind that brand. Initially your brand may have comparatively low levels of recognition on a national or international stage but your commitment to grow the franchise business will increase the strength of your brand with every new unit you open.
• potential income (26 per cent of respondents) The relatively low number citing income potential as a reason for operating a franchise may indicate that they were prepared to sacrifice an element of their income, through paying franchise fees, for the advantages of reduced risk and other support activities.

WHY THIS FRANCHISE?

In a further, more recent, survey, franchisees were asked why they had chosen their specific franchise rather than another system.

Reasons for selection	2004	2005
Growth potential	34%	23%
Affordability	10%	22%
Interest in field	33%	13%
Well-known brand	12%	12%
Available support	0%	9%

The variation of answers between the two years may draw into question the validity of comparing the two years’ results, but it does certainly highlight some of the thought processes that franchisees use in deciding on one system as opposed to another. When we come to consider what messages we might want to impart in the marketing materials we will do well to consider those aspects that franchisees say are important to them.

FRANCHISEES’ FORMER EMPLOYMENT STATUS

Over 60 per cent of franchisees come from an immediate background of being employed, while just over a further 30 per cent come from a self-employed background, including a small number who are, or have been, franchisees of another system. Only 5 per cent come from a situation where they were unemployed or had recently been made redundant. This perhaps confirms the view expressed earlier that most franchisees had the option of spending some considerable time in researching their options before taking their final decision.

MARKETING FOR FRANCHISEES

Prompting the initial enquiry

In order to attract enquiries from potential franchisees you must make them aware of the existence of the franchise and the potential it offers. Your core business is possibly quite well known within your local trading area but one of the reasons that you will have decided to franchise is to extend the business outside your own locality. This will be virgin territory for you and your brand. Your marketing messages to potential franchisees must therefore contain a clear description of what the business does and what the franchisee will be required to do.

The purpose of this initial marketing exercise is quite simply to attract enquiries from suitably qualified people who will have an interest in operating one of your franchised outlets.

In order to do this you will need to work through a number of processes.

• Set a time-frame for the marketing and subsequent recruitment process. During the development period of the franchise system you will have been working to a timed Action Plan. This should have included an appraisal of the target date for the launch of the franchise and a forecast of when your first franchisee would commence trading. It is important that you do not underestimate how long it might take to recruit your first franchisee, particularly if you are relying on income from that franchisee to further develop the franchise. Research has suggested that the average time taken from a potential franchisee’s first contact with the franchisor to the commencement of trading is seven months. The process of recruiting franchisees is more complex than that for recruiting employees and sufficient time must be built in for this activity.

So why does it take so long? Let’s consider the various elements of the process simply from the point of view of timing.

Your marketing media will be designed to attract applicants to contact you regarding your franchise. Unfortunately, unlike an advertisement for a job, you will not be able to put a closing date to generate a prompt response so you are totally reliant upon the enquirer being sufficiently motivated to respond quickly.

Having received an expression of interest you will need to go through the various stages of the recruitment process (more of which in the next chapter) which might include:

• (a)an initial screening over the telephone;
• (b)the dispatch of an information pack to give the applicant more information about precisely what it is the franchise does;
• (c)the receipt and appraisal of a completed application form;
• (d)arrangements for, and conduct of, one or more interviews/meetings;
• (e)confirmation from the franchisee that they have sufficient funding available (which might include the arrangement of bank finance) – which, in itself, will prompt the need for a business plan to be prepared;
• (f)the completion of the legalities, including the franchisee taking advice from their legal adviser;
• (g)the period of initial training of the franchisee before they can start trading using your system.

At each of these stages there is a potential for delay even if the franchisor is driving the process forward as firmly as possible.

Be realistic when establishing the time-scale for the recruitment of franchisees. Remember the average is seven months and the early franchisees for a new system are almost always more difficult to recruit.

• Set a budget for the marketing process that is realistic. Whatever media you decide to use there will be a cost implication. It is a good idea to research the costs of the various media you might wish to consider as soon as you begin to think about the marketing process. This should ensure that you are aware of the financial implications of your proposed marketing plan as you begin to structure it.
• Establish the franchisee profile – precisely who it is you are looking for and what qualities, skills and experience you wish them to have. Until you have this worked out it will be impossible for you to judge where and how you are likely to find them and how you will recognise them when you do find them. Some of the things you will need to consider are:

This is by no means an exhaustive list, each individual franchise will have specific elements that they will build into their franchisee profile. Once you have developed your own franchisee profile, prioritise the characteristics into ‘must-have’ and ‘nice-to-have’ categories. This will allow you to identify those areas of qualification that are most important in your franchisees. This in its turn will assist you once you get into the recruitment process.

The franchisee profile is a crucial element in the process of finding and recruiting franchisees. Without it you will have only a vague idea of who you are looking for and therefore how and where you might find them.

• Decide what media you will use to communicate with potential franchisees. Your franchisee profile will tell you a lot about the sort of person you are seeking to recruit and who might be interested in taking your franchise. What you need to consider now is what media are most likely to put your opportunity in front of them. Historically the national and specialist franchise press, along with franchise exhibitions, were predominantly the media chosen by franchisors. More recently, however, the role played by the internet has become critical in franchise marketing. Over 60 per cent of franchisors now use the internet for franchise recruitment purposes compared to 50 per cent using conventional print media (NatWest/BFA Franchise Survey 2006).

You will need to consider the role that each of the following media might play in your franchise marketing process.

The press

National press Most of the national daily and weekly newspapers now have a section dedicated to advertising franchise opportunities. This is, on occasions, supported by franchise-specific editorial in the business sections. When considering whether these should have a place in your marketing mix you will need to think again about your franchisee profile. If you are seeking business-oriented people with financial management skills you may decide that they are more likely to read one of what were traditionally called the broadsheets, The Times, Daily Telegraph etc. rather than a ‘red-top’ tabloid. However, the latter could be valuable to a franchisor seeking franchisees from their target readership. You need to assess whether your target franchisees overlap with their target readership.

Local or regional press There is perhaps a limited place for the use of local or regional press when you are trying to establish a national network. However, where a particular region is being specifically targeted, local or regional press could play a role. You will need to establish whether there are relevant sections of the paper that might reasonably accommodate an advertisement for potential franchisees.

Franchise press There are number of publications dedicated to franchising or with a strong franchise bias. Some of these are available for sale on news-stands while others are subscription only. Not all are targeted at franchisees or potential franchisees so care should be taken to ensure that they will deliver your marketing message to your target market. Typically monthly or bimonthly, they have a longer life than a newspaper and are targeted only at the franchise sector.

Trade press If your franchisee profile seeks or simply allows for applicants who have industry experience then advertising in the relevant trade press may prove a useful way of achieving targeted marketing.

Other press options There are a number of publications aimed at those seeking entrepreneurial opportunities of all types. These may well include features on franchising but will almost certainly include a variety of ‘business opportunities’ where the track record is perhaps not as well defined as in the typical franchise. They may expose your message, however, to a wider audience than those simply seeking a franchise.

Most display press advertising is quite expensive both in terms of design of the advertisements and also cost to place them in the publication. However, you can make clever use of inexpensive classified advertising to drive interested parties to other media such as your website.

Public relations All of the above options use various types of printed publications through paid-for advertising. However, effective use can be made of good PR placements with no direct charge from the publication. A good PR agency, preferably one specialising in franchising, can often get editorial placed in publications at no cost. However, this is largely dependent upon the skill and perseverance of the agency staff, and upon having a newsworthy story that will enhance the publication by being of interest to its readership. It is unlikely that any PR agency will guarantee you placements and so you may end up paying for work to be done that fails to produce a result. If the agency is reputable they will have records to show the level of placements they are typically able to achieve for a given level of activity and corresponding expenditure.

One of the benefits of using a PR agency is that they often have access to unusual placement opportunities including, for example, business-oriented programmes on radio and television. Even a 30-second interview with a happy and successful franchisee could be worth many thousands of pounds worth of direct advertising.

Exhibitions

Franchise exhibitions At present there are a number of franchise exhibitions that regularly take place in the UK. The largest are those in London in the spring and at the National Exhibition Centre, Birmingham in the autumn. While requiring a considerable investment in the design and building of a stand, and the charge from the exhibition organisers for the stand space, they do offer the prospect of face-to-face contact with prospective franchisees. There are specific skills involved in getting the best out of what can be the quite expensive investment of exhibiting, and careful consideration will need to be given to all aspects of stand management if this investment is to provide an adequate return.

Trade exhibitions In just the same way that the trade press might be a suitable medium for some franchise opportunities, trade exhibitions could prove a ready source of potential franchisees. Virtually everyone in the exhibition hall, whether a visitor or other exhibitor, could be a potential applicant.

Exhibitions are likely to be among the most expensive marketing media in terms of the cost of an individual entry. However, they do provide access to many thousands of people who are sufficiently interested in franchising to make the journey to the venue.

The internet

With an increasingly large proportion of the population now having access to the internet, either through their workplace or at home, this method of communication is becoming more and more important to just about every commercial and non-commercial organisation. There are two main areas to consider in relation to franchisee recruitment and the internet – your own website and commercial websites specifically developed for franchisee recruitment.

Your own website You may already have your own website which will have been designed to communicate, as part of your business marketing strategy, with existing and potential customers. It will be important that you have a section of this website dedicated to the franchise opportunity. People who are already your customers or who express an interest in your product or service by visiting the website may well include a number of those who like the product so much that they might like to buy the business, or at least one associated with it.

Whether you have the franchising website as a part of your existing site or whether you make it (or make it appear to be) something totally separate, will be a matter for you to discuss with your website designer. Either way you will need a mechanism for clicking through to the franchise pages. Typically we see websites with ‘Franchising’ as one of a number of small click-through buttons along with others titled ‘Products’, ‘Services’, Location’, ‘FAQs’, ‘Contact Us’ etc. If you really want to make your home page work for franchise recruitment you will need a much larger area of the page to promote the franchise than just a small click-through button. If you don’t make it look an important part of your business then your potential franchisees won’t think that it is!

Franchise recruitment websites As recruitment advertising continues to move from the printed page and onto the internet, more and more websites are being established that offer franchisors the online equivalent of both a magazine and an exhibition. You will need to examine what each of these sites has to offer and at what cost. Some allow the franchisor to be very selective about who is able to access their section while for others it is effectively an open house. Whatever route is chosen there must always be the option for the potential franchisee to learn some key information about the opportunity and for them to make an immediate response by requesting further information.

Other linked websites Perhaps the most important website for providing franchisors with a direct link to their own site is the British Franchise Association (BFA) website. This website provides a vast array of information for both potential franchisees and franchisors. Included is a list of all BFA members with, where possible, a click-through link to the franchisor’s own site as well as an enquiry facility that forwards enquiries to individual franchisors. Over 80 per cent of BFA franchisor members received enquiries from potential franchisees via the BFA website during 2005 and over a third of these signed up one or more franchisees as the result of these leads.

The internet is becoming increasingly important in all our lives, and its power as a marketing tool for franchisee recruitment is set to grow even further.

Other media

Building the franchise brand should be recognised as being as important as building the core brand of your business. You should consider, therefore, every opportunity to include your franchising messages on any marketing communication to your customers or potential customers. Many of them will have no interest at all in starting a business but they may well know someone who has. In a recent survey over a third of franchisors questioned included ‘word of mouth’ in their list of the most useful methods of recruiting franchisees.

At least one international fast-food franchisor includes information about the franchise on all the packaging used to serve the food. Other franchisors include the franchising message in adverts they place for their core product or service. It may only be a short message in very small print, so as not to detract from the main message of the communication, but it serves to raise the general level of awareness of the franchise opportunity. Others advertise the opportunity on stationery, vehicles, in fact any medium that could be used to communicate with prospective franchisees.

Finally, it is becoming clear throughout the sector that the requirement for good franchisee applications far exceeds the number of applicants. We must therefore continue to seek new avenues for communicating with potential franchisees, even to the point whereby we try to get in touch with people who have never even considered running their own business but who might be successful at it. Some franchisors are now ‘trawling’ the many CV websites for people who are looking for a change of employment but might have the qualifications or experience to become franchisees. Some CV posters could take offence at their personal information being used to contact them for a reason other than the purpose intended, i.e. to invite job offers from employers, so care should be taken when drafting the content of any approach letter. You must also ensure that you are not infringing any of the rules or terms and conditions of the CV website.

• Determine what key messages you will use to attract potential franchisees in each of your chosen media. Your marketing plan may include a variety of media in order to communicate with everyone who demonstrates key elements of the franchisee profile. The purpose of using a number of different media is that it allows you to target potential franchisees who fit specific qualities identified by the profiling process. It is likely, therefore, that you will need to use different marketing messages to attract these differing applicants.

Until your brand is readily recognised throughout your target market one of the key elements of the message must be to clearly define precisely what it is that your franchise does. It is true that a company like McDonald’s is now so well known that it only needs to place the ‘Golden Arches’ trademark on a page to tell people that what follows is about a fast-food restaurant. In your early days you will need to be much more specific about what your franchise can offer to both the potential franchisee and the consumer of the goods or services that are the subject of the franchise.

In the same way that you will have developed the franchisee profile to determine whom you are seeking, so you must also develop a clearly structured definition of your ‘franchise offer’. This should answer a number of questions:

• 1.What are you selling to your customers?
• 2.What are you selling to your franchisees?
• 3.What are your unique selling points?
• 4.Why should a prospect choose your franchise?

1. What are you selling to your customers?

It may be clearly apparent to you what the nature of your business is – you have been involved in it since its inception – but until your brand is instantly recognisable you will need to explain the product or service to your potential franchisees. As with all selling activities you need to be able to demonstrate not only the features of what you are selling but also the benefits of those features to your customers.

2. What are you selling to your franchisees?

Well, clearly, the opportunity to replicate your successful business in their own territory. However, it is far more than that. What you are offering them is the opportunity to be their own boss, to benefit directly from the financial rewards of their hard work, to follow a proven business system that will enhance the possibility of success and reduce the chance of failure. In fact you need to identify all the reasons that might attract a potential franchisee and demonstrate how your franchise will deliver what they are seeking.

3. What are your unique selling points?

You may be the only business in your industry sector to offer a franchise opportunity, or you may be in direct competition with other franchises within the sector. Either way you will need to demonstrate what it is that makes your franchise system special – and, remember, you need to show the benefits not just the features!

4. Why should a prospect choose your franchise?

Partly this will be down to the features and benefits of your particular franchise opportunity, but do remember to consider what it is the potential franchisees are looking for. Do you have better growth rates and potential profitability than the rest of your sector? Is your brand more strongly recognised? Is your training more comprehensive? Do your existing franchisees say nice things about you? Do you achieve a high rate of customer retention and repeat business? All of these can be possible subjects for inclusion in your initial marketing messages.

The purpose of the above questions is to consider what will make your franchise attractive to potential franchisees. However, part of the marketing message must be used to ensure that the applicant is aware of, and demonstrates, certain ‘must-have’ elements of the franchisee profile, and so it is important to provide information relevant to them when they consider your opportunity. For most franchises the availability of the level of investment required will be critical for both franchisor and franchisee. If you require an overall investment of, say, £100,000 it is wasteful to attract enquiries from people who cannot find such funds. The messages must be clearly structured to eliminate ‘non-starters’ without running the risk of putting off good potential candidates. You may decide, however, that in order to generate the largest possible number of enquiries you will limit the ‘qualifiers’ that you put in your messages and rely on an early personal contact during the recruitment process to weed out the unqualified candidates.

Above all you are seeking to get potential franchisees to make contact with you so make sure that there is a clear ‘call to action’. Ensure that your message contains whatever means you wish them to use to contact you, whether it be a telephone call, a visit to your website or an address for written communications.

Identifying the key messages that will attract a potential franchisee to enquire further about your franchise is critical to the marketing process. No matter what media you choose to use, if the message is unclear, or not compelling, then you won’t generate the volume of enquiries that are needed to ‘feed’ the recruitment process.

• Develop marketing products and processes to deliver the messages via the chosen media. You will almost certainly need specialist help here. Writing copy and designing advertisements, websites and brochures are all specialist jobs. You will need to guide the specialist in what you are seeking to achieve but they will have the expertise to help you to produce materials that will achieve the desired results. It will be a waste of money to place poorly designed advertisements in your chosen media. One well-designed communication will produce better results than a dozen ‘amateur’ efforts. You may believe you can design good advertisements or write compelling copy – in which case, why aren’t you working for an agency that does that rather than in your current business?
• Develop a marketing plan, using those messages and media, to target potential franchisees. This is the culmination of all the previous pre-marketing activities. Having decided who you are looking for, the timing of the search, the available budget, the various media available to you, the messages that will be used to target different elements of the franchisee profile you will now need to pull all these together in a formal marketing plan. The marketing plan should specify the timing, the media, the target market and the message. You might lay it out in a grid formation, as shown in Figure 10.1. Then confer with your chosen media buying agency to ensure that the timings are suitable and that you are not missing an important time slot, e.g. when a particular section of the press might be running a feature on franchising. The timing of your marketing spend may not correspond exactly with your budget forecast, particularly if a specific media opportunity arises unexpectedly. However you must ensure that your overall budget is not exceeded.
• Monitor the effectiveness of the marketing activity and revise it if necessary. You will need to record the sources of all enquiries if you are to make a judgement on the media that produce the best results for you. You will also need to record the number of enquiries generated by any particular piece of marketing, to evaluate the cost of marketing per enquiry. You will also need to be able to track those enquiries right through the recruitment process so that you can see not only which media produced the largest number of enquiries, but also which produced the largest number of ultimate sign-ups. You can then calculate a cost per franchisee.