How Great Franchise Sales People Create Failing Franchises

Wednesday, June 6, 2018
A great franchise sales person can make or break a franchise. This first point of contact is crucial to the structure and sustainability of any franchise system.  You might think all your problems would be solved with great franchise sales people who just deliver higher close rates. But you couldn’t be farther from the truth. Mercenary sales folks might solve an immediate cash flow problem on the front end. But the reality is that it could be the most expensive sales practice in franchising today. If your team is focused solely on delivering signed franchise agreements and not making sure that franchisees will succeed in the long-term, you are headed for an expensive lesson.  I made this mistake as a franchisor and at the very least it led to:
  • a disappointed and frustrated training team
  • a disheartened group of existing franchisees
  • fear across the system.  (More on this topic in future blogs)
But suffice to say that Franchisors who are too eager for the next franchise fee + salespeople looking to get their next commission check, increase the potential of franchise failure.

Too many franchisees close their location in 2 years or less.

Perhaps they were undercapitalized through the buying process. And if they are an undercapitalized prospect, they will be an undercapitalized location. Unable to invest in the marketing, training or staff to flourish, their location will flounder and capsize. Great franchise sales people uncover those warning signs within hours of talking to a prospect. Perhaps they don’t fit with the culture. Renegade franchisees chafing at the reporting requirements, the uniform or even the branding collateral.
When great franchise sales people ask the right questions at the right time they uncover those warning signs.
Which is why a “great franchise sales person” should be re-defined. It is why the term franchise development became an industry standard. Franchise development folks may not have the highest conversion rate. They do not convince a prospect who is on the fence to commit to a system that isn’t quite right. Development teams know how to winnow out inferior owners quickly. At the front-end of the  process. Not after investing a dozen or more hours in the pitch - and certainly long before sharing a franchise agreement.
Great development people match prospects to franchises that will build success together for decades.
Some forward-thinking franchises are looking at a staggered commission that compensates sales people when franchisees have met goals after 3 and 5 years. It’s controversial but at least an attempt to recognize that part of the blame for unsuccessful franchisees is created in the sales cycle itself.

I know the questions to ask, the sequence to follow and the insider method that the most successful development teams use to build the strongest franchise systems. Let’s talk about your franchise and what you want to build.