Attracting franchisees: grow with the right candidates.

Although franchising's largest and most popular brands represent the images most people hold about the industry, recent research revealed that franchising has been significantly influenced by the growing number of new concepts appearing in the past few years. One-fourth of those had 10 or fewer units.

During these turbulent times, it is important for franchisors to keep their focus on attracting candidates that are a good fit for their system. Current economic conditions are putting a strain on everyone's bottom line and many in the franchising industry face a growing number of competitors. The collision of those two forces, along with stricter lending requirements, means that every franchisor is looking for cost-effective ways to attract new franchisees.

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Certainly, all franchisors want to find the ideal franchise candidate who is successful, ambitious, highly-financially liquid, carries a solid credit rating with years of success in the business world or embraces a second career. While this profile would fit the franchisee mold for every franchise, the question is: "How, as a franchisor in an unstable economic environment, does one attract quality, high-performing franchise prospects and investor groups?"

Developing a Strategic Plan

As the changing economic climate increases obstacles for the business community, it is important that franchisors develop and execute a strategic plan. Serving as a roadmap to where a franchise is heading over the next few years, how it is going to get there and how the franchisor knows when goals are achieved, a strategic plan supports several facets of a franchisor's efforts to attract quality franchisees. Even with economic pressures, franchisors who execute a sound strategic plan have a greater opportunity to expand their businesses.

While a strong strategic plan is one of the most important elements a business can develop, it should be more than just a plan on paper. Once it is adopted internally, it should become a way of thinking that is embedded in a company's culture.

As franchisors set out to grow with the right franchise candidates, a goal-based strategic plan can have the greatest impact on driving results. This comprehensive form of planning focuses on a franchisor's mission, sets goals and implements action plans to meet strategic objectives.

Before developing a plan, franchisors should perform a thorough assessment of their business including strengths and weaknesses, opportunities and threats (also called a SWOT analysis). With this firm understanding of their company, franchisors are better positioned to execute a growth plan aimed at attracting quality franchisees.

An internal survey of existing franchisees can also provide valuable information, as well as data that can be used to attract qualified franchisees. For example, a recent survey of Little Caesars franchisees revealed that 99 percent of those surveyed agree that the company has a proven system that works. In addition, 98 percent agreed that it is one of the hottest concepts in the pizza business, and 98 percent of franchisees agree that it has a strong brand. Statistics like this are of interest to franchise candidates.

The key to a successful plan is in the execution and monitoring process. Franchisors should monitor the progress of each goal, checking to see if they are on track, if there are obstacles that can be overcome, or if there are serious issues threatening the completion of the goal. Monitoring the process helps franchisors revise goals and objectives as needed.

Defining Quality Franchisees

Within its strategic plan, franchisors must have a clear picture of the type of franchisee they are seeking and establish a baseline of characteristics. Certain traits will be specific to each concept, but generally, there are standard qualities that are required for success in the franchising industry.

Most franchisors seek prospects with enthusiasm, passion for the brand and its products or services, an overall commitment to following a system, appreciation for proven business models, dedication to community service and an interest in the well-being of their employees.

When it comes to investment groups, franchisors should place a high value on capital resources, operations team strength, growth capacity, experience in franchising and practical knowledge of the industry.

Attracting the Candidates You Want

To attract the best franchisees, systems should first be confident and clear on the characteristics that define the brand and set it apart from the competition. The concept needs to stand out from the crowd and franchisors must spotlight the aspects of the franchise that make it unique and appealing to certain personalities. Whether it is value, simple operations, consumer appeal, quality or growth potential, to strike a chord with today's entrepreneurs franchisors must capitalize on the niche they own and consistently communicate their differences at every opportunity. This includes in-store branding, marketing collateral and Web site presence, packaging, advertising, public relations and internal communications.

Second, in today's franchise sales climate, it is vital to create experiences that expose franchise prospects to the benefits of being part of an established franchise organization. Several ways to convey the benefits include online webinars, store visits where prospects can shadow owners or managers, and phone calls between potential and existing franchisees to discuss the franchise opportunity. The goal for franchisors is to establish a reputation in the marketplace as a concept that is growing with quality franchisees. Current franchisees can convey that message in the most compelling way.

In addition to placing greater emphasis on communicating their niche and the benefits of franchising, the ability to provide financing support is another important element of overcoming the current economic environment. Strong bank connections, relationships with preferred lenders and solid track records with the Small Business Administration are good examples of ways to attract quality franchise candidates.

Attracting Individual Candidates

As franchisors develop their growth plan, they must dearly separate elements of the plan aimed at attracting individuals and larger group investors. For individual franchisees, some of the important questions franchisors should answer to gain a clear understanding of who they believe will help them grow their chain include:

* Which industries do prospects come from?

* Which industries are downsizing and creating a pool of qualified candidates facing a career change?

* Which obstacles do candidates face in the decision-making process?

* Where do they live and are they willing to relocate?

* How do they receive their information and in what format do they want to receive it?

* Whose opinion do they value?

* What is their preferred communication method?

* What balance of advertising, direct mail and public relations should be used?

With the target individual franchisee defined, franchisors can then determine the right messages to include in their marketing and communications efforts to attract prospects.

For instance, at Little Caesars, from the beginning of the recruitment process and throughout a franchisee's relationship with the brand, the company's ongoing training programs are consistently communicated. Delivering on this important training message, as well as a host of other support services, is a major reason the chain has achieved significant growth in recent years and developed a reputation for being franchisee focused.

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Review the Franchise Sales Process Aimed at Individual Candidates

Once the right franchisee candidate has been identified and the marketing messages have been defined, franchisors may want to refine their sales process. For franchisors with a solid internal sales team, keeping sales activities in-house versus outsourcing to a third party is the best option. By keeping this activity internal, franchisors eliminate any third-party interpretation of who the right franchisee should be for their system.

In addition, compensation should be based on the quality and character of the franchise candidates and not based on achieving numbers of new franchisees. This process avoids the fast-talking, hard-sell techniques that alienate candidates, and instead focuses on a discovery process with which both parties should be comfortable. It leads to stronger candidates, encourages the franchise development team to work collaboratively, and makes it clear that you are building a franchise with people who are committed to the brand.

For many systems, franchise brokers play a role in driving sales, serving as an extension of the franchisor. However, franchisors must realize that they need to pay extra attention to brokers who may be more aggressive in a weakened economy.

The Appeal of Investment Group Candidates

With credit becoming more difficult for individuals to obtain, multi-unit, multi-brand franchise operators are becoming increasingly important targets for franchisors. These groups are experienced in running businesses that follow a proven business model and which utilize established systems and processes. Plus, they often will have the wherewithal to secure loans or finance their own investments.

In addition to established multi-unit operators, in recent years, private-equity groups have entered the franchising industry. With significant capital resources, private-equity firms may be viable franchisees who are experienced in operating businesses in both challenging and less complicated economic environments.

With greater resources at their disposal, larger investor groups have the potential to significantly affect the overall expansion of a franchise. Their connections to financial institutions and franchisees in other systems typically make them a strong networking resource.

Franchisors should look for groups that demonstrate the desire to learn new business models and have operations teams in place. Without these attributes, multi-unit, multi-brand and private-equity group operators can undermine a brand's credibility and compromise the culture of the franchise because their "footprint" within the system is considerably larger. Examples can include a group that seeks to grow for growth's sake rather than growing strategically, fails to follow a franchisor's operational procedures or buys and sells franchises without getting involved in the communities they serve.

In short, the right investment group is the one that will operate the franchise effectively, helps a franchisor continue to tell its story and reach the right audiences, increase awareness of the brand and reinforce its unique characteristics, and provide the customer with a very positive and memorable experience that brings them back for more.

The Franchisor's Role

Even a strong franchisee will struggle to succeed if a franchisor does not properly understand its role in the relationship. The franchisor should have tools, training and systems in place that help franchisees achieve their goals. These include:

* Experienced regional field managers and home office staff who provide on-site and remote support to help franchisees find the right site for their business, design and build it properly, select equipment, hire and train the employees, market the business to the local community and continuously enhance the customer's experience.

* An established territory that gives the operator rights to operate in a defined area and allows the high-quality performers to grow,

* Access to vendors who deliver the cost savings and purchasing power of a chain,

* Access to ongoing training programs that offer continuous learning opportunities and implementation of a franchisor's operating system which has been carefully developed over many years,

* Ongoing communication between franchisees and franchisors including electronic methods, meetings and committees to share information, facilitate discussion and address issues,

* A proven business model which details the operational format and helps enable owners to find and evaluate potential employees, train them and help employees acquire additional skills,

* National partnerships with philanthropic organizations that have an emotional connection with your customers, and

* Ongoing, cost-effective marketing support and innovative programs to remain an industry leader.

With these systems, processes and practices in place, franchisors will be well positioned to offer quality franchisees the experience they expect from their investment.

Stay Focused

Today's economic climate is a prime opportunity for franchise organizations to overcome the continuous struggle between quality and quantity, between finding the best franchisees for their systems versus merely selling franchises to meet quotas. While franchise sales is more challenging, the potential franchisee pool is growing as unemployment continues to rise.

With a greater number of prospects, the opportunity for franchisors to grow with quality franchisees is also increasing. Success hinges on developing and executing a sound strategic plan, understanding the target franchisee, marketing the investment opportunity properly, attracting the individual or group and understanding the franchisor's role.

David Scrivano is president of Little Caesar Enterprises, Inc. He can be reached at [e-mail].