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16 09, 2022

Franchisor Pitfalls – The Franchise Manual Podcast – Episode #34

By |September 16th, 2022|Franchise Development, Franchise Recruitment, Franchisee Onboarding and Training, Podcast|Comments Off on Franchisor Pitfalls – The Franchise Manual Podcast – Episode #34

My Podner in this episode is Michael Peterson and he’s going to talk with us today about the mistakes that new franchisors typically make during their first year of operation. Some of these mistakes can be quite expensive, while others can lead to the death of your entire system. If you are a newly minted franchisor, or if you are about to start your journey, this is one that you won’t want to miss.

Time Stamps

Michael Peterson Intro 00:00:31
Segment 1 00:02:37
Get to know Michael Peterson
Segment 2 00:18:22
Topic Segment: New Franchisor Pitfalls
Segment 3 01:03:05
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

Key areas franchisors miss in their first year:

Pre-launch

  • Not getting the FDD to fully capture the business model. This leads to something so prevalent that I came up with a name for it; the 2nd year re-write. So many franchisors make massive changes to their second year FDD either because they didn’t capture the existing model in the first year, or they didn’t have someone walk them through the thought processes they should be going through on every item before they commit it to paper.
  • Having “to be implemented” clauses in their agreements. The most common one I have seen here is a national ad fund, though I have seen tech fees quite a few times as well. When your franchisee #1 or #2 has been operating for 3 years, paying you your royalty only, and suddenly you decide your system is big enough to justify the advertising fund of 1-3%, believe me they will not be happy. Start taking this from day one, even if you turn around and spend it in their market.
  • Cutting corners or coming in underfunded. This is probably the #1 cause of failure of young franchisors. Deciding to write an operations manual in-house, find the cheapest franchise attorney possible (or, worse yet, trying to do an FDD without a franchise attorney), not having quality marketing materials, not having funds set aside for franchise sales; these are so self-defeating.
    • A bad operating manual can lead to system problems and even litigation.
    • If you succeed as a franchisor you will end up using a good franchise attorney, if you start out with inexperienced or ineffective counsel, you’ll just pay in negotiation, litigation, or just headaches before you switch to better counsel.
    • Your marketing materials are your first impression, you have to make them count.
    • Franchise sales cost money, period. If you don’t have a good marketing budget, you will struggle to grow. Think about this. Each year, you are going to spend between $6,000 and $25,000 on renewal, depending on how many registration states you go into and how complicated your audit is. I would guess the average is close to $12,000. If your lead generation spend results in one sale, then you have an extra $12,000 in costs for that sale. If you have a robust budget and someone solid handling franchise sales, and you award 3 franchisees, then the renewal is only adding $4,000 cost-per-close. Big difference.

Post Launch

  • Hands down, the biggest mistake a franchisor can make is bringing in the wrong franchisee. If you have been doing all the ‘right’ things, spending money, having a professional franchise salesperson either in-house or outsourced, reaching out to brokers to talk about your brand, and 6 or 12 or even 18 months in you don’t have a franchise sale, that can be frustrating. It also might happen; the first franchisees are the hardest to find (lets delve into that). I have seen this situation cause many franchisors to award a franchise to someone they shouldn’t and regret it for years to come.
  • Not having a culture of compliance from day 1 is another seemly small issue that will come back to haunt you. If your FA calls for quarterly or annual financials from your franchisees, get them even if you don’t know what to do with them! If your franchisees have a required add spend, monitor it from day one. Or better yet, engage with them and help them spend it correctly, but either way make sure they are spending it. If there is a clause you are not enforcing from day one, throw it out.
  • A problem many new franchisors think they wish they had; growing too fast. I have been in this position. I am talking about 4 stores open in January and 120 open that December fast! Trust me, you don’t want this kind of growth out of the gate.
  • Compromising to get a deal. . . I put this one last because it very well may be something you need to do. As I mentioned, first franchisee is HARD! It may be  reasonable, appropriate, or even necessary to ‘give’ on the first franchisee, maybe even on the first few. But be careful. If you are giving a bigger territory, are you really setting that franchisee up so that there is no chance of you putting someone into the same market and putting local brand awareness 100% on their shoulders? Are you offering a refund clause that you can’t really afford, from a capital cost of onboarding stance? Make sure your attorney is involved here and be careful. And again, don’t be afraid to say no and walk away.

Michael Peterson
Franchise Beacon
michael.peterson@franchisebeacon.com
www.franchisebeacon.com

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

Books Mentioned in the Episode

Think Like a Freak

by Steven D. Levitt, Stephen J. Dubner

The Memory Illusion

By Julia Shaw

Eye of the World

Robert Jordan

Find this podcast on:

      

You can find a transcription of this podcast here.

14 04, 2022

Maximizing the Franchise Expo – The Franchise Manual Podcast – Episode #33

By |April 14th, 2022|Franchise Development, Franchise Recruitment, Podcast|Comments Off on Maximizing the Franchise Expo – The Franchise Manual Podcast – Episode #33

My Podner in this episode is Tom Portesy and he’s going to talk with us today about how to maximize the return on your investment at a franchise expo, how to avoid the pitfalls, and best practices that will help you represent your brand in the best light.

Time Stamps

Tom Portesy Intro 00:00:27
Segment 1 00:03:41
Get to know Tom Portesy
Segment 2 00:18:22
Topic Segment: Maximizing the Franchise Expo
Segment 3 01:03:42
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

  • What is a franchise expo
  • Short history of the expo
  • How to manage realistic expectations of an expo
  • Know your objective
  • DOs and DON’Ts at an expo
  • Take advantage of the free training offered by MFV
  • Spend time developing your opening line
  • Know the value of a lead
  • Control how much time you spend with each person
  • Which industries do better at an expo

Tom Portesy
MFV Expositions
tom.portesy@comexposium.com
www.franchiseexpo.com

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

Books Mentioned in the Episode

Good to Great
The Fog of Life

Find this podcast on:

      

You can find a transcription of this podcast here.

5 04, 2021

Marketing to Prospective Franchisees – The Franchise Manual Podcast – Episode #32

By |April 5th, 2021|Franchise Operating Manual, Podcast|Comments Off on Marketing to Prospective Franchisees – The Franchise Manual Podcast – Episode #32

My Podner in this episode is Jackie Hoegger and she’s going to talk with us today about how to market to prospective franchisees. This conversation spans topics such as website design, digital marketing, even down to how you treat your existing franchisees. This is our first episode on the topic of marketing and we came out of the chute  with a GREAT one.

Time Stamps

Jackie Hoegger Intro 00:00:33
Segment 1 00:05:26
Get to know Ms. Jackie
Segment 2 00:16:50
Topic Segment: Marketing to Prospective Franchisees
Segment 3 01:00:57
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

  1. Brand on Fire (00:21:49) – Elevate your brand as the key authority in the franchise world – Go beyond simple brand awareness and stand out….provide MORE value than your competitors.
    • Know your “story”
    • Know your passion and learn to convey your passion to the prospective franchisee
    • This is a marathon, not a sprint
    • Hone in on your God given skills
    • What is it that makes your concept special
    • Most franchisors will need help developing this point
  2. Social All The Way (00:29:12) – Tell your story as a Franchisor on social media – your new franchisees are watching. Get them to trust you as a leader before they ever make the call or the link online to talk.
    • Social media is the best ROI on delivering your message
    • Know the target profile of the perfect franchisee, then dial in your social media advertising
    • Social media not only allows people to see you from the outside, it also allows people to be able to trust you
  3. The Power of the Existing Franchisees (00:32:16) – Let them sing your praises! Let them garner the attention of YOU!
    • Your franchisees are your #1 asset. Nobody can credibly sing your praises better than your current franchisees
    • Prospective franchisees are most interested in what your existing franchisees say about you, and the WILL ask.
    • Coach your prospective franchisees before they make the validation calls so that they know how and when to ask follow up questions. If they talk to an existing franchisee who does not sing your praises, then teach them how to ask questions such as “How much do you spend on marketing?”
    • Marketing isn’t just advertising, it is much more. It also includes soft skills such as how you treat your franchisees. Existing franchisees are a DIRECT arm of your marketing
    • Communication is king
  4. Web oh Web (00:37:02) – Your website needs to simply rock – It’s the front door to your business and future franchisees will go there FIRST! Make it EASY PEASY to find out how to gee a Franchisee.
    • Spend money on your website – it IS marketing
    • Spend money on a good CRM software that will allow you to grab a lead and not lose it
    • Calculate the value of a prospective franchisee over the life of the contract to help you stay motivated NOT to lose a lead
    • It may take several touches with a prospect before they decide to move to the next step. Use the CRM to maintain communication with a prospect.
  5. Keep is Simple in a Complicated Process (00:46:00) – Give them a simple process from the first bite.  As you discover if they can fit into your culture ad family – make them feel welcomed!  Of course – Discovery Day is your wow factor!
    • They should look back and thing, “This was the easiest thing I’ve ever done.”
    • Make it fun, energetic, and educational
    • Assign the prospect to one person and that person “owns” them. This makes the prospect feel special and prevents them from falling between the cracks
  6. Eyeballs and Attention (00:49:04) – Optimize your Appeal and let them see the way you treat your current franchisees as true partners…..support programs – rapport with each other – and mostly – the dream to have multiple units.
    • Treat franchisees as true partners
    • Franchisees are watching EVERYTHING you do, as if you were on a first date
    • They pick up on kindness, humility, and compassion, and this is the best marketing you can do
    • The power of corporate culture is under-appreciated
    • You can do all the marketing you want, but at the end of the day, if your guest experience isn’t there, you are fighting a losing battle.
  7. Hire an Agency (00:55:21) – They can develop a 3 pillar strategy to drive conversions to your website which leads the first touch.
    • Do what you do well, and hire done what you cannot do
    • It’s OK if marketing is not your “gig”, but if it isn’t, you should hire it out.
    • Have a marketing budget before you begin. Your marketing “war chest” should have $50K+. However, every marketing campaign is different.

Jackie Hoegger
Hoegger Communications
Jackie@TeamHoegger.com
www.teamHoegger.com
940-631-7999

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

Books Mentioned in the Episode

Crush It
By Gary Vanerchuck

Find this podcast on:

You can find a transcription of this podcast here.

5 12, 2020

The Franchise Operating Manual – The Franchise Manual Podcast – Episode #31

By |December 5th, 2020|Franchise Operating Manual, Podcast|Comments Off on The Franchise Operating Manual – The Franchise Manual Podcast – Episode #31

My Podner in this episode is me, Kit Vinson (finally!), and I’m going to talk to you about what franchisors should know about their franchise operating manual. The guest host for this episode is Mr. Jack Monson from Social Geek Radio.

Time Stamps

Kit Vinson Intro 00:00:29
Segment 1 00:02:15
Get to know Kit Vinson
Segment 2 00:13:30
Topic Segment ?The franchise operating manual

TOPICS DISCUSSED IN THIS EPISODE:

What?s Included in a franchise operating manual?

Every manual is customized to the industry of the company, but there are elements of a franchise operating manual that are common to all manuals.

  • Introductory chapters
  • Pre-Opening chapter
  • Human Resource chapter
  • Daily Operating Procedures chapters
  • Marketing chapter
  • Sales Chapter

What is the process for producing a franchise operating manual?

  • Creation of the custom outline for the manual
  • Legacy documentation review
  • Identification of the content experts
  • Information gathering phase
  • Production phase
  • Revision phase

Make the manual creation process fun so that you can start the flow of your team?s creativity juices.

How often does the typical franchise manual need updating?

Manual updates should be completed on a regular basis. Younger franchise systems will need to update their operating manual more frequently because their systems seem to evolve at a much faster pace than that of a mature franchise system.

If you do not keep your franchise operating manual updated regularly, you increase the probability of you having to explain to a judge why your manual isn?t up-to-date.

How are franchise operating manuals typically distributed to the franchisees?

  • Hard copy (paper)
  • PDF
  • Web based platform (Wiki-style)

Hard copy manuals have extreme limitations. They are not secure. They are only a snapshot of your system on that day. Media limitations.

PDF manuals are searchable, but they are not secure. They are also a snapshot of your company?s system on that day.? They are relatively easily to update but you run the risk of having multiple versions of your manual floating around your system.

Web based, online operating manuals are secure, they are extremely easy to update, you can track your franchisees activity in the manual, and you can include multimedia content such as videos.

What are the functions of a franchise operations manual?

First, the Franchise Operations Manual is the authority document of the franchise System Standards. The System Standards are the standard procedures that a franchisor requires of all franchisees in order to duplicate the customer experience in every location. The customer experience is the driving force behind profitability. If you can duplicate a favorable customer experience, then you may have a business that you can franchise. If you have a well prepared Franchise Agreement, it will refer to the Franchise Operations Manual as the System Standard. This way, as your system grows and your System Standards change, you only have to update the manual instead of updating the Franchise Agreement.

Second, the Franchise Operations Manual is the most effective tool for protecting your Brand. A company?s Brand is one of its most valuable assets. The Brand is also the asset that is at most risk when a company decides to franchise. When you franchise a concept, you are putting your Brand in the hands of other people, all of whom likely have different ideas about the best direction for the company. A properly prepared Franchise Operations Manual, with well-defined and organized System Standards, will be one of the few tools you have to manage the Brand and control the franchisees when they try to act on their vision for what is best for your Brand.

Third, the Franchise Operations Manual will likely be the principal tool for training new franchisees. It is the ?Your Company for Dummies? book. You have to assume that most of your franchisees will not have experience in your industry. They may not have any business experience at all. It is very common for a retired schoolteacher or a retired military person to invest in a franchise. This is not to suggest that schoolteachers or military personnel don?t have any business savvy, it is only to say that they were not formally trained in business and have not practiced it during their career. Your manual needs to be a document that not only trains them on your system of providing a favorable customer experience, but also one that brings them up to speed on how to manage a business.

Fourth, a well prepared documentation of the procedures that has helped make your company a success will help you sell your concept to potential franchisees. Put yourself in the shoes of a potential franchisee. If you received a Franchise Disclosure Document (FDD) that showed you that the company had a 50 page document describing all of its operating procedures, you might be a little concerned.

You will also take your Franchise Operations Manual with you when you meet with potential franchisees for the first time. In that meeting, you will attempt to sell the concept to the prospect. Like all good sales people, you will likely have a few sales tools to assist you. You will probably present a PowerPoint presentation of the concept, you will review the company?s performance in the FDD, and you will present the Franchise Operations Manual as your proof that you have a well documents system for success.

Fifth, you don?t get very many opportunities to convey your corporate culture to your franchisees. Initial training lasts a week or so. Annual conferences last a few days per year. Ultimately, it is the franchise operating manual that will have the most contact with your franchisees, so what better place to show them who you are.

Kit Vinson

www.franman.net

kit.vinson@franman.net

214-736-3939 x 101

Find this podcast on:

You can find a transcription of this podcast here.

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