Recruiting new franchIsees
An Example of how we went about it
Moving on to recruitment, I mentioned earlier about Peter Bassett with his group and how his first franchisee was an employee and then, once that was established, he went on and sold other outlets to new franchisees. So that’s the evolution he used to kick his recruitment along.
Greg, his first franchisee in Melville, Perth, was his best franchisee. So what we would do is we would have a seminar, people will say yes I’m interested in having a look at Automasters, so we’ll meet you at Melville at 3 o’clock on Thursday.
We would go down there and Greg would run a tour for us. We just be in the background and go and have a coffee out of the way. Greg would take them around, ‘This is what I do, this is how we handle a customer, here is the car, here is where we have all these banners hung up nicely and blah, blah, blah, this is what works really well, I was doing this…’
So he’d tell the typical story, explaining he was previously an employee, he was frustrated because he didn’t have his own business. Then this came up as an opportunity, and how he’d taken it and the business is growing and he’s loving it, and so is his wife because now they can afford to go to Fiji on a holiday.
And the prospective franchisees talking to him are saying, ‘Well I can see this is what this fellow has done, is this something I could do?’
Then we come back in as Greg was asking, ‘Have you got any questions?’ And there I might have my ear just listening to what the questions were and after that when he’s finished, we’d ask if they’d like more information? And people would say, yes definitely.
So you say, okay obviously the information we’re going to share with you, we don’t want every Tom, Dick, and Harry learning. Greg doesn’t want the businesses out in the road knowing it, so it’s only fair we protect their interest. They’d probably feel the same and they’d say, yes. So therefore, we’ve got this little non-disclosure agreement. Just endorse that and give it back to me. I like the term, ‘Non-disclosure.’ Sometimes you find ‘confidentiality’ maybe intimidates and the little tip here is ‘endorse it,’ and not ‘sign.’ Because if we all say ‘sign,’ it comes out like you’re signing your life away. So those are just little things but that’s what we do; they get their information pack, and go for the process. There you go.
Select the right people in the right order
It’s important that you appreciate, and I can’t emphasize it too many times that you’ve got to make sure you do select the right people. It’s very tempting particularly when you start, when maybe cash flow is tight, it would be great to open up a franchise. You know they’ve got enough funding to do it, they’re really enthusiastic, but if they’re not the right sort of people, or it’s the territory in Broome or Cairns and it’s going to stretch your resources, you’re better off not to do it.
We spoke about strategic growth rather than reactive growth. It’s important to plan that.
However, unplanned opportunities can come up. Our franchise owner in New Zealand, said, I’d like to go to North America, so he actually took the franchise to Canada. He sold New Zealand for ERA and moved to Canada. That was so easy that it just happened. Sometimes, you get an opportunity that pops out of the woodwork.
But in many respects, you’ve got to keep coming back to the system. Because you’re entrepreneurial, you’re happy to change things and do stuff and you react perhaps by nature, you can be your worst franchisee because you don’t follow the system. So you’ve got to make sure you respect those rules because if they look at it and see that you’re breaking the rules, are they going to respect them? No. So, you got to make sure you address that
Some recruitment stats
Some of the things about recruitment, Griffith University here has become very proactive in the franchise sector. They do a number of courses and training programs and so forth. Some of them I think are very academic and I’m not sure whether necessary have benefit but there is information that they send out. I certainly recommend that you get on their newsletter list because they have some interesting stats they produce every now and again and there’s some good information that you can quote to prospective franchisees and even your team and so on.
They did a survey of franchisors and this was the average they found for recruiting franchisees and what it cost them. We’re saying here, an average cost of recruiting a franchise was about 20,000. Remember these are going from probably service businesses, to home cleaners, to Mc Donald’s and large million dollar business, so the figures vary. About 30% of the people use a franchisor or business broker to recruit their franchisees, and we’ll run through that in a bit more detail in a moment. They found with their growth that a multi-unit franchising has definitely made a difference. I mentioned about Subway and people like Pool Works, how when somebody really understands, it’s easy for them to grow a business and take over another outlet, if they’re suited. The Peter Principle, have you heard of it, is a glass ceiling and they almost promote people beyond their capabilities. That’s where I refer to the sales manager. The top salesman being promoted to sales manager, but he hasn’t got the skills. You’ve gone beyond his ideal level of competence. So you be careful that you don’t push people beyond that. Often they’ll take it because they aspire to it, but they haven’t got the skills. So, before you put someone up to a different level, go through that Disc profile aspect again and just have a close look. At least you make sure you stop and check.
The average number of enquiries you can see there is about 40 per year per franchisee and about a 10% success rate when it came to the number of people they spoke to. That’s going to vary including how efficient they are with their processing and so forth. It’s just an indication of what might be out there.
The key areas of franchise recruitment
The key 3 areas of recruitment are marketing, the recruitment package or the material that you give to your collateral or you give to your perspective franchisee for them to have a look at that’s going to be the information they’re going to read and share with their partners and so on, and then you’re looking at your recruitment process or the way you lead people down through there to make sure they’re getting a level of understanding and knowledge which is necessary.
Do the marketing for your franchisee
So we’re coming back to that schematic again.
We spoke earlier about when you look at your product or your service, your branding and marketing, and you work out your customer avatar, then your brand and put in all your logos and your advertising.
You do exactly the same when it comes to recruitment. It’s a parallel process but with different levels of application. You’re going to do your franchisee strategy for your franchisee recruitment. Work out where you’re going to be advertising and so on. But you will use all the branding you worked out for the customer.
Your perfect franchisee
Let’s just touch base on that. Looking at your perfect franchisee, your franchisee avatar as we’ve been referring to, you’ll first be looking at their balance when it comes to a DiSC profile. The best way to learn that is look at your staff, your team of the moment and say, who’s the ideal person that I think will be a great franchisee, and get them to do a DiSC profile. Because then, you start to get a bit of a feel for it. You get a feel of people’s worth. Some of my clients get everyone in the office to do it and it’s amazing when it shows up and you do find that sometimes there’s a square peg in a round hole. It explains why this particular role needs that sort of person. This is the sort of information that if you’re applying for jobs in most businesses, you’ll spend a lot of time going through these various tests. What we’re going to point you to is a very simple one that I think is very applicable for anybody and everyone. It really answers a lot of questions in many respects and throws up a few other questions you need to answer. It’s really worth going into it.
And then when you understand the person you’re looking for, the sound of the language they talk, how they spoke to you with regards to customers, it’s the way they communicate.
How do you appeal to them?
Then you think, what are they looking for? They’re looking for cash flow, they’re looking for security, and they’re looking for an investment opportunity. Why is it that they’re doing it? That’s what you’re going to appeal to in your advertising? Do you remember the Panadol for the headache? We can fix it. You buy the headache tablets at the pharmacy or the supermarket. Bang, bang, bang. So it’s problem, solution, access to the product.
Where will you find them?
And then you’re going to look at your target market for your particular business. Who are going to be your prospective franchisees? It depends on the nature of your industry. Where will you find prospective franchisees? Maybe franchisees in other groups are disillusioned. It may be people who’ve owned a business, and have just sold their business. A lot of people who move into franchising have been in business before, but realize that it’s damn hard and love the thought of just getting on with what they love and let someone else take care of the marketing and the advertising and the accounts, and that’s very common. So these can be great people to employ in a business and also to have as franchisees.
It may be just the general business buyers. There are people out there who have decided that they’ve hit 45 years of age or they had just been made redundant and they’re fed up, and going nutty with the uncertainty, they want the security of running their own business, and they could see because they know people maybe or see people who run their own business who are just like them and doing really, really well. They’ve got a beach house. They’ve got a nice car, and a boat, and they go on holiday overseas every year. I’m no different to them. They might be the boss and they say, I can do the job better than him. Why don’t I get out there and get involved in business myself? So these sorts of people are ideal.
And then look at your competitors, they may have people, maybe amongst reps, people who call in as a rep in your industry, maybe are good potentials. We recruited a franchise team member in Perth, who used to be the rep that came into Bedshed, selling us bedding. We actually ended up selling a franchise to him, as we acted as the agents, a Bedshed. And then he sold that after about 3 years and came to work for us as a broker. He was really good because he knew every side of the business.
Don’t just think there’s one type of person. It’s surprising where they can come from. And of course, referrals. The gold club, it’s amazing, and the Chamber of Commerce. Once the word’s out, it’s surprising how people would come along to you. You do have to have an element of being ready to handle that, which is where your unique selling proposition and your elevator pitch is so important. And obviously being able to handle your emotions, and your commitment, and the pleasure you get from it is all transparent.
Plan your promotion
Finally you look at your marketing promotion plan, this is what you’re going to do. Basically, you plan it out. Where are you going to be? Where are you going to do your promotion? That’s the parallel exercise; the one we looked at when it comes to promoting your product. It doesn’t need to be huge in detail.
But you all need to spend maybe 10% in recruiting each franchisee. So maybe you’ll say I’m happy to spend 5,000 or 10,000 or 1,000, whatever it is. A lot of people will say, I’m going to do it myself therefore it’s not going to cost me. But remember, it’s going to cost you in time because you are losing productivity in another area. An analogy you always think about, in a business is, it’s like doing the bookkeeping. You do it yourself because you don’t want to pay someone else, but what’s your time worth an hour? I don’t know anybody in business whose time is not worth at least $100 an hour – productivity. And if you’re doing that’s worth $50 an hour, you’re only getting half the efficiency. It’s important to rationalize that and it helps you make the decision because that’s where growth is such a challenge.
It’s difficult making a commitment by putting somebody else on or delegating or leveraging somebody or using an accountant to do something, but it often makes a lot sense. Use resources. Use people who are skillful. They’ll do the job twice as quickly as you any way, therefore, it’s probably only costing a quarter of the expense. That’s what I found with my bookkeeping. I hear from them a couple times a month. They look after everything. They pay my wages, the cash book’s all done; it’s so simple. I remember he pressure of trying to get it done every month when I was trying to do it by myself.
So, there you go.