Why are people interested in opening franchises? (It's pretty simple, actually...)
This past November, FranchiseHelp first experimented with the idea of a franchise matching quiz. Our idea was that, by having potential franchisees tell us about themselves, we’d be able to present them with the franchises that they were most likely to want to open. (If you want to check it out, click here.)
For example, a “car guy” is far more likely to want to open an automotive franchise than a tutoring franchise.
We’ve seen quite a bit of positive feedback from visitors who appreciate us for helping curate the wide world of franchise opportunities.
One of the incredibly positive side effects of this process is that we’ve gotten access to some amazing data about who potential franchisees are and what they’re interested in.
One of my favorite questions is all about why the person is interested in opening a franchise:
We sat down last year and thought about what the most common reasons people give for considering becoming their own boss. While this list isn't perfect, it's fairly comprehensive in terms of possible rationales.
Alrighty, so from the period of April 20th to May 20th 2015, here’s what the breakdown of answers looks like:
Almost 50% of people who take our matching quiz select money as the primary motivation for wanting to open their own franchise.
In a question where there are 6 options, the idea that a single answer would have 50% is an incredibly strong signal that this is what people care about most.
So here’s the curious part about these findings...
When you read as much franchise marketing as I do, you find that money is one of the least promoted features of owning a particular franchise. (I am aware that there are some legal issues here as well as some franchises not being particularly proud about their unit level financials, but you still think that you’d see it more than you currently do.)
This is an incredibly strong signal from the potential franchisee pool that they want to get into this business because they want to make money.
It’s not that they want to work from home, it’s not that they want to change things up, and it’s not that they are tired of what they do now!
They want to make a good investment!
So why don’t franchisors try to promote this feature of their franchisee program more?
After discovering this fact, I decided to dig a little bit deeper. How does someone’s desire to make money change as potential franchisees' bank accounts change?
You may hypothesize:
1. As people have more capital, they are less likely to care about money, as it is less of a concern for them.
2. As people have more capital, they are more likely to care about money, as richer individuals are concerned with savvy investing.
I personally guessed that the first one was true, so I was pretty shocked to find these results:
(What I did was index the relative importance of money for the $500K+ people to 1, and then demonstrated how people with less liquid capital are less motivated by money. So "Money" is about 77% as important to people with $0 - $25K compared to those with $500K+.)
So it turns out that the more money that someone has, the more they care about money as far as motivation for opening up a franchise.
The lesson is that if you are a franchise that is targeting people of higher net worth / liquid capital, the onus is stronger for you to prove to them why it’s a good investment. You’re less likely to be able to convince someone with $100K in the bank why opening up a franchise is a good lifestyle decision than someone with $25K.
And this has implications above and beyond simply how you market your franchise. Your sales teams will need to know this as well. Because highlighting the wrong aspects of your franchise may lead to potential franchisees deciding that a competitor is a better option for accomplishing their goals (making as much money as possible).
So start thinking about how you sell and market your franchise. How do you promote the ability to make money? Is it a major feature? Do you try to hide it?
The market has spoken fairly loud and clear that this is what they’re in it for, so it’s time to make the adjustment.
If you’re interested in some of our other data, or how FranchiseHelp uses the quiz to get people interested in franchises, let us know.