Our Franchise Consultant Gives You 9 Must Read Tips For Selling Your Franchise
Got a cool concept and a system that’s running like a well-oiled machine? Thinking of taking it to the next level and becoming a franchisor? To help get you started right, we turned to franchise consultant Peter Casey of Capital Franchise Group for his expert insights. Before you sell your first franchise, check his list of tips:
- Be willing to make several face-to-face visits. The person buying into your franchise is buying the relationship and your personal experience. Since yours is not a major franchise system, it’s more important to focus on the extra attention and the support that you’re going to provide.
- Offer a bigger territory. People buying an unestablished franchise system are going to be naturally reluctant. You need to give a lot more than you will for your second, third, and fourth deal. Their commitment to you is based on trust; prove your commitment to them by sweetening the pot.
- Be patient. The process will take a lot longer in the beginning because people are going to want to spend more time and work through more issues.
- Don’t break the law. Get familiar with the rules that are in place, especially regarding earnings claims. If you think selling your first franchise is hard, it’s incredibly hard selling your second or third when the first one sued you.
- Have appropriate partners lined up. For example, a good commercial realtor who is well-versed with your model and willing to assist in the early stages can make franchisees feel good about you.
- Have good marketing materials. Know who your target market is and what they’re looking for in a franchise opportunity. Advertise on different mediums—not just print and not just the Web.
- Consider hiring a franchise broker. Someone who has closed franchise deals before can be a big help. It’s tough to run the store and be a full-time salesperson.
- Hold the bar high. You’ll be very eager to take a check from anyone you can, but as a new franchisor you need to find somebody who’s had business experience.
- Keep it local. Thinking you can support somebody who is in a totally different state at this early stage is unrealistic. Avoid the long distance relationship and start close to your home base.
Franchise Disclosure Document for Dummies – Part 6
The key disclosure in Item 15 states whether the franchise owner is obligated to participate in the direct operations of the franchised business. For prospective franchisees looking for a pure investment rather than a business opportunity, this disclosure might be the first (and only) provision they read in the FDD. Although, an experienced franchise investor may be able to negotiate an exception with the franchisor.
It’s Good to Be Popular (But Not Too Popular)—Choosing a Trademark for your Franchise System
For new franchisors, standing out from the crowd can be a task of epic proportions. Selecting a strong and memorable trademark is certainly an important (indeed, critical) first step, but for the relatively unknown, picking a trademark that is too abstract can occasionally be viewed as a step in the wrong direction—you want to stand out, but you also want people to actually know what you do or sell.
Why Doesn't Chipotle Franchise?
I’m a huge Chipotle fan and I’m not ashamed to admit it. I love a big fat carnitas burrito with every possible topping (is that even the right word for what you put on a burrito?) on it, especially guac. But every time I’m outside of New York I wonder why there aren’t more Chipotles out there. Sure there are a bunch (at the end of 2014 there were more than 1,700) but their numbers pale in comparison to other “fast food” giants like McDonald’s or Subway (they have more than 36,000 and 43,500 restaurants respectively). So why hasn’t Chipotle followed suit and gone the obviously successful franchising route?