Changing customer expectations and rapidly emerging technology creates both an opportunity for growth and a performance gap for franchise systems

By Thomas Scott, CEO Brand Journalists

2015 was a great year for the franchising industry and in the early months of 2016, the next few years look like an even better time to be a part of such a thriving industry.

According to FranData, last year there were more than 385 new franchise companies starting up operations; that’s more than one new franchise system a day. That’s an historic moment for franchising and a bold sign of what lies ahead.

Robert Cresanti, President and CEO of the International Franchise Association opened the 56th annual conference in San Antonio – one of the largest on record with these stats:

  • The franchise industry now has 795,933 establishments open

  • These business produce over $944 Billion a year in sales

  • Franchising now makes up over 3% of the total US GNP

Most importantly, the franchise industry has significantly outpaced corporate America when it comes to job creation, adding over 1 million jobs in the past five years. The franchise industry is strong and well and is one of the brightest spots in our economy.

For anyone working in franchise development and tasked with growing an existing franchise system, there are some really bright and hopeful signs of life ahead:

  1. Financing is coming back and there are finally good loan programs hitting the market – this has been the top reason that many prospective owners have decided not to buy and its resurgence is huge.

  2. Search interest for franchising is growing – there are record numbers of potential franchisees looking for ownership information online.

  3. Millennials are beginning to enter the industry and are having a huge impact. Millennials are far more likely to buy a franchise than previous generations and they are challenging the status quo, disrupting traditional franchise recruitment systems and forcing the industry to reinvent itself.

  4. Mobile, web and social technology is evolving and the knowledge gap between raw interest in franchising and detailed ownership information on specific brands is smaller than ever before; franchise companies are finally starting to understand how inadequate most recruitment marketing is and are making strides to connect more deeply with prospects.


This year’s conference delivered on many fronts. For CEOs, franchise development executives, franchise recruiters and franchise development marketers, here are our key takeaways from this year’s conference:

 

Key Franchise Sales Takeaways From the 2016 IFA Conference:

The millennial franchise buyer is forcing change in franchise development departments: according to FranData’s President and CEO Darrel Johnson, 60% of Millennials identify with entrepreneurship and would be open to owning a business. They simply see the Baby Boomer path of going to college, getting a degree, working for a large company and retiring on a pension as completely unrealistic and unattractive. In fact, they see this traditional view of a career path as foolish and highly risky.

Millennials are much less risk-averse and much less afraid of failure in a business. Weaned on startup tales from Silicon Valley and the dot.com rage, failure is a badge of honor and Millennials are simply not afraid to jump in and push for results.

Because they now make up 30% of the population and make up the largest segment of the workforce, this is an important strategic shift for the franchise industry and over the next decade, these buyers will dramatically change the face of our industry. As many development executives stated at the conference, working with Millennials is a challenge and they behave differently than older generations.To get better results, a smart franchisor will take the time to understand how a millennial buyer views the world and get a grasp on what expectations they bring to the table. The more closely you can align with these, the better results you will see.  This group is just now entering their 30s and they are enthusiastic about jumping into franchise ownership. Here’s some advice from the conference to help you understand your gaps:

  • Millennials use technology at a much higher rate. While this isn’t a surprise, what might be is that the way they use technology is different.  When it comes to franchise recruiting, this means rethinking mobile versions of your franchise recruiting website, making it easier for the typical millennial buyer to do research and advertising in a much more authentic and detailed way. The best way to scare off Millennials is to push traditional advertising and marketing messages to them – they just tune out.

  • The millennial buyer doesn’t like your sales process. Chances are, your current sales process is far out of alignment with what you need to improve chances of recruiting more Millennials. As a group, Millennials avoid salespeople and anything that smells like a sales process – you’ll have to earn their trust by being fully present, accessible and focused on them as individuals, not just a stat on your weekly pipeline report.

  • The types of content Millennials gravitate towards is radically different than anything you have in place.  Video, details, authenticity, conversational articles, unbiased reviews are all a part of the scope a Millennial expects to see on your website. Look at a dozen recruiting websites and you’ll quickly see there is a performance gap here that companies will need to address.

 

Your franchise recruitment website continues to be the most important component of your franchise sales efforts: If there was one uniform word of advice from every single franchise executive, it was this: if you haven’t spent time and money getting help to build out a high-performance recruiting website, you’ve already lost the development game.

The franchise recruiting website serves as a detailed home base a potential franchise owner visits to do research on your opportunity –this is also where a candidate makes the decision to buy or not to buy. There are very few specialists that know how to build high-performance recruitment websites and there are even fewer with a solid track record of performance.

A successful recruitment website should be designed to engage a prospect and keep them reading for 30-45 minutes. It should convert unique visitors to franchise leads at a high rate – at least 4% – and it should work well on both desktops and mobile devices.

Most importantly, it should be a living, breathing embodiment of your authentic brand story. Spending time on the site should create both an emotional connection to the opportunity and give a prospect helpful and detailed information that answers most common questions and removes any big objections. It should be designed to dominate SEO and have a platform for targeted content marketing.

Companies that roll out winning websites like these reap huge results and get a quick return on their investment. This is true of a small startup franchise brands like New York based Woops Macarons or Atlanta based Outback GutterVac.This strategy works for iconic and well-established brands like AAMCO, Chem-Dry or Captain D’s. Take a look at these websites we’ve recently built to understand what you should be doing to get better results.

The design of your site isn’t as important as the content. The lesson from this year is simple – get help designing and authoring the right type of content so that you can intersect your prospects and help them better understand the brand. The rewards are huge if you do.

Mobile usage is evolving much faster than franchise development departments: we passed an important milestone this year that you may not have noticed. For the first time ever, mobile visitors accounted for more than 50% of all web traffic. For franchise recruiters, this is problematic and once again, it’s time to rethink your strategy on how you convert and engage mobile visitors to your franchise site.

The industry prediction of where mobile technology is very clear: within a couple of years, we won’t be using laptops or desktops and we will only be using smartphones to access the Internet. Think about that for a minute – how prepared are you to deal with such a huge shift in the way people use technology? What’s going to happen halfway through this year or next when your lead flow begins to drop off and you can’t reach your development goals?

If you ask your marketing department about this, they will likely say your site is responsive, meaning that your site is designed to respond to the screen size the viewer is using (desktop, laptop, tablet or phone) and reorganizes the content to make it viewable on that device.  In other words, this is the same website, just scaled to fit across the many different platforms.

That alone doesn’t cut it today – to be effective, you’ll need to think much further ahead on how a mobile user is using their phone to research and buy your opportunity.  We often say that you’ve been fired from the first conversation with a prospect.  Prospects now have a conversation with your brand on your recruiting website (see the point above) and the decision to buy is made before they opt in to talk to you.

The challenge in 2016 – and why you should budget for a redesign of your recruiting website – is that now we have two different audiences trying to have conversations with us using two totally different platforms. Making a one-size-fits-all responsive website that just ‘works’ on both laptops and mobile phones isn’t enough.

Video is now the gateway content for franchise sales and the type of video you need is much different than the video you have. Here’s an important stat from Lorne Fisher’s (CEO and Founder of Fish Consulting) presentation on using social media to generate franchise leads: according to Socialnomics, 2/3 of all content viewed on mobile devices will be video by 2018.

Two – thirds! At last year’s Franchise Update and Leadership Conference, the annual lead generation presentation reported that only 40% of the franchise recruitment websites reviewed had video. 60% didn’t have any form of video.

For the 40% that did, only a handful of franchise recruiting websites had the right kind of video.  As we shift recruiting marketing to engage more with Millennials, the industry’s thinking about video needs to evolve.

Here’s what doesn’t work: video testimonials that looked like you pulled your owners out of a conference session, stood them against a wall and held a gun to their head. Watching these stiff and inauthentic videos, you get the feeling that a handler outside the frame said, ‘now say something nice about training and support’ or ‘say why you would do this again.’ Savvy buyers – and that is the only type in the market – can smell inauthentic marketing and they are quick to dismiss it.

What does work? Documentary-style movies. The type of film – not a video – that you might see advertised as a ‘short’ at South by Southwest. Shorts are authentic, interesting, story-based films that give insight into a topic. Usually 5-7 minutes long, these videos are interesting to watch in their own right and are very compelling. They also take a masterful storyteller to produce.

AAMCO franchise used this method to greatly increase lead generation and drive up positive validation by showcasing one of their long-time owners, Lou Fizzarotti. Captain D’s used this method to showcase two brothers who opened a top-performing franchise in West Point, MS, which was ‘bigger than Wal-Mart.’  I Love Juice Bar’s founder used this method for sharing his personal story of why he decided to franchise. Expect to see much larger usage of documentary videos for brand stories, franchisee validation and better ways to communicate with the YouTube generation as they enter the ranks of franchise ownership.

Video has the potential to smooth out validation and help people connect more deeply with the culture of a brand. Want to target some specific types of franchisees? You’ll be a lot more successful in hiring a documentary filmmaker to dig for the story that resonates the most. Documentary video is possibly the biggest lead generation trend of 2016.

The web form is going to go away: There, we’ve said it. Real franchise buyers don’t want to fill out your web form. You know this in your gut because you don’t like to fill out forms yourself when you go online.

Here’s the deal: franchise recruiting and most sales CRMs depend on a specific prospect’s behavior – they have to complete a form to request information. The form feeds information into your CRM and the salespeople can work the leads. The web form has been the sole source of opt-in for more than a decade but there is a really challenging trend that is going to disrupt your sales team in 2016: franchise buyers want to control the sale, they want to withhold information and they want a better way to opt in.

Think of it this way – forms are so 2010. Opt in – the moment of truth when an interested candidate raises their hand to say they are interested  – is changing. Phone calls are now making up 30% of franchise leads on the many franchise websites we build and manage. Forms have gotten shorter and now contain only a minimal amount of information and the next frontier is text communicating in place of the web form or a phone call.

What’s going to replace this? Social logins, autofill scripts for email marketing, text opt-in, more diverse phone lead tracking and probably some ways we have not thought of yet.

These updates in behavior promise to break down barriers between a candidate and a recruiter but it poses real challenges for CRM companies who don’t currently have the ability to integrate non-form opt in. We’re back to manually entering lead info, which rarely works well.

Facebook and other social media platforms offer cost effective advertising options:  My teenage daughters often remind me that Facebook is for ‘old people’. By ‘old’ they mean people over 30. You might lean towards LinkedIn as your preferred social network for generating leads but Facebook has improved its ad platform recently and managed in the right way, it is proving to be a viable lead generation source.

Jack Monson, Global Director of Manalto Social Media, spoke on tactics for generating leads with social media and said it best: “the days of having a dedicated Facebook page for development are gone. Today it doesn’t matter if you post something on your page – you have to develop, publish and promote content in the feed of your target prospects.”

He’s right – reaching potential franchise candidates on social media is less about what you post to your page as a status update and more about how to promote your content in multiple ways inside the Facebook news feed. There are a few ways to do this: by promoting posts that link to your franchise website and by creating targeted ad platforms

Diversity in franchise recruiting is becoming more of an issue: Gerald Fernandez, President and Founder of Multicultural Foodservice and Hospitality Alliance, gave an impassioned and highly practical talk on the growing importance of diversity in franchising. While his point was not aimed at franchise sales, it is still extremely important to consider:

39% of the country is now non-white. That percentage is growing rapidly and if you look around at the racial and ethnic makeup of our country, we remain a melting pot of cultures and peoples from all over the globe.  Affluent immigrants are making up larger and larger percentages of franchise purchases; people fleeing global uncertainty see the U.S. as a bastion of unlimited opportunity and the franchise industry is very attractive.

The demographics of the U.S. are changing – African American, Hispanic and Latin, Asian, Middle Eastern and other non-white peoples have growing populations that should be better reflected in the franchising industry. There is more diversity at every level of economic and social class in our society than ever before. It is time we took the time to be far more inclusive on this front!

“If someone of Middle Eastern, Indian or some other diverse group looks at your website and they only see photos of white people or only photos that include people of color in service positions, you are turning those people away,” said Hernandez. His advice was practical – simply make sure your development team is diverse so it reflects your franchise prospects. Make sure your marketing is authentically diverse. Don’t use stock photos to force the issue – it is painfully obvious if you do. Push to recruit diverse franchisees and work hard to help them succeed. As our population grows and evolves, so will your base of franchisees.

Who’s doing an excellent job of this? Marco’s Pizza. That system has been one of the fastest growing pizza franchises for the past few years and it has done so by recruiting a diverse group of franchise owners. They are not so focused on recruiting existing multi-unit franchise owners as most brands are and have instead done an amazing job making themselves highly attractive to white and non-white owners. The focus on diversity is one of the main reasons Marco’s Pizza are succeeding and more brands should follow suit.

Persona marketing forces us to rethink PPC and SEM marketing:  The average franchise company spends over $200,000 a year in marketing and advertising to generate and generates thousands of leads a year. Over time, a typical franchisor will have well over 5,000 lead records in a CRM.

How well do you market to this list?  Do you send out emails on a regular basis?

One takeaway that you should consider researching is the advent of persona marketing. Everyone who uses the Internet is identifiable from the unique IP address they use. That’s what we use to track buyer behavior on our websites and it is what we use when we retarget visitors to our recruitment websites.

Google can often associate some specific information with that IP address; they can often associate a device type and an email address. Knowing this, savvy marketers can leverage a list like the one you have to get much more focused on how they influence people who have already expressed interest in your opportunity.

You can display specific ads – both PPC ads on Google and display ads – to any of those people on sites other than your own. You can use your list on Facebook to create relevant content for people in their newsfeeds. It’s a good kind of creepy and it works.

We’re doing much more of this for our clients this year and expect it to be an increasing trend as we going forward.

Franchise Sales Process tactics continue to evolve: Just as our core buyers are rapidly changing so is a franchise sales process. If you are still sticking to a rigid sales process for all leads, you are missing deals.

Savvy recruiters are learning to flex with the different types of franchise leads they receive. Get a lead from your website via an inquiry form? You might have a totally different process than someone that comes from a portal.

Get a lead that is younger and one that is much more experienced? You might deal with them in different ways, each designed to produce the same result. Millennial buyers might need more information than someone transitioning from a corporate career. You might need to move your FDD up or your application back. If you treat everyone the same, you’re only going to be successful with a small percentage of closable deals.

The type and scope of content you use in the sales process is also evolving. Stay true to the promise of franchise recruiting, which is: helping people make good, well informed decisions about franchise ownership. Do this by asking for feedback and listening to what prospects tell you. Experiment in small ways to tweak the process and always root decisions in the actual data, not your emotional or anecdotal view.

 

What to do with this information?

 

2016 and beyond should hold a lot of opportunity for franchise brands on the development front.  The problems our industry has been focused on for the past few years are getting solved and the problems lurking over the horizon are likely issues you haven’t even considered yet.

As a franchisor, you have a decision to make: should I stick my head in the ground or try to get ahead of my competition before these issues lay waste to my development team?

Need help with any of these or want to talk to someone who knows how to affect change on each? Start a conversation with us. You’ll benefit even if you don’t engage us to help you grow your brand.

For more information, visit Brandjournalists.com or call us at 615-483-4923