Gradual growth, record demand and younger buyers force change in franchise development

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It’s hard to believe it is the 18th year of the Franchise Leadership & Development Conference (FLDC). From humble beginnings with fewer than fifty people, the event has grown to become one of the premier places for franchise recruitment professionals to learn about the craft behind growing franchise systems.

This year’s event set a record attendance level, with more than 450 attendees and more than 200 franchise companies participating in panel discussions, round table talks and vying for the coveted Star Awards for top performance in Franchise Sales.

2016 has been a good year for franchising, and across the board, most brands saw increases in development. We estimate that there are more than 12 million prospects in the U.S. researching franchise ownership, and according to the International Franchise Association, franchise brands recruited an estimated 15,000 new franchisees this year. There are also record numbers of franchise systems now, with more than one new franchise brand launching a day in 2016.

All is not rosy, though.

The upcoming presidential election has cast a cloud of uncertainty across the country, and many prospective buyers appear to be standing on the sidelines, waiting to see what transpires. The sharp increase in the number of franchise opportunities on the market has diluted the number of prospects for each brand, making lead generation much more challenging. There are simply more choices now, and many new businesses are attractive when compared to more mature brands.

According to FranData, who presents a state of the industry report every year at this conference, small bank lending for franchise purchases is getting harder to come by and there is still some uncertainty about the economy, keeping away many potential buyers.

There are several bright spots: franchisors are creating breakthroughs on several levels, and we are seeing much younger owners opting for franchise ownership.

Here are our main takeaways from this year’s conference:

Takeaways from the 2016 Franchise Leadership & Development Conference

It’s all about the story. At nearly every session, we heard recommendations to use more content. “It’s all about content today. Content, content, content. Content is king.” There appeared to be a gap, though, in what this actually means when it comes to franchise sales.

Here’s the deal — the story is the basis for human communication. We use stories to make sense of the world around us, to relate to other people and to make decisions. Content, just for the sake of content, is just noise. The wrong content can turn people away before you ever get to speak with them.

Your brand has a story, and there are always a group of potential franchise buyers eager to hear it. If you have a solid, well-told story that buyers can really relate to, you’ll earn conversations at higher numbers. If you fill your marketing pieces, website and digital content with bullet lists, cheesy marketing slogans, skimpy outlines and features and benefits selling, you’ll end up alienating the people you need the most.

Think about the common questions buyers have and how a typical entrepreneur would try to evaluate a business from scratch. What scope of information do they want and how can you provide article-format content that gives substantive information to these buyers when they are doing self-directed research? When it comes to recruitment websites, more is always better. Don’t be afraid to have longer pages and do your best to fully explain each concept using stories to make it come to life.

Think about the stories that make your culture, mission and people come to life. Get to the Why and How and When in your stories and be descriptive. Don’t skimp and resist the urge to shorten your narrative. Serious buyers have a tremendous appetite for detailed and specific information, and the story makes your opportunity come to life as well as making the numbers come to life.

That’s the power of a well-told story; you just don’t realize you are “being sold” because it is both interesting and helpful.

Your recruiting website is the home base for your story. The better job you can do moving people to your story-based recruitment website, the better chance you’ll have to increase your performance in an increasingly crowded franchise opportunity market. Don’t know how to do this? Do what most STAR award winners did this year and last — pull in an experienced outside resource to get your story correctly mapped out.

Younger buyers are entering the market. If you read our blogs, you know we’ve been focused on getting franchisors ready and prepared to deal with what is sure to be a staggering increase of younger franchise buyers. For the first time in the FLDC’s 18-year history, there was a significant increase in franchise buyers under 30 years old.

This is the first year of what should be several impactful years — the franchise buyer population is shifting and this is sure to have a dramatic impact on franchise recruitment in the next five to ten years.  One well-known food brand commented that they had flown to Harvard to meet with a financially qualified buyer who was finishing up his last year as an undergraduate and was purchasing a multi-unit deal. He would have been 21 or 22.

Companies across the industry are seeing millennial buyers opting in and, in many cases, buying franchises. As a group, they see franchising as a smart career move and a far less risky option than a traditional startup.

Many franchisors, however, don’t know how to effectively reach these young adults. Josh Harrell, a very accomplished millennial filmmaker who works on our team spoke up at the “What’s New in Lead Generation?” session to comment that he was amazed at how many companies — including the panelists and majority of attending companies — seemed to miss the mark, misunderstanding how to market to his generation of entrepreneurs.

“As a franchise buyer, I’m looking for authenticity and transparency,” he said to the group. “I won’t talk to a salesperson unless you can communicate to me online and have the answers I’m looking for. I don’t want to be sold. I want to be able to connect with the brand on a personal level.”

He was commenting on how bad most franchise development video is and how far off point so much of the franchise recruitment messaging is for younger buyers. He’s spot on; buyers like Josh will just move on to a brand that understands how to connect with millennials and treats them with respect. His generation now makes up a third of the buying population, so ignore them at your own risk.

Your sales process stinks. Another shocker from this year’s survey report was simply that traditional sales processes are no longer working. In today’s market, you can’t work every buyer through a rigid sales process and expect to get consistent results.

Franchise buyers have a buying process — meaning they are in control of gathering content and searching for answers to common questions. A high performance recruiter today understands that every buyer enters the sales process at a different stage and takes the time to understand where they are.

If your salespeople answer the phone and vomit features and benefits on candidates before they’ve gotten to know them and really understand what they are looking to accomplish with business ownership, you’ve already lost.

Sales process discussions highlighted how small tweaks can produce big gains. Call response time, use of different opt in strategies for your website and communication tools in the sales process, changing the emotional pace of buyers and teaching recruiters to do a far better job of listening and storytelling all make a big impact on results. Don’t make the mistake of thinking your sales process is working. Underperforming? Don’t look to the lead sources as the issue. Our advice is to start picking your sales process apart and understand why prospects don’t buy.

Franchisors just don’t get video — at all. A positive note for 2016 was that video on recruitment websites increased from 40% last year to almost 60% this year.

We live in the YouTube era and if you’ve spent any time on a website, Facebook or Google, you know that video has emerged as a dominant medium for communicating concepts online.

Judging by the quality of video we saw on the sites for brands represented at the conference here’s how the typical franchisor responds to the need to add more video: They take a camera and a backdrop to a conference and trot out franchisees in logo shirts. They stand in front of a logo backdrop and say nice things about the franchisor. Watching these, you have the impression that what they say is forced and the franchisor is holding a gun to their head. They are rarely genuine and since they all look alike, they offer very little towards positive validation.

Don’t do this. Seriously.

If you are going to use video — and all indicators are that video content is the future of franchise lead generation — do it right and use video to illuminate your brand story, give insight into what a day looks like and use your franchisees in their native environments to voice their version of the value proposition.

Think of video as a small movie, heavily rooted in the story. Create documentary-style films about your brand that provide positive reinforcement of the decision to buy, and let what franchisees say and do speak for itself. Think story first; who in your system typifies the ideal candidate and who has a compelling story to tell? Spend time in the field with them documenting their story and work to create a living, organic library of documentary video.

What was the main takeaway from this year’s conference? Budget a lot more for video, possibly as much as you might spend on rolling out new websites every other year.  Video creates unique and strong emotional connections with prospects in a way no other format can. Create a development strategy around video content as some leading brands like Chem-Dry and PostNet have and continue to publish new content on a regular basis. The payoff is huge.

Takeaways from the 2016 Franchise Leadership & Development ConferenceSocial media produces sales.  Based on the feedback and questions in the social media for franchise sales session, recruiters and even some regular franchise development suppliers still don’t understand the role social media plays in franchise lead generation.

Yes, savvy franchisors are closing deals from Facebook and LinkedIn.  Both of these platforms are giving Google a run for its money and both are working to develop loyal audiences who spend large amounts of time on the platform.

Facebook in particular, has really raised the bar on its advertising platform. Spending money on Facebook is smart; there are buyers for all types of concepts, and it is easier than ever to target potential franchisees based upon geographic location and with precision. Done correctly, the cost per lead on Facebook can be much lower than average.

That doesn’t mean the quality is consistent. Facebook is a different animal than Google, and the results differ. Where Google Adwords produces consistent results and also high quality results, Facebook requires different tactics to master. The big difference: on Google, prospects are seeking information. Intersecting a buyer when they are doing active research is an excellent way to engage someone. On Facebook, buyers are not doing research; they are much more often just reading the news feed and commenting on posts. When you advertise, you are creating awareness higher up in the funnel. You might intersect someone close to doing a deal, and you might intersect someone before they’ve considered ownership.

That doesn’t mean Facebook ads are a waste, just that you are reaching people before they are doing research. Luckily, it isn’t expensive and the brand awareness can help drive other marketing as well as generate leads directly. Don’t make the mistake of dismissing this channel. Tried it and not gotten great results? Get some help; we find Facebook campaigns take more work than other paid channels to optimize, even for experienced pros.

The important takeaway for LinkedIn? Use the sales navigator option, which, although expensive, allows your salespeople to send guaranteed in mails to target prospects. LinkedIn’s advertising channel is not robust nor does it produce consistent results, but thinking of LinkedIn as a prospecting tool really works.

Franchise recruitment websites are changing dramatically — again.  We were happy to have two of our websites make the top five recruitments websites this year, the fourth year in a row. We believe the franchise recruitment website is the single most important component of your development effort; it is the first contact a prospect has with your brand and the better that first impression is and the longer you can engage that prospect, the better your development results will be.

The rise of video and the switch to mobile devices are changing the design and architecture of franchise recruitment websites in the year ahead. Expect to see video-driven sites designed for both mobile and desktop users. The sheer amount of video and text content needed to communicate a brand story has increased, and recruitment websites are changing to match.

Opt-in is also changing. Expect to see more segmented use of tracking phone numbers rather than forms (phone leads close at twice the rate of web forms) and expect to see some other forms of opt in, such as texting, social and auto-fill forms. The traditional lead form simply has too much friction to be successful on mobile devices. If you are stuck on using long forms across the board and you are not deploying better technology, you might be missing the bulk of your buyers.

Franchise portals do work. Franchise portals have been a mainstay of franchise lead generation for decades. We use them on every account we manage and believe in them. There was a sharp rise in closes coming from franchise portals this year, a reflection of how smart franchisors are integrating portal advertising with their organic efforts to generate leads.

There are a few reasons for the spike: Ethnic, non-white potential franchisees increased. This number was up to 39% last year and could be over 50% by the end of 2017. Buyers not native to the U.S. turn to portals as an easy way to discover several brands in a segment.

Franchise portals themselves have not remained stagnant; almost all portals have redesigned sites, deployed sophisticated analytics and progressed towards helping buyers make more meaningful connections with specific brands.

While we don’t think you can grow a brand using just portals, you should always have some of your budget allocated to them, with at least 2-3 portals in your mix. This creates important visibility and the number of buyers who see your brand on a portal then Google your development website is increasing. Don’t make the mistake of cutting off portals; that is sure to reduce sales results.

Duh, you have to have an item 19. Franchise buyers expect financial representations. The more sophisticated the buyer, the more important this becomes.  It is shocking that some brands still don’t have an item 19 and the news from the FLDC is clear — you will have a substantially harder time recruiting good buyers without one.

Takeaways from the 2016 Franchise Leadership & Development ConferenceCulture acts as an immune system. The culture of your franchise system is playing a more influential role than ever before. Franchise owners today want to make money, but they also want to be part of a team of people with whom they enjoy working. Culture is your immune system towards problems that can undermine performance and destroy the relationship between owners and franchisors.

The takeaway this year is that franchisors need to do a much more substantial job articulating their culture both in marketing materials, videos, text, websites, emails and in-process content.  Top performing franchisees who understand what your culture is will be attracted to your brand over others.

Have a fast-paced, entrepreneurial culture? You’ll attract people that fit in. Have a culture focused on helping others? Those buyers are looking for you. Many buyers today are choosing brands based on culture first, so don’t overlook this on your website.

In Summary

2017 should be a slightly better year than 2016, no matter who wins the presidential election. The number of brands has skyrocketed and although the population of potential franchisees has grown, becoming both younger and larger, there are more choices than ever before. This means that you’ll have to spend more on marketing to help your brand stand out, and as always, what has been working might not work going forward.

Think about how you communicate your brand story and use video to do that. Most of all, rethink your franchise recruitment website. It is a great time to be in franchising and the future of the industry is stellar — make sure your brand is well positioned to take advantage of this growth.

Have questions about this year’s conference or any of these takeaways? Reach out to us and schedule a call. It might help you create a breakthrough this year!