Franchise Your Business
Franchise sales strategies vary based on goals and capitalization. Organic growth, though slower, is often healthier, but brokers, though expensive, may provide a higher volume of leads.
As you begin to franchise your business, building the proper sales framework is a key step. Often, a strategic approach to sales that maintains a brand’s high standards while also recognizing the relational aspect of franchising is what will drive scale beyond the initial corporate locations, but understanding how exactly to build this process (and how to reward those who play a part in it) isn’t always as clear. Many founders begin with organic sales and pursue broker networks later on. Regardless of how you choose to grow, understanding that brokers and internal sales teams require entirely different operational frameworks is key.
To understand how to successfully balance broker relationships with internal sales, 1851 Franchise spoke with Charles Bonfiglio, founder and CEO of Tint World. After launching franchising in 2006, Bonfiglio grew organically for more than 10 years before tapping into broker networks to propel further growth.
“[Early on], I was doing very little marketing, and I really didn’t know how to sell franchises [when I first started growing Tint World],” Bonfiglio said. “I was probably doing a few stores a year. Little by little, we chipped away, and when I got to about 25 stores, I started to ask questions. ‘How do we grow this faster?’ My second hire was somebody who started selling locations to help me build out these stores quicker.”
For most new franchisors, there’s not a single blueprint for lead generation on day one. Each brand is different, and the existing awareness and demand will vary. Further, the sales approach will need to adapt based on your ideal franchisee. For Bonfiglio, organic interest drove steady franchise development in the early phases. People found the idea of an aftermarket auto shop appealing and inquired about opening their own.
In these early stages, a lean structure is smart. Bonfiglio brought on an external sales representative to manage the early pipeline.
With an external sales representative, the founder generally remains the face of the brand, but the external rep manages the initial pipeline. This way, the founder is not sorting through masses of initial applicants. Rather, they meet candidates after they’ve already been evaluated.
“I had an outside salesperson,” Bonfiglio said. “I paid him to do the administrative work of following up with people, vetting them, sending them the application, and sending them the disclosure document, answering basic questions... and when they were completely qualified and ready, they came to Discovery Day, and they met me."
Because most emerging brands will have modest lead volumes at this stage, paying a full executive salary typically isn’t feasible. This is why the independent contractor model can be an ideal option. This way, the salesperson can have a flat, per-deal closing commission, and the majority of each new franchise fee paid is retained to fund franchisee support and brand growth.
This approach does mediate growth in the early stages, but this isn’t necessarily a bad thing.
“For someone who has a business and wants to franchise it, I think going a little slower on the first 10 or 20 [units] would be wise so they can really understand,” Bonfiglio said. “If you’re counting on you making money when you’re trying to build a franchise, that’s really not a good recipe for success. Your focus should be on two things: making sure franchisees are profitable and happy, and evolving the system to where you’re making it easier for franchisees to operate.”
When a franchise system reaches a certain maturity level (typically 50 to 100 units), it has likely become royalty-sufficient, and the math of the business shifts. Once recurring royalties from the system reach a point that they can cover corporate overhead, the franchisor’s reliance on upfront franchise fees can decrease. When more of the franchise fee becomes “available,” it can be funneled to a broker network to accelerate expansion, if desired.
When using franchise brokers for sales, franchisors will join established broker organizations. These groups employ individual brokers who act as coaches or consultants to prospective franchisees, and if your brand is a part of their “inventory,” it may be pitched to these candidates. The candidates are generally prequalified and handed over to the internal team as warm leads, but there are pitfalls. Commission from brand to brand isn’t always the same, so it’s possible a broker may suggest a different brand from yours in hopes of receiving a bigger commission. And, while a broker should generally understand your brand, they may not know it as well as an internal salesperson would.
While a broker can offer a somewhat steady flow of leads, the cost to get in and the fees associated with each deal closed can add up quickly.
“I was really surprised by how much of the license fee you have to give a broker to do that job,” Bonfiglio said. “They can range anywhere from $20,000 to $30,000 per license. So, if you’re charging a $40,000 or $50,000 franchise fee, half of that (or more) could be going to that broker network.”
In addition to the costs associated with each individual deal, the networks require membership fees, sometimes $20,000 per year, and event attendance to build trust with individual brokers.
For a growing brand, the costs associated with a broker network can be a tough pill to swallow.
“If you go to three or four-unit deals — if someone buys a multi-unit license, you pay a reduced amount,” Bonfiglio said. “It could be somewhere about $10,000 for each of the additional ones. You can actually make some money if you’re selling multi-units, but not as much when you’re doing a single-unit, because the broker is taking the majority of that license fee. And you have to realize that it’s not always good to sell multi-unit licenses. You’re probably better off growing the company with single-unit licenses so you don't have to have people feeling pressure to develop the next one just because they’ve paid for it.”
With an external salesperson and/or participation in broker networks, it’s crucial you build the internal team accordingly. These are great tools, but they can’t support the entire development strategy alone. Bonfiglio compares a high-volume internal franchise development team to a classic assembly line. There are specialized internal roles that support the sale and launch of each franchise. And, according to Bonfiglio, just because someone isn’t the salesperson, this doesn’t mean they shouldn’t get some kind of reward for their contribution to growing the system.
It will never be a single person handling a lead from the first inquiry to opening day. Recognizing everyone from the internal salesperson who answers questions and completes the initial vetting process to the onboarding lead who ensures the franchisee is not just signed but actually set up for success incentivizes people throughout the entire development process.
In this model, you’re likely paying a steady base salary and providing smaller commissions for each deal closed. For the sales manager, this could be $1,000 per closed deal. For the closer, it may be a couple thousand dollars.
“I say, ‘I’m giving you a commission of X for every deal you close, but if we go through a broker network, I’m giving you a percentage of the money that’s left over after the broker is paid,’” Bonfiglio said. “So, if my franchise fee is $50,000 and the broker commission is $30,000, I have $20,000 left. I’m likely giving my franchise development person $5,000 of that, my inside salesperson taking the calls and appointments $1,000 of that, and my onboarding person $1,000 to $3,000 of that, depending on how quickly they get the franchisee open. So, at this point, the majority of that money from the franchise fee is used up.”
Practical Tip: Align financial incentives with organizational speed and franchisee happiness. Incentivizing your onboarding staff ensures internal teams don’t lose momentum the moment the new franchisee signs their agreement.
As you build your franchise development strategy, it’s important to consider how different sales structures impact your capital structure over time. Some franchise brands choose to scale via brokers, which can be an acceptable option, but they must understand that, in this scenario, upfront franchise fees are effectively gone — largely invested in the commission with less left to reinvest in franchisee training and support.
On the other hand, growing more organically and with the help of a single sales rep rather than a true broker generally costs less and leaves more funds available for meaningful support structures that will strengthen the business for the future.
“When you're opening up franchises, you’ve got to have the mindset of ‘I'm not going to make any money,’” Bonfiglio said. “I'm gonna keep every bit of it going into the system at least until I get to 50-plus locations.”
Franchise sales aren’t about selling a product. You’re selling a model, and long-term success is directly tied to your team’s ability to identify, onboard and support thriving, profitable business owners who will willingly pay recurring royalties. By structuring commissions carefully and refusing to rely blindly on external networks before your foundation is solid, you’ll ensure your team stays strong and motivated, your options remain more open and your system is set up to excel.
Growing and selling franchises is difficult. Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit www.1851growthclub.com and see what we can do for you.
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