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Happy Franchisees, More Leads: Why Positive Validation is Key for Organic Growth

The experiences of existing owners can heavily influence the decision of which brand an entrepreneur decides to invest in.

In the world of franchising, brands must remember to equally focus on supporting existing owners and recruiting new franchisees into the system. A company can have the flashiest marketing and attractive numbers in their FDD, but if their existing franchisees are unhappy with their corporate support, that disconnect will show and sour the outlook of the opportunity for prospective new owners. 

“The most important step in the process of a prospect deciding on whether to sign with a brand or not is validation. What I say about a brand or what the brand says about itself does not compare in value to what the franchisees themselves say. That is where the rubber hits the road and what will make a brand sell,” said David Busker, franchise consultant and founder of FranchiseVision. A company can get all the leads in the world, but if the franchisees are unhappy and express that when they come asking, the leads go nowhere.”

Hearing that the experience of owning a franchise is an excellent opportunity from the mouth of someone who already owns one is a major persuasion point. Having existing franchisees validate the brand’s key benefits and the return on investment they get adds a considerable boost to the company's credibility. If they give the brand a good review, serious parties will likely look into it further.

“If franchisees are happy and validating that the systems work and that the support is there when friends, family, prior colleagues who are seeing their success and inquiring about it, that person may then want to investigate it, and then comes a lead,” said Iric Wexler, former chief development officer for Premium Service Brands and Authority Brands. 

Not only does franchisee validation demonstrate the positive principles of a brand, but it also adds in a human element that is extremely important. Franchise candidates spend a lot of time pouring over data, financials and other numbers, and hearing from another person about their actual experience is a great way to help them visualize how attainable ownership actually is. 

Busker recommends that brands have high-performing franchisees do endorsement videos validating the company’s perks, which can be used for franchise development marketing. 

“Have your franchisees do testimonial videos. I think those are way more powerful than anything you can do — to feature your own franchisees and have them tell the tale of how it’s positively changed their life. It's going to reveal more about your brand than anything else,” he said.

Another way businesses encourage their franchisees to validate the brand when candidates come asking questions is by offering an incentive, explained Corey Nicholson, Founding Partner and CEO at Cadence Franchising.

“The number one source of new franchisees is good word of mouth from happy existing franchisees. So, it's the franchisor's job to ensure their existing franchisees are encouraged to speak about it, so they will offer cash bonuses for referrals when new owners sign on, or trips,” explained Nicholson.

However, these types of incentivization have a “very fine line” and have long been a heavily debated topic, Wexler noted. The argument is that if companies offer too much cash for positively validating a brand, owners may be swayed to sugarcoat facts or sweeten the truth. 

“If you incentivize existing franchisees too much, they may not be as honest in their validation because even if things aren't going great, they will say they are because they want the money,” said Wexler. “Most lawyers caution above offering more than a $10,000 reward. No doubt franchisors want to motivate franchisees, but they have to walk a fine line to make sure that they are not over-incentivizing.”