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How To Sell Your First Franchise

For aspiring franchisors, one of the biggest and most stressful challenges is selling that first franchise. Here are five tips to make it easier.

Selling your first franchise is a little like landing your first job — it’s all about getting someone to believe in you and to invest in you. With only the success and track record of your core company to sell — and no previous franchisee performance numbers to include in your franchise disclosure statements — you’re asking franchisees to take a big leap of faith. 

But all successful franchises have to start somewhere. While every path is unique, experts say there are some steps you can take to ensure your success. 

Locate Your First Franchise Near Your Corporate Headquarters

Oversight is crucial for new franchisors, one reason to keep it close to home.

“I think it is smarter to grow closer to home so you can be there often,” said Corey Elias, director of franchise development at Franchise Captain. “I’d want to be able to drive to locations because it’s important to be hands on at first.”

Lauren Coulter, director of franchise development for emerging brand Biscuit Belly, agreed. We are trying to keep our corporate locations within a two hour footprint so we can easily get to them,” she said. “We’re definitely trying to be smart with our first franchises. Distance not only makes it more difficult to manage effectively, it’s also important to think strategically about distribution channels.”

While your first franchise doesn’t necessarily have to be located within the same state as the corporate office, it helps if it’s within the same region. Among other things, it also makes sense from a marketing perspective. “One of the hurdles you face with a new franchise is brand recognition,” added Coulter.  “Someone in another area of the country might not have heard of your brand. Staying as close to the franchisors’ market is smart, because a lot of the brand’s recognition will be there.”

Consider Opening Another Unit — or Two — First

Despite the cost, opening one or more test locations before franchising is a smart strategy that can pay off.

“A good example of that is the dog grooming brand Scenthound,” said Elias. “They started in Florida in 2013 with one location but grew corporately to four locations in the Southeast. One was used for testing when they rolled out franchising; now, they have 29 units across three states. It was smart how they rolled it out.”

While having multiple units before franchising will increase a brand’s credibility, not every brand has the capital to do so. Luckily, there are other strategies. “I’ve heard of brands opening corporate stores with the intention of selling them to franchisees,” Coulter said. “The model is kind of like building a spec home. It’s a great way to start gathering data to support your brand’s success. Without multiple units, that’s difficult to derive.”

Sweeten the Deal for Early Signers

It makes sense that potential franchisees are more comfortable investing in a proven business model with plenty of data to support the brand’s success, so there should be benefits for franchisees who take the financial risk of getting on board early. “Certainly, being able to pick your location knowing that you don’t have any competition is a huge plus,” Coulter said. “And for a lot of our early franchisors, there’s also the opportunity to be very hands-on in the development process.”

“The higher the risk, the greater the reward should be,” added Coulter. “Find ways to give early signers special bonuses that make it worth it for them to invest.”

Find the Right Franchisee

One of the most important aspects of building a successful franchise is to find the right people to  help you build your brand.

“You have to make sure you’re aligned with that franchisee and that you share some of the same goals,” said Matthew Weiss, director of franchise development at Franchise Evolution Partners and director of operations for a multi-location Massage Envy franchise.“Having a moral compass for your brand is really important so you can make sure you’re slotting people into that mission vision. Those first franchisees are going to be a huge part of your success. Among other things, they have to have the ability to run a business and take advice from a franchisor.”

Enlist Professional Help

For new franchisors, a franchise broker can make all the difference. 

Talk to a franchise broker,” said Elias. “Our job is to find the right fit, and that’s true for both franchisees and franchisors. The franchises most people know about are mostly restaurants they’ve eaten at. We introduce them to a whole world of franchises they wouldn’t have otherwise known about. So in a sense, we do the marketing for franchisors.”

While the services offered by a franchise broker come with a fee attached, for an emerging brand trying to make that first sale, it pays to enlist the services of a professional franchise matchmaker.