Key Takeaways from Franchise Development in 2018

2018 was quite the year for franchise development. 1851 Franchise spoke with franchise development leaders and got their impressions on the franchise development space in 2018.

Some things pretty much stayed the same.

Of course, prospective franchisees are concerned about how much a brand will make them.

“We’ve been seeing this trend for quite some time - it almost seems like a statement of the obvious - but unit economics, return on investment of the individual unit level, is still paramount and still the most critical thing that franchise candidates look for,” Newk’s Eatery chief development officer Chris Cheek said.

“Unit economics, return on investment continues to be the number one and number two most important thing as a franchise brand that you can have in order to pursue and grow by way of franchising,” Cheek said.

The power of content has proved indomitable.

“What’s working, what continues to work, is telling stories, telling these success stories of franchisees within our network,” U.S. Lawns senior director of franchise recruiting Dave Wells said. “Using content to answer questions and overcome objections.”

Franchise development leaders also agree on one major point: Franchisee candidates are more educated than ever.

“One thing that we’ve seen in 2018 is that the franchise candidate that we work within our sales process is the most educated they’ve ever been about your brand prior to them even making contact with you,” Cheek said.

Nowadays, Cheek said, it’s very safe to assume that the prospective franchisee has already done a lot of research before they even make the initial point of contact.

“So the philosophy of ‘Let’s hold back information to pull them through the process and have them earn access to information is gone away,” Cheek said, adding that what continues to be important is to be able to provide as much information as possible. “Of course the FDD defines what we can provide, but provide the FDD as early in the process as possible.”

To that end, some franchises are changing up the way they communicate with prospective franchisees and feed them information.

Wes Barefoot, the director of franchise development for ShelfGenie, noted how over the past couple of years or so the way prospective franchisees like to engage and gather information about the brand throughout the discovery process has changed.

“From my perspective, you still need to have a methodical process but you also need to really find some ways to keep candidates engaged and keep feeding them information, and information in the form of content that they can kind of use whenever and review whenever,” Barefoot said.

To that end, ShelfGenie said that while their development process is still methodical, the brand has invested in a new CRM system over the past few months that will make the process a more comprehensive and interactive experience for candidates.

“We’ve invested pretty heavily in doing some video content that’s really designed to help the candidate understand what the ShelfGenie business model is, the role of the owners and how we support these franchise partners,” Barefoot said.

Barefoot enjoys how prospective franchisees these days are more informed by the time they make contact with the brand.

“It allows me to maximize my time on the phone with these candidates,” Barefoot said, adding that before it wasn’t uncommon for him to have one-and-a-half to two-hour phone conversations with prospective franchisees “because so much of the time was me verbally explaining things to them that they were hearing the first time.”

Also, while some franchises experienced major growth in 2018, a stronger economy has stalled franchise purchasing.

Wells said 2018 has been a tough year for franchises looking to expand. Not a lot of people, he said, are looking to make life changes when everything is going well in their career.  

While he said it’s been “a tough year” for franchise sales, Wells talked about how the brand plans to work on that.

“What we’re doing to combat that I would call a strategy of radical personalization,” Wells said. “We’re looking at our process and rather than this traditional idea that you’re going to set up your process and everybody has to go through the same process and jump through hoops, we’re looking for opportunities to tailor our experience to the candidate to make sure that we are answering their ‘why’ and making sure that our process isn’t being roadblocked in front of them but rather encouraging them based on the background and skill sets that they’re bringing to our organization.”

Wells has strong ideas on how the franchisee recruitment process needs to change.

“It is also important that we optimize our value curve,” Wells said in an email. “Today, every interaction a candidate has with our brand or our team needs to move them up the value curve and closer to making the decision to join the U.S. Lawns team. Antiquated strategies like creating hoops for them to jump through in order to see if they can follow a process (and therefore would make good franchisees) cause downward movement on the value curve and just don’t work today. Qualification is still important, but we need to do that in a more intimate way than we have in the past.