The Franchise Sales Process is Broken

Franchise sales is nearing a point of death. Pressure is climbing to get deals done, which is causing franchise sales teams to push through deals that are less than golden.

The risk is far larger than the potential return. Yes, deals grow brands, but wrong deals kill brands — destroy them. Bad deals will grow your brand to 100 units and help you support milestones of 90 open, 70 open, 50 open and then below. Yes, I wrote that correctly — up and then down, down, down.

Franchise Sales Is Broken. Why?

1. Leadership demands are at an all-time high.
2. Buyer are at an all-time low.
3. We are conditioned as humans to believe that if we are not growing, we are dying.

In a good economy, buyers wait on the sidelines. The bulk of franchisees (not the business operators who scale businesses) come from the middle. They are middle managers, who naturally are risk-averse — exactly the reason they buy an operationally built franchise. They wait for indicators of bad — layoffs, overlooked promotions or life events that trigger action. Once those happen, they look at franchises.

What's the Solution?

But in a good economy, more and more franchises are born (especially when private equity is paying ridiculous multiples because of a lack of inventory). More franchises, fewer franchisees, higher expectations — BOOM.

So, in a good economy, what are the solutions? 

1. Grow in concentric circles.
2. Focus on driving sales for your franchisees by giving them the innovation they desire and the infrastructure they require.
3. Set realistic growth expectations — focus on the right franchisees, which in turn will present a much larger deal value.
4. Be patient.

I get it, you want to grow. But grow right, people. Encourage your franchise team to find you awesome deal value, not simply franchise fees. Change your mindset, change your outcomes.

Franchise sales should be franchise development. When you develop franchises, it becomes a part of the one-percent club — the club that becomes a remarkable franchise. Not one franchise got rich overnight — and even for those who are perceived to have, the sky may fall soon.

And in today’s times, you have a true opportunity to push the hard reset button, reshape your approach to development, and deploy.