Franchise Evaluation Part 2: Ensuring You Have Positioning and Messaging for Product, Costs, Depth of Support, Leadership, Growth Plan, and Validation

As potential franchisees complete their due diligence and research your brand, they will want to know, in clear and specific terms, who they will be working with, the details of the product or service, the costs involved with the opportunity, and the potential for growth. 

All of these details must be packaged in an attractive and compelling way in order to hook franchise candidates and begin to build their trust in you as a franchisor. This can be done through both marketing and competitively positioning your Franchise Disclosure Document (FDD).

Here are a few areas that must have thoughtful messaging to attract potential franchisees.

Differentiate Your Products or Services

When developing your messaging and FDD, creating and demonstrating a brand identity is critical. This brand story will closely align with your product or service, so the first step is to analyze what you offer and how it stacks up against your competition.

Distinguish your brand’s offerings from others in your industry. Then position these unique products or services as lucrative and data-driven in your messaging to franchise candidates.

Promote Your Distinct Model of Franchisee Support

Is your brand setting up franchisees for success? How is that support being conveyed to potential franchisees? The franchise model is uniquely attractive because business owners can lean into a franchisor’s support when issues arise or when a franchisee lacks expertise in a certain area. This could come in the form of marketing, technology, or connecting franchisees with an advantageous supply chain.

Once you’ve analyzed the differentiating factors between the support you offer and other franchise brands, this should be communicated through the FDD.

Costs and Fees

A franchisor should expect potential franchisees to shop around and compare the initial fees of several brands. There are several ways to make the costs of buying into your franchise more competitive. Consider implementing discounts for multi-unit purchases and creating advantages in terms of territory size.

The brand’s royalty structure can also be designed to be more competitive. While most royalty structures are based on charging franchisees a percentage of gross sales, consider instituting performance-based rewards systems or fixed rates.

Financial Performance Representations

The FDD’s Item 19 is the most crucial tool a franchisor has to communicate value to prospective franchise owners. Item 19 increases transparency by outlining income potential, gross and net profits, “break-even” figures, and ranges of actual or possible sales. 

This section of the FDD is designed to answer the all-important question on franchise candidates’ minds: “How much can I make?”

While Item 19 is optional to include in an FDD, it is an opportunity to outline your brand’s track record of success and convince franchise candidates of the lucrative nature of your brand.