7 Lead Generation Factors to Consider for Your Franchise

Franchise sales don’t just happen by chance; if you’re a franchisor looking to bring serious prospects to the table, you’re going to need to put together a franchise marketing plan with hard info on your budget, your location strategy, and your expansion goals.

Easier said than done, right? Fortunately, franchise expert Mark Siebert has laid the groundwork for building a solid marketing plan. In his book, Franchise Your Business, Siebert offers up these seven lead generation factors that will, in his own words, “give you a baseline for the best chance of success.”

1. Setting a Budget

The proper budget for any franchise should strike a balance between its long-term goals and its available resources. Unfortunately, not many business owners give their budget the attention it warrants. Many have vague notions of “aggressive growth without sacrificing quality” (which is, of course, the dream); others throw out an arbitrary number of units they’d like to open without giving serious thought to *how* they’re going to make it happen.

The key to developing a proper expansion strategy, according to Siebert, is to “set a long-term goal (exit, business value, cash flow, etc.) and time frame (five years), translate that goal into a hypothetical business that can achieve it (100 franchises paying $30,000 a year in royalties, for example) and work backward to a more specific short-term objective (selling 12 franchises in the first year).”

Once you’ve set these growth goals, you can figure out an approximate marketing cost for each franchise unit by using industry averages. Finally, take that value and multiply it by the number of franchises you want to sell to come up with an annual franchise marketing budget.

2. Targeting Geographic Markets for Expansion

Many rookie franchisors make the mistake of casting their nets too wide when they start expanding. They get a hot prospect from a market they hadn’t really considered, but decide to pursue it because they’re afraid if they don’t, they’ll lose the lead. “It’s easy to spot a franchisor that has not benefited from professional advice just by looking at their location strategy,” writes Siebert. “If they have locations all over the map, chances are they are being opportunistic and unfocused in their marketing efforts.”

The problem is that franchisors — especially inexperienced franchisors — are worried that franchisees are in short supply, and so they aggressively pursue every lead. But when it comes to leads, you should be looking for quality over quantity. Rather than reactively pursuing isolated candidates in remote markets, you need to be focusing your lead generation efforts in targeted markets that you’ve already tagged for expansion. That way, you’re not just chasing leads — you’re chasing the best leads.

3. Getting the Right Mix and Distribution of Corporate Locations

Another factor to consider is your desired ratio of franchise-to-corporate locations. “For many new franchisors,” Siebert writes, “the best course of action is to put the further development of corporate locations on hold as they get established as a franchisor. This approach allows you to learn the business of franchising and concentrate all your resources and efforts on the new business.”

That said, if your short-term plans are focused on franchise and corporate expansion, you’ll need to include that in your location strategy when you’re putting together your marketing plan. Here are some location strategies you can consider:

• The Home-Sweet-Home Strategy. You keep your corporate locations in markets that are close to home and focus on franchising in more distant markets.
• The Spiking Strategy. You open corporate locations in distant markets that will serve as hubs for future franchise efforts.
• The Cherry-Picking Strategy. You reserve the prime markets (or the prime locations within those markets) for your corporate locations.
• The Reverse Cherry-Picking Strategy. You offer up the prime markets to the franchisees and focus on building your corporate locations in subprime markets.

4. Narrowing Your Market

The key to targeting leads is to narrow down the profile of your ideal prospect. This is done mainly through primary market research, although a little intuition definitely doesn’t hurt. Siebert explains, “If your target franchise audience comprises the entire universe of franchise buyers, you will be forced to use a very general message to attract them. More importantly, you will likely need to advertise in general business or franchise publications, where you will be competing with many additional franchise opportunities.”

5. Playing the Numbers Game

Sales is a numbers game; it may be a cliché, but that doesn’t mean it isn’t true. The more money you spend on franchise marketing, the more franchises you will sell. Or as Siebert puts it, “Franchise marketing dollars generate leads. A percentage of those leads fill out applications. A percentage of those will come in for meetings. And a percentage of those meetings will turn into franchise sales.”

6. Timing It Right

Timing is going to play a role in any successful franchise marketing plan. Even franchisors that aren’t dealing with a seasonal business model should still focus their advertising efforts at certain times of the year.

“Generally speaking,” Siebert writes, “franchise buyers go into hibernation in November and December. At that time of year, most of us are preoccupied with the holidays and are less concerned with making life-altering decisions. Likewise, there is a period of doldrums in the heat of summer, when prospective franchisees are more focused on family time and vacations than they are on buying a business.”

Things get even more complicated when you’re trying to sell franchises for a business that’s highly seasonal  — Christmas decorations, tax preparation or pool cleaning, for example. If you’re a seasonal franchisor, you’ll definitely need to take this into consideration when you’re putting your franchise marketing plan together.

7. Mixing and Matching Strategies

“Market planning is, more than anything, the art of allocating scarce resources effectively across unlimited uses for those resources,” writes Siebert. And complicating matters even further is the fact that you’re going to have to deal with conflicting information from all those professionals you’re working with to develop your franchise marketing plan. Public relations firms, print ad salespeople, internet marketers, and lead brokers are all going to be vying for your marketing dollars by insisting their approach is your wisest course of action. And while these are all awesome strategies for lead generation, you’d be foolish to rely exclusively on one approach to the exclusion of the others.

When it comes to allocating media dollars, your marketing plan needs to take the following into account:

• How have similar franchise concepts (or franchises of a similar investment size) performed historically?
• How have your marketing efforts performed historically?
• What’s the profile of your ideal franchisee?
• What is your value proposition? Your budget? Your desired speed of growth?
• What is your message? Can your business model be explained simply or does your franchise require a more complex story?

Generating leads is easy; coming up with a list of serious prospects requires a lot more planning and effort on your part. But if you do the heavy lifting up front by developing a realistic and workable market plan (taking these seven factors into account), then your expansion efforts will go a lot more smoothly.

Growing and selling franchises is difficult. No great franchise did it alone. Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit www.1851growthclub.com and see what we can do for you.