Top 5 Franchise Sales Tips

If you’re viewing this page, you’re probably a franchisor who has some holes in your franchise sales processes and needs some tips and guidance on how to sell more franchises.

As an owner of both a Franchise Marketing Agency and a Franchise Sales Organization that has worked with 300+ brands over the past 15 years, here are 5 Franchise Sales Tips to consider to help you sell more franchises:

Tip #1: Retool Your FDD

We see a lot of brands that no matter how many leads you drive and how good your sales reps are, the opportunity just isn’t good enough for investors to take their hard earned cash or go at risk with a loan in order to buy the franchise.

Usually the Item 7 in an FDD is pretty straight forward and it shows how much the investment costs.  In most cases, taking your Item 7 and putting it on the landing page of your web form in a section called something like “How Much Does It Cost?” can be extremely helpful.  Oftentimes you can double your landing page conversion rates just by adding a table to your landing that mirrors your Item 7.

The next thing to look at is the real culprit which is your Item 19.  If you don’t have an Item 19, it’s probably going to take you somewhere around 1 out of 250 Sales Qualified Leads (SQL), meaning the leads have the right amount of money, to get a sale.  Contrast this with top brands that have everything in place.  Many of those convert at around 1 out of 40 to 1 out of 75 SQL becoming a franchisee.

There are 2 things that turn people off with an Item 19.  The first is your Gross Sales and the second is your Gross Profit.  It depends on the industry, but in general if your franchise opportunity has locations that are doing $1M+ in revenue, that’s very attractive to people.  In some industries, you can be at around $400K-$600K in Gross Sales and be fine.  But, if your franchise Gross Sales is a lot lower than your competitors, it may be a turn off to people, regardless of how good your profit margins are because people don’t want to waste their money and time on things that don’t bring in a lot of money.

More often, however, the thing that turns people off with an Item 19 is the Gross Profit.  Every industry is different with this, but in general if your Gross Profit Margin is under about 15%, don’t expect a lot of takers.  No matter how good you are at marketing and sales, it’s hard to convince people to invest in something that makes about as much money as buying stocks do at 8-10%, which barely keeps up with inflation.

If you do have a strong Item 19, put it on your Landing Page.  Likewise, if you have a solid Item 20, include it on your landing page.

Remember, your FDD is your #1 marketing tool!

 

Tip #2: Drive More Leads

I didn’t used to think that this was the case, but as long as the ROI in your Item 19 is strong, the #1 reason why franchisors fail to grow is because they didn’t spend enough money on their marketing in the first place to drive enough leads to close deals consistently.

After managing over $35,000,000 in ads for franchisors, I’ve learned that there are 3 variables in the equation of “How many deals will I close per month / year”:

1. Ad Spend – Start with at least $5,000 – $10,000 / mo. in Ad Spend
2. Cost Per SQL – Shoot for a target Cost Per Sales Qualified Lead of between $50 – $180
3. SQL to Sale Conversion Rate – This typically ranges between 1 out of 40 on the low end to 1 out of 250 on brands that have issues

The top brands that we do all of the franchise marketing and sales for close about 1 out of 60 SQL into a sale.

Match all this up and what do you end up with?  About a $7,500 / mo. ad budget with a $100 Cost Per SQL and 1 out of 60 SQL turning into a deal.  So that would get you about 75 SQL per month and once you’re ramped up close about 1.25 deals per month or 15 deals per year at a Cost Per Sale of $6,000 per deal.

Keep in mind though that if you have less than 25 franchisees listed in your Item 20, your profit margins are under 30% in your Item 19, or your investment costs over $150,000 to invest in, those will show up in how many SQL you need to drive to get a deal.

The principle here though is that if you think you can spend $2,000 – $3,000 / mo. on your ads and get somewhere, it’s highly unlikely.  We have some brands that are an exception to this rule, but you probably need to keep building up your brand and making yourself more money with your existing business prior to really trying to grow your franchise.

 

Tip #3: Buy Discovery Day Flights

This one was a bit of an unexpected learning as we grew from being just a Franchise Advertising Agency to being a full Franchise Sales Organization (FSO).  The way I learned it actually was that I was having such a hard time getting people from my own leads to go from a Meet The Founders (MTF) meeting to a Discovery Day that I just threw it out there to my sales reps to start buying free flights for people.

What we learned is that you will statistically drive 3-5X as many Discovery Days and Sales if you buy free flights for people than if you don’t.

In fact, when I started buying flights for people, it logistically took so much effort for me to call or text all of these individuals and gather their flight information that I put it into the Confidential Questionnaire online that leads fill out right after they fill out the initial web form so that I have this information ahead of time for top prospects.

The main information that you want to gather up front from people, hopefully online when they come in as a lead are:

1. Full Name
2. Email Address
3. Date Of Birth
4. Gender
5. Airport Code (where they will be flying from)
6. Tentative Discovery Day Date

If you get this information up front, it will make a WORLD OF DIFFERENCE for you with franchise sales.

 

Tip #4: Automate FDD Receipt Signatures

You’ll never sell a franchise to anyone that hasn’t signed an FDD Receipt Page.

For this reason, I try to get as many people as sign your FDD Receipt Page up-front.  For us, we have people do this automatically after they select their Discovery Day flights.  Also, having a link that you can send people via text or whatever else is a game changer.  Each of our brands have a url that ends with /fdd where our sales reps can just send a link via a text or email and get that signed.

I was looking at some of our numbers and currently about 12.4% of our our SQL sign the FDD Receipt Page.

 

Tip #5: Shrink Your Sales Stages

We run into brands all the time that have an incredible amount of stages prior to Meet The Founders (MTF) and Discovery Day.

What we’ve found is that you really only want to have a couple of calls prior to a MTF.  Usually something like this:

1. Intro Call
2. Business Model Call
3. FDD Review

If we have a really good candidate, we may skip the FDD Review or combine Business Model Call with the FDD Review.  The point is, people hate meetings.  And since you’re not going to get too many shots to wow people, you want to make sure that they’re the right type of people and understand / are interested in the business and then have them Meet The Founders.  For us, we try to get a verbal commitment to a Discovery Day at the end of that call and then book their Discovery Day Flights that same day as the Meet The Founders meeting, if possible.