Very often potential franchisees tend to get excited over the latest new franchise opportunity - without any thought about whether it is the best business model, the right return-on-investment or whether it means them working "in" the business or not.
Leading sales expert Andy Preston highlights the dangers of entering into a franchise opportunity without thoroughly investigating the vital element that will determine whether the business will be success – acquiring new business.
It is highly likely that a substantial percentage of people visiting franchise exhibitions are desperate for something to buy into to avoid them ever having to go to work for anyone else again. Many will be lined up to watch demonstrations of the latest cookery implement or aerobic craze, getting excited about the prospect of being a franchisee and what kind of money they'll be making in 2, 5, or 10 years time without any sort of plan on their part of how to get there - in fact, many might not have even heard of the franchise before they walked into the exhibition hall earlier that day.
Andy Preston, a highly acclaimed sales trainer, founder of training company Outstanding Results and former top sales performer within franchising, suggests that all too often potential franchisees get excited about the prospect of buying a "turn-key" business that will bring them good revenue in years to come, without them having to work too hard.
Often, the reality is franchisees have to work incredibly hard in the initial stages of growing a franchise to even survive, let alone make a healthy profit. With some franchisees spending more than £50,000 on a business opportunity, the most common mistake they make is their failure to consider how they are going to get a return on their initial investment, what it will mean in terms of further investment, time and many other factors.
“For many franchisors looking to sell franchises, their main concern (depending on the type of franchise and the franchisor themselves) may well be to sell more franchises to bring more revenue in to the franchisor. This could mean overlooking the screening of a potential franchisee for essential attributes like sales skills and motivation for selling,” explains Andy, who regularly sees new franchisees at his sales training seminars, desperate for some support and guidance.
A common scenario is that new franchisees are left to sell with minimal support from the franchisor. The challenge then, is how to find the sales.
Andy advises that the first 3 months in a franchise will be crucial to determining whether a franchisee's sales are going well and whether they will need to improve their selling techniques.
Small businesses tend to fail through lack of sales and lack of cash flow and in Andy’s experience, it is this lack of sales that proves to be the biggest problem for most new franchise owners.
“Good 'new business' sales skills are not skills that can just be acquired overnight. Without learning some simple but crucial sales techniques, many franchises will end up unnecessarily being sold at a loss, or given back to the franchisor," explains Andy.
When purchasing a franchise which requires the franchisee to "proactively" sell in (i.e cold calling, face-to-face meetings etc,) rather than a retail environment where the customers come to them and all they need to do is attract more, Andy describes the following scenario is a common occurrence;
Step 1 - They visit the franchisor and decide to buy a franchise
Step 2 - They receive 2-4 weeks "training" on the new franchise
Step 3 - They start their franchise and have to prospect for between 80-100% new business.
Andy says: “Most of the training from the franchisor will be on the systems and processes of how to "work" the franchise and if the franchisee is lucky, they may receive 3-4 days sales training from them - which again is more likely to be on the "system" of selling the franchise products or services.”
“Suddenly the franchisee is thrown into the realisation they need to do some proactive selling – and quickly!
"They may pick up the phone and call a few leads, or - if they are really brave - call some “cold” prospects. The risks here are that the unprepared new franchisee will easily feel dejected after a knock back, fail to get through gatekeepers and when they do, the decision maker doesn’t see the value in meeting with them or even discussing their offering."
As a result many franchisees end up frustrated, feeling the franchisor has “deceived” them. Andy says he often hears comments from franchisees such as: “They never told me it would be this hard to get appointments, win business, and find new clients,” or “I’m not cut out for selling in such a competitive market,”.
Andy explains that whilst in some cases, a franchisee may get lucky and land a client that gives them a lot of business, refers them to others and literally saves their bacon, there are many franchisees who give up or return the franchise within six months simply because they couldn’t bring in the new business.
However, making a success out of a franchise which requires proactive selling is entirely obtainable argues Andy, providing the franchisee understands the market, the requirements of the role and considers undertaking sales training to enable them to do this successfully before embarking on the franchise.
“Ultimately, the first and most critical question for a new franchisee should be: "Who is going to undertake the selling?" If they have no sales skills themselves and do not want to learn, then they need to find someone who does - beit through a business partner working in the business who is skilled in selling, or employing someone to fulfil the entire sales process from generating their own leads, to visiting clients and closing the business as well,” concludes Andy.
This article was written by Andy Preston - director and founder of training company Outstanding Results.
This article is provided for general consideration only and the information contained herein is not to be acted upon without professional independent advice.
Outstanding Results provides help, guidance and support to in-house sales teams of both large and small organisations throughout the UK and Europe. With over 12 years senior-level experience in the industry, Andy works with companies and their sales teams to help them make more appointments, get more clients, negotiate higher fees, make more cold calls, become more motivated and achieve their targets every month. He also helps them to avoid getting in a rut, handle rejection, defend their prices better, overcome client objections, avoid procrastination and getting out of dreaded sales slumps.
