The Franchise Sales Process

The franchise bros discuss the process of developing a systemized franchise sales process and its importance in growing a successful franchise brand.

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Transcript

Mark Vandegrift 
Welcome to the latest episode of FranSimple, the podcast designed to make the concepts of franchising simple. I'm your host, Mark Vandegrift and with me is my franchise bro and an all time expert on franchising, Steve Vandegrift. Steve, welcome.

Steve Vandegrift 
Well, thank you, Mark. Good to be back for another episode.

Mark Vandegrift 
Yeah, we're already on episode five. Steve, I'd like to begin by asking you to explain why having a systemized franchise sales process is critical to building a successful franchise network.

Steve Vandegrift 
Sure. Well, we'd like to say successful franchising is all about replication or duplication and franchise sales, we believe, must be replicable as well. Ultimately, that structured sales process, it ensures that every sales team member is following the same franchise sales steps in the process and they're sharing the same information with prospective franchisees asking the same questions and qualifying candidates using the same criteria. Very, very important. It also provides a consistent experience for franchise prospects. And it actually can be measured. So you can continually, let's say, evaluate whether any enhancements or modifications to the franchise process may be required. Another aspect, it really does eliminate, let's call it emotionally, awarding of franchises. And instead, it focuses on the facts. And then finally, I believe it increases franchise closing rates while also increasing ultimately the quality of the franchisee. We like to say if your sales system isn't systemized, you're not awarding franchises. You're haphazardly selling franchises.

Mark Vandegrift 
So we know we need a systemized operation. We know we need systemized marketing. So this would be a kind of a third leg to the stool of a systemized franchise sales process.

Steve Vandegrift
That's exactly right.

Mark Vandegrift
And if you take away any one of those legs, then the franchise structure isn't overly stable. So maybe explain what can happen if franchisors don't have a defined sales process.

Steve Vandegrift 
Well, there's a number of different things and I'll just try to stick to a few of the key. First, I'd like to say it leads to inconsistent messaging by the franchise sales team. They don't know what to say. One prospect learns certain things about the brand and the franchise program. Another prospect learns different things. The information really needs to be consistent all the time. It also can lead to either overwhelming or underwhelming prospects with little, too little or too much information. We like to say when developing our clients franchise sales system that there's an old sales adage take someone as far as they can see right now and once they get there take them a little further and that is so true when it comes to franchising You can literally just blow away people's minds when you dump all this information on them at the same time. It also can lead to not fully qualifying prospects and candidates and the problem there is You ultimately want to be able to qualify prospects the same way every time. It can lead to higher failure rates. You're not qualifying and consequently you're awarding franchises that probably shouldn't have been awarded. And there can also be legal issues. Your sales team might not know exactly what they can share, they should share, or they shouldn't share. And so again, those are just a handful of issues that can arise.

Mark Vandegrift 
So it's kind of like what we want to have on a retail front. If I have salespeople on the floor, I want them to sell my product the same way over and over again, because most likely if a company is successful, they figured out what that sales process looks like. And so it's repeatable even for people that wouldn't be classified as true salespeople. Is that good? Yeah.

Steve Vandegrift 
That's a very good point, very true.

Mark Vandegrift 
A sales script, for instance, isn't a bad thing when you're doing franchise sales.

Steve Vandegrift 
it's vitally important. Vitally important.

Mark Vandegrift 
Okay, so give me something else beyond a sales script to define what it means to truly systematize the franchise sales process.

Steve Vandegrift 
Well, first of all and foremost, the steps in the process are obviously clearly defined for consistency. And you mentioned about sales scripts as an example, right? We need to have a message that's shared consistently with every prospect. So standard scripting, when speaking with prospects is vital. Every person, we like to say every salesperson needs to sing off the same song sheet. Another systemized tool is implementing a CRM system, automating the part of the franchise sales process. Another is having defined communication timelines and methods. An example would be how quickly do we respond to prospects? What are the communication methods that we're going to use during each step of the process, right? So is it going to be email versus a phone call versus a web meeting? Developing standardized emails and follow-up timelines is another very, very important aspect. Even developing standardized phone and web meetings agendas and Discovery Day agendas. Another aspect of a systemized sales process is having compliance checkpoints just simply to ensure that the entire franchise sales teams is fully following the sales process. And then the final one I'd like to mention is just implementing KPIs, various aspects of the sales process.

Mark Vandegrift 
Yeah, that makes sense. So you're really talking about multiple aspects to the sales team. You're talking about a sales script, what they can and can't say, but you're also talking about a mechanized system that has a predefined process. So every touch, whether it's a phone call, whether it's an email, whether it's a form that goes out to visit maybe a deeper page within your website that shares a little bit more.

Steve Vandegrift 
Yes.

Mark Vandegrift 
when they're allowed to sign the FDD, all of those, it's better to have it mechanized so that a salesperson can't get off script, is kind of what you're saying. So it's marrying the sales script with the mechanization of the process, is that right?

Steve Vandegrift 
That's right. It's marrying the personal touch with technology and that helps ensure that consistency.

Mark Vandegrift 
And then for the mechanization, I assume, like I mentioned, you can't sign the FDD too early or the franchise application, I mean, you can't sign that too early in the process. So the mechanization prevents the sales person from jumping the process. Is that correct?

Steve Vandegrift 
That's right. And just something very basic that many clients don't initially think about. Someone might have spammed someone and submitted a submission. The CRM system will track. Obviously, there's an unsubscribe in every email. And so it'll prevent that person from being accidentally emailed or even more importantly, with the FDD. The systems are set up so that if you're not registered to say, let's say in California or New York, it's a registration state, you haven't gone through the process, the CRM system knows. And so if you accidentally try to email a prospect from California, the FDD, it'll prevent you. So yes, we're firm believers in using technology to your advantage and for your protection.

Mark Vandegrift 
Have you seen an instance with maybe within a given franchise system where you have maybe two or three different salespeople, one's killing it and someone else is not. And what I'm asking there is probably twofold. One, do you feel like sales personality is still, even though it's systematized, still influential? And number two, if someone's not doing a good job of converting or whatever it may be, is that a factor of perhaps get just happenstance of getting unqualified leads or do you find more often that it has to do with them jumping off script?

Steve Vandegrift
I'm going to say it's the latter. They're not fully following the process. They feel like, I don't need to do this step. I have this prospect so excited. They're ready to sign the agreement, and I'm only on step two. So they skip step three and four. They jump to the FDD as an example. So yes, I would say the lion's share of the time, that would be the case.

Mark Vandegrift 
Interesting. Okay. So you don't think the personality comes into play as much as maybe someone's personality on a retail floor.

Steve Vandegrift
Well, no, I think personality has a lot to do with it because, you know, when you're in person, you have body language and everything else. Personality, though, getting the right people is the first step, right? They need to have that background. They have to be in the type of individual that can communicate even through technology, phone calls, web meetings, and still exert that personality. So, yes, it could be it was the wrong hire. I'm not saying that there's not salespeople that shouldn't be in the position, and that is a large part of the problem. I'm saying that assuming you have two that say equally minded people, similar personalities, outgoing, et cetera, and one's not doing well and the other's doing great, it does come down in many, many cases to the failure to follow the process. The process was developed for a reason, to provide what I said earlier, that consistent experience for every prospect and their fail to do it.

Mark Vandegrift 
So if a franchisor was out looking for someone and as part of guiding them toward hiring the right person, rank these in order of one, two, three. I'll make it easy on you.

Steve Vandegrift 
Okay, don't go past three.

Mark Vandegrift 
Yeah, I won't. So number one is personality. Number two is having a passion for that franchise business, meaning the product. And number three is being technically skilled to be able to use some of the technology involved in the process.

Steve Vandegrift 
I say, passionate, personality, then obviously skilled in the process. Because again, you have to have people that can really communicate well. Again, most franchise sales, except maybe the Discovery Day step, when they come to visit the franchisor learn about a day in the life of franchisee. We have conducted many of those for our clients. And it's always interesting, and especially when we're involved in the franchise sales process. We'll have people come walking in the door and they recognize your face and immediately they come up to you and give you a big hug. So there is that personality side that has to shine through during the sales process when you're not actually sitting across the table from them or in the same room with them. So personality is big. But having a passion for the business, I've always said I can't personally sell what I don't believe in or I'm not passionate about. And I think that's true for most great salespeople. We don't look at sales as a bad thing. We're not trying to sell somebody something they don't need. In fact, that's another critical factor in the sales process. You have to be willing to say no, but you also have to be willing to understand that sometimes people are going to say no to you. And that's OK. We always tell our clients, you need franchises. You don't need any one franchise.

Mark Vandegrift 
So there is an element to this within the personality that that individual who's selling needs to have somewhat of a filter where they can say, not sure this person is the right fit or this team is the right fit with our franchise. Is that something that you see as a valid attribute?

Steve Vandegrift 
Oh, that is so true. At the end of the day, that's a really important aspect of the entire franchise sales process. So yes, I agree with exactly what you said.

Mark Vandegrift
Good. Well, you mentioned KPIs earlier and you know in the marketing world now we're all about KPIs because we can track and measure everything. Give us some KPIs that franchisors should track relative to the franchise sales development process.

Steve Vandegrift 
Sure, just name a handful, cost per lead. Obviously, it's very important. What's it costing you to generate a lead? What's your total marketing and sales cost per franchise granted? We call it cost per acquisition. Having website and Google Analytics, so clicks to conversions, right? How many people are filling out that initial inquiry form as compared to how many clicks you're receiving? Certainly lead to franchise application. How many leads is it taking you to generate a franchisee? Lead source performance, how's it performing compared to other lead sources? You want to track that, you want to manage that. And then the final one I want to bring up and a lot of people don't associate this with the sales process, but it is a KPI. You need to look at that franchisee and evaluate their performance once they're open you know, at a six month, 12 month, 24 month period, because that allows you then to start really dialing in on that ideal franchisee. You've obviously going through with a solid, solidified sales process. Theoretically, everyone's going through the same process. And so again, that performance evaluation can be another critical KPI as well.

Mark Vandegrift 
You know, it's interesting, you're more on the sales side than I am. You skipped, if you will, KPIs that might apply to the actual process between the lead and the closing of the franchisee. What KPIs do you see in there to measure how well the salesperson that you've hired for the sales process is really doing?

Steve Vandegrift 
Okay, well what we do when we help clients develop their franchise sales development system is we're actually putting together all the steps in the process. So there may be 28, 30, 32 different steps. And so when you're looking back on, let's say you're having a performance issue with a particular salesperson you're able to look back and should look back and see where are they losing that person? Is it at step 10? Is it at step 12? Is it at step 15? Because that allows you then to look at the process. And this is what we talk about, the ability to continually analyze the process since there is a defined process. And so you're able to look at it and say, is it that salesperson or is it the actual step? And then obviously, if there's only one salesperson, you have to make a call. But when you start to look at three, four, five, six, seven different steps in the process, and no one else is, let's just say they're hitting it at 10. Step 10, they're losing all these prospects. But you have others that are just sailing right through it. Well, then it might just be a performance issue that either they're not, I guess, fully completing that step, they're not getting the information they should, they're not sharing the information they should. And so, yes, it can be evaluated the same way, which lends itself back to the idea of having a systemized sales process. Great question.

Mark Vandegrift 
Okay, so, you know, if I were a prospective franchisor and I heard 26 to 35 or whatever it is that you mentioned just a moment ago, that's a lot of steps, but those are very nuanced steps, right? Very short steps and most of them are minimized. Right.

Steve Vandegrift
In some cases very, very short. So it might just be confirming receipt of a form. That would be a step officially because again, think in terms of the technology.

Mark Vandegrift 
Okay. Yeah, walk us through some of the key steps. So maybe the bigger ones, we know the receipt of a form or the signature is not a big step. Maybe give us the key steps of a properly systematized franchise sales process.

Steve Vandegrift 
Sure, and that's really those key steps. In other words, when I talk about the CRM, we're talking probably 28, 30, 32 different emails that have been structured. It can be as simple as the person failed to make that first web meeting with you. And so you're sending out an email for that. But the overall sales process, you receive that inquiry. Typically, they're completing an inquiry form on the franchisor's website. They're completing a form on a franchise portal like franchisedirect.com. So that step is the next step. And then typically, an introductory email will go out with additional information, might include a franchise brochure in that step. Typically, you want to then have at least one phone call. You might have one or two phone calls, depending one on the prospect's knowledge of franchising and your brand. But that's certainly going to occur multiple times. So those phone calls are also steps in the CRM system as well. And then they're going to be requested to typically complete some type of preliminary consideration form. Initial inquiry forms are very basic, name, address, email address, phone number, how quickly are you ready to purchase a franchise. A preliminary consideration form like WeDraft, we call it kind of a mini application. We're not asking for social security numbers and your firstborn's first name, et cetera. We're trying to get to the next level of pre-qualification. We want to know their background, their experience, their work history. And so they're going to complete a form like that. In our sales process, we also develop an online franchise sales presentation. We call it a great precursor to a franchise discovery day. So in essence, think of a PowerPoint presentation. Well, our entire sales process, as I mentioned, is based on taking them as far as they can see and take them a little further. So when, as an example, they click on the link to the franchise brochure, instead of just seeing a frequently asked question that said, here's the range of the investment, they're going to actually review the item seven, the actual initial estimated investment. So now we've had a couple of phone calls. They've asked some great questions. They filled out a preliminary consideration form. And then we're going to do an online franchise presentation, again, increasing the level of information we're sharing so we don't overwhelm them. And in that presentation now, yes, we're going to briefly outline the initial investment, see if they have any questions. But we're also going to talk about, and again, in relation to that type of business or industry, what's the site selection process look like? What's the criteria? We're going to give a couple of slides on that. That's an important aspect. What's the human resource side? How many total team members do we need? How many are part time, full time, et cetera? We're going to include in most cases the item 19, financial performance representation. You know, people always want to know one of the top three questions, how much money can I earn? Another question that they'll ask through that process, but one of the top three is, how do you help me attract customers to my business or clients to my business? And so we're going to talk about the local marketing and the support that the franchisor is going to provide or their approved supplier. As you know, we handle a lot of our clients local advertising for their franchisees, their grand opening advertising. We want franchisees to know right up front what that support looks like. So we're going to discuss this during the hour presentation. Is our client working with the franchise master real estate broker to assist franchisees with the site selection process? We're going to touch on that. So again, that's the next step in the process. Now typically following that is a great time because during the presentation, many, many people we know have never looked at a franchise disclosure document. So we take a slide or two and we discuss the franchise disclosure document from a standpoint of here's what's in it. Here's the table of contents. And we talk through, you you'll want to review the franchise agreement, but Bill. You're not going to purchase scenario development right now you have mentioned. So you really don't need to review that. You want to review the 23 item FDD. And so we start getting them aware that this 180, 200 page document, it's not like they have to read everything. And so after the presentation, they'll make the decision, yes, we'd love to review the franchise disclosure document. That'll be the next thing that goes out. Another step would certainly be pre-qualification for funding. If they're going to obtain an SBA loan or do a retirement fund rollover using their 401k or IRA, we're going to introduce them to our preferred suppliers that are going to be able to pre-qualify them for that. And then following that, assuming the pre-qualification has been successful, they'll be invited to a franchise discovery day. Okay, so that's probably step six. That discovery day is very important. And then typically a final step that can either become before discovery day or after depending on the clients preferences once they have franchisees operational we call it a franchisee validation call and so franchisees are added to the FDD every year annually updated for the previous year the list of franchisees and all their contact information is in there and so we actually structure with our clients and their franchisees the kind of approval process. So if I call a franchisee and that franchisee says, I don't recognize the name Steve Vandegrift, corporate always sends me an email when you reach the appropriate spot in the process, have you talked to corporate? And I say, no, I just wanted to call and get your thoughts. And they obviously politely say, well, I'll ask you to reach out to corporate first. So franchisee validation calls, we like to tell our clients, make sure your first five are successful and they're going to help you sell your next 50 to 100. So that's another critical step. And then the final step is obviously the formal franchise application and the award or the decline of a franchise. So you have about eight major steps there.

Mark Vandegrift
OK, so it's not as much as what sounded like 25 to 35 steps. It's more like seven or eight major steps.

Steve Vandegrift
That's right, the technology side of it, there's all those emails that can go out, but they're not, we call them a step, but they're not one of the franchise sales process steps. It's more related to the CRM action plan.

Mark Vandegrift
Excellent. Okay. So, you mentioned one of the middle steps there. I don't remember if it was five or six, but it was really kind of going through the operations, right? So what kind of alignment do you think there needs to be between the development team and the operation and support teams?

Steve Vandegrift
Well, it's critical because again, first of all, every team member, franchise ops, franchise sales, whatever it is, franchise support, they need to be all have a great understanding of what is in the franchise disclosure document from a responsibilities of the franchisor right. We it's so critical that franchisors understand what they put in that document through the franchise attorneys so that they fully comply with it. So we always like to say, do what you say you're going to do. And so ultimately, there needs to be that alignment, especially when you start looking at, we need to share KPIs with the various departments, right? We want to understand what's making a great franchisee. Let's say there's a struggling franchisee. We need to communicate because we want to find out was that simply we might have selected the wrong franchisee or did someone drop the ball or did someone in the sales process over deliver? Hey Steve, we're going to do X, Y, and Z. Well, that's nowhere in the agreement. Operations and support didn't know anything about it. So again, the communication and alignment with each other is very critical.

Mark Vandegrift
Do you think that's probably one of the biggest mistakes that franchisors make is developing that good line of communication among teams?

Steve Vandegrift
Well, I'd like to say not with our clients because even through the franchise disclosure document development process, by the time that document is drafted, they know exactly why we've mutually determined that the franchise fee is going to be this, site selection criteria is that. All those various components. But yes, there can be issues with that. And again, when most of our clients are not starting with, let's say, one person in this department, one person in that department, they're typically wearing multiple hats. And so there might be one owner and the manager that's going to be involved in training support. They have another key employee that's going to be involved there. Another owner, they love sales, they love talking to people, and so they're going to handle the franchise sales. So initially, it's much easier for those people to communicate. But as you grow and now you have three, four, five sales development team members, You have five or six people in your franchise operations. You have four people in your franchise support. That's where you have to make the effort to ensure that they understand the importance of communicating amongst themselves.

Mark Vandegrift
What do you think is the biggest mistake that franchisors make in their sales process?

Steve Vandegrift 
Well, first of all, not having clear qualification criteria, right? Why are we going to qualify someone to purchase a franchise? Another one has to do with the cultural fit. You know, is there a fit between the prospect and the brand? We explained to our clients as we're beginning to develop their franchise sales system is look, they might look great on paper. They have the financial backing that they need. They have some business experience, et cetera. But this is where a franchise discovery day becomes even more vital because we have had clients go through their first few discovery days and sure enough, they thought this prospect was ideal, but they just had a sense that they weren't the right fit. And thankfully, they took to heart the idea that they need to sell franchises. They do not need any one franchise. And so that's another aspect. Certainly another one is selling franchises too fast before fully understanding the types, the amount of support, the training that the franchisees truly require. I mentioned previously over promising and under delivering is another critical one. I would mention failing to follow up or to support struggling franchisees. And then the final one I want to mention, I keep going back to it, but not tracking data and the KPIs. That's going to tell you a lot and that's such a critical thing to do and today's technology makes it so simple to do. You just have to implement the systems. Great question.

Mark Vandegrift
Well, let's end it with this. You know, most of our franchise clients don't run into these issues.

Steve Vandegrift 
Right.

Mark Vandegrift
And I think that's because of the services that we provide. And we're much more one-stop shop hand holding than just being like here's your FDD, goodbye good luck.

Steve Vandegrift 
You're right.

Mark Vandegrift
So, maybe share a quick overview as we close up here. What services are we offering to assist clients to make sure they develop a great sales development process. 

Steve Vandegrift 
Well, I'll start with this. We always say we're going to develop your entire franchise sales development system. We actually do the heavy lifting in that. We begin by developing, as an example, an internal document. It's an internal manual. It's a comprehensive franchise sales development manual. It's going to outline the steps, the scripts, et cetera, from point of contact from a prospective franchisee, clear through signing the documents. We prepare all of the necessary forms, so franchise applications, preliminary considerations forms, FDD request form, the initial inquiry form that's going to go on the franchise website or on the existing website is a separate landing page. It's another critical aspect of it. We also prepare all of our clients the last handful of years have elected to start with the CRM system. They're so affordable. They do streamline the process. We've talked about all the benefits of that. We get intimately involved with that. We develop their entire franchise sales action plan that's going to transfer into the CRM. We draft the campaign emails. Now keep in mind, our clients, we're fully reviewing it with them. We jump on web meetings. We go through it in detail. It's also our way of training our clients in the art and science of franchise sales. We also develop franchise brochures an online franchise presentation as I mentioned. So we get very, very deeply involved and they come out with a complete systemized franchise sales development system. So critical. And we'll assist them obviously in setting up their CRM system as well.

Mark Vandegrift
Great. Well, we certainly helped, I think a lot of people here understand this critical component to franchise development because probably most of them have not thought about this component. You know when you're thinking about expanding your business through franchising, I don't know that you necessarily off the top of your head get to the point of, gee I wonder who and how I'm going to sell people franchises, right?

Steve Vandegrift
That's right. If every single client feels that way and yet they learn as we go through this that they have the tools, the means, etc. to be able to confidently go out and start talking to perspective franchisees. And of course, we are willing to support our franchise clients with outsource franchise sales and we'll actually sometimes work with 1 or 2 or 3 clients for six months, maybe a year. And we will actually do the follow up and follow through and then we bring them into the process at the appropriate time. And so we can work with both sides of that equation, but I can't tell you how many times we got clients come to us and say, look we know we're going to want your team, your expert team to handle the franchise sales process. And we always share, we can decide, you can make that decision now, but you can also wait until we get you through the franchise sales process and see if you feel any differently. And I bet 7 or 8 out of 10 times, they get through the process, we've gone through the training, helping them understand the process. We will actually get on three-way web meetings and phone calls and even the franchise presentation with our client and their perspective franchisee. We'll attend discovery days and so 7 or 8 out of 10, I will say on average will end up saying you know what, we feel very very confident and we'd love nothing more than for them to contact us two weeks later and say man is this going well, I have 3 web franchise presentations already scheduled, but for those that are concerned, they really wanna focus on the non sales side, we are here to help.  

Mark Vandegrift
Great. Well, that's a good place to wrap up today's episode of FranSimple. Thanks for joining us Steve and for all of our listeners, thank you for liking, sharing, subscribing, and until next episode, may your business expand through the power of franchising.