Selling Franchises After Your FDD is Issued – What Comes Next?
Learn about the franchise sales process and ways to communicate the value of your brand to potential franchisees.
Issuance of the FDD is an important milestone in every new franchisor’s journey, granting them the legal ability to sell franchise opportunities and scale their brand. Once the FDD is issued, though, many franchisors find themselves wondering what to do next to sell their franchise.
While the FDD is an important document that contains complex data and information about the franchise opportunity being offered, it usually isn’t enough to close the deal on its own. Once the FDD has been issued, there are still additional steps franchisors need to take to sell franchise locations.
In this article and the video below, we’ll discuss the franchise sales process and explore ways to improve the chances of selling franchise opportunities as a new franchisor.
Understanding the Role of the FDD
As a regulated mandatory legal disclosure document, franchisors are required to provide a Franchise Disclosure Document (FDD) to franchisee candidates prior to offering or selling a franchise. Due to the large amounts of financial information and estimated data that the document contains, however, receiving the FDD can sometimes intimidate – and even scare away – potential franchisees.
Because of that, franchisors shouldn’t think of the FDD as the central focal point of their sales process. Instead, while new franchisors are developing their franchise system, they should also focus on developing a framework of strong content to share with potential franchisees during the sales process that conveys the value of their brand in a more approachable style.
Establishing a Franchise Sales Process
The franchise sales process should be designed to inform prospective franchisees about the value of the brand in a way that’s both honest and accessible. Although the process can vary by franchise and industry, all good franchise sales processes share a few fundamental elements.
Franchise Sales Website
The franchise sales website is a powerful tool for attracting franchisee candidates. Because a well-designed website can be an excellent resource for potential franchisees to understand and connect with a brand, franchisors should make sure to follow best practices and include sections on their website that are specifically designed to educate prospective franchisees about the value of the opportunity being offered.
No matter which industry you operate in, having a strong brand story is one of the best methods for franchisors to set their business apart from the competition. To build a compelling brand story from the beginning, franchisors should answer the questions, “Why you? Why now?” – that is, why should someone want to buy a franchise opportunity from you at this moment? Think about your brand’s history, values and unique qualities when creating your brand story. These factors can all help generate interest and make the opportunity to buy into the brand more appealing.
As a franchisor, sharing your story as the founder of a brand is important for establishing a relationship and attracting interest from franchisee candidates. Your franchise sales website should contain a video introducing yourself as the founder and franchisor, explaining your story from a founder’s perspective while working to build a connection with prospective franchisees.
Advantages Offered by Your Franchise
It’s important to remember that the benefits you offer franchisees as a franchisor can set your brand apart from competitors and help attract franchisee candidates that are a good match for your business. From expert support to buying into a developed brand with a track record of success and validated unit level economics, there are plenty of advantages to buying a franchise. As a franchisor, you’ll want to make sure your franchise sales website communicates all of the advantages your franchise system has to offer future franchisees.
Steps to Franchise Ownership
As a franchisor, a great way to educate potential franchisees about the process of buying a franchise opportunity is to include a section on your franchise sales website explaining the process for purchasing a franchise opportunity. While steps may vary depending on your industry, the key is to educate prospective franchisees about the steps they should expect to take when they begin their franchising journey with you.
Digital Brochure or Downloadable Guide
In addition to creating an informative and appealing franchise sales website, it’s also important for franchisors to capture the contact information of prospective franchisees in order to connect and provide them with more information about the franchise opportunities being offered and next steps.
A best practice for franchise sales websites is to include a call to action where potential franchisees can enter their information into a contact form. After submitting their information, prospective franchisees are provided with a downloadable brochure or guide to franchise ownership that can offer them more detailed insights into your brand and sales process before your team speaks with them.
Preliminary Discovery Call
Once a prospective franchisee has submitted their contact information to learn more about the franchise opportunities being offered, it’s time for the franchise sales team to get to work. The next step in the sales process is to schedule a mini discovery call with the franchisee candidate to discuss the franchise in more detail and answer any questions they may have.
During the preliminary discovery call, franchisors should also plan to have a member of their sales team present the franchisee candidate with a presentation (often via PowerPoint or slide deck) covering the points included in the downloadable brochure or guide in more detail.
Disclosing the FDD
During the preliminary discovery call, or even ahead of it, it’s important to advise prospective franchisees that, as a franchisor, you’re legally required to disclose the FDD to them prior to making an offer to sell a franchise opportunity. This document can be provided to prospective franchisees in the form of a printed document or electronically.
While it’s permissible for franchisors to offer prospective franchisees a general overview of the topics covered in the FDD, franchisors should never attempt to give legal advice to franchisee candidates. It’s also important for franchisors to never attempt to mislead prospective franchisees or disclose any additional information beyond what is provided in the FDD. Instead, franchisors should always advise franchisee candidates to review the full contents of the FDD with a qualified attorney before making any business decisions.
Once the FDD has been reviewed by the franchisee candidate and their attorney, franchisors will typically schedule a follow up presentation and discovery day where they will evaluate potential territories where the prospective franchisee would operate and discuss further details about the franchise opportunity. Next, the potential franchisee will submit a formal application. Once approved, the final step after a brief waiting period is the signing of the franchise agreement by both parties.
While the overall franchise sales process can differ depending on the franchise itself, it’s important for franchisors to make sure they have something to offer prospective franchisees that goes beyond the FDD. By informing franchisee candidates about franchise offerings in a way that is approachable and accessible, franchisors can avoid overwhelming prospective franchisees and increase their chances of closing the deal.
For more information about what comes next after launching your FDD, contact us or call us at (718) 979-8688.
By admin February 2, 2022
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