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Mastering the Franchise Sales Discovery Process and Converting Leads

How to Streamline your Franchise Sales Process for Success

When it comes to successfully scaling your franchise system, nothing is more important than onboarding well-qualified, properly capitalized franchisees that are a good fit for your brand.

For franchisors without franchise sales and discovery processes in place, though, recruiting the right people can be challenging – if not impossible. Overly casual scheduling and aimless communications can turn off great candidates, while failing to disclose certain documents can result in regulatory violations. Because of the risks, making sure your franchise sales process follows the right steps and addresses topics that prospective franchisees care about is critical for your brand’s success.

Below, we’ll explore the steps for streamlining your franchise sales process – and taking your franchise system to the next level.

Your Franchise Sales Discovery Process should include:

  • Initial Contact and Set an Agenda
  • Introduction Call
  • Operations Call
  • Disclose the FDD
  • Unit Economics Call
  • Territory Call
  • Validation
  • Discovery Day
  • Close the Deal

1. Initial Contact

As a franchisor in an increasingly online world, having a great franchise sales website that tells a compelling brand story and informs prospective franchisees about the benefits of joining your franchise system while capturing leads is important. Once a prospective candidate expresses interest in buying a franchise, though, it’s important to know what your next step should be to convert franchise leads into sales.

Whether you handle it yourself, leverage the power of technology, or assign the responsibility to a member of your corporate team, it’s critical to reach out and connect with interested candidates quickly. By offering an opportunity to learn more about your brand and speak with someone from your team directly, you’ll open the door for a great new business relationship – and a potential franchise sale.

Candidate welcome materials

When responding to a prospective candidate’s inquiry, make sure to have welcome materials prepared to share. Sending a welcome video and a digital brochure is a great way to introduce prospective candidates to your brand while educating them about the advantages of becoming a franchisee in your franchise system.

In addition to introducing the brand, your candidate welcome materials should include information about your franchise sales process – something that can help candidates feel more comfortable and know what to expect.

Schedule a 30-minute introduction call

Although welcome materials are an excellent way to break the ice with prospective candidates, it’s critical to make time to speak with them directly as soon as possible. Along with your welcome materials, include a calendar link for scheduling an introduction call where you (or a member of your sales team) can speak with the candidate over the phone and get to know each other.

To ensure that a candidate won’t lose interest or take an opportunity with another franchise system instead of yours, the introduction call should take place quickly – ideally within a week of initial contact. For franchisors that are too busy to talk with candidates within that time frame, it might be worth considering hiring a sales representative to avoid missed opportunities.

2. Introduction Call

Because the introductory phone call is a way for you to get to know prospective franchisees – and determine whether they’re a good fit for your franchise system – it’s important for franchisors to take time to learn about who a candidate is and what their goals are.

In addition to learning about the candidate, make sure to emphasize transparency in your introductory conversations as a franchisor. Be candid and open with prospective franchisees when answering their questions, and prioritize information that’s necessary for making informed decisions about buying a franchise business from you. Make sure to inform candidates about the financial costs and amount of time necessary to open and operate a franchise – and make sure they’re able and willing to make the investment before proceeding further.

It’s often a good idea to avoid asking franchisee candidates or their brokers to sign nondisclosure agreements (NDAs) before the introductory call, as complex legal formalities can drive away prospects early on.

Set an agenda

Every time you meet with a prospective candidate as a franchisor, it’s important to have an agenda – and to stick to it. During your 30-minute introductory call, plan to spend a short amount of time introducing your brand. While your presentation doesn’t need to be long or intimidating, it should briefly educate the candidate about your system’s key achievements, team members, internal culture, costs, products, the benefits of investing in the franchise system, and the qualities you look for in a franchisee.

Schedule a second call

As the franchisor, it’s your responsibility to set up the next call with the franchisee candidate. Make sure to schedule a follow-up within a week of your initial call to ensure your brand stays fresh in the candidate’s mind. Because your next call will focus on your business operations, make sure to provide the candidate with operations materials to review so they can prepare for your next conversation.

3. Operations Call

Although the introductory call is typically done by phone, future meetings with franchisee candidates should be conducted via video conference – allowing you and the candidate to speak “face to face” while interacting more seriously. This includes the second call, which should focus on the day-to-day operations of the franchise.

During the operations call, make sure the candidate understands what a typical day looks like for a franchisee in your franchise system. What is it going to look and feel like to run a franchise business? Make sure to address things like labor, hours, and the more technical aspects of running the business.

When you’ve finished educating the candidate about your system’s operations and processes, take time to answer their questions before scheduling a third call to discuss unit economics.

Disclosing the FDD

Under the Federal Trade Commission’s Franchise Rule, franchisors are required to disclose their Franchise Disclosure Document (FDD) during the FDD disclosure period – that is, no more than 14 days before offering or selling a franchise business.

Because your next call with the candidate will focus on finances and unit economics, providing the candidate with your FDD at the end of the operations call often makes sense. This can help ensure compliance with federal franchise laws while making sure the candidate has the information necessary to prepare for your next conversation.

When disclosing the FDD, make sure to have the candidate sign Item 23 (the FDD receipt page). Because the purpose of Item 23 is to provide proof that the FDD has been received by the candidate, it’s a good idea to make sure the candidate understands that signing the receipt page won’t establish any binding legal agreements or obligations between either party.

4. Unit Economics Call

During your third call with the candidate, you should focus on educating them about the unit economics of running a franchise business in your franchise system. Plan to spend about 45 minutes reviewing the numbers disclosed in your FDD with the candidate, including Item 7 (Initial Investment) and Item 19 (Financial Performance Representations). Take time to discuss the costs associated with buying, opening, and operating a franchise business in your franchise system as well as marketing costs and other fees, royalties, etc. In addition to costs, remember to discuss how franchisees generate profits. During this call, it’s also important to discuss funding and ensure the candidate has access to enough capital to open and maintain the franchise business without issue.

Because the FDD is an important legal document, it’s important to avoid giving franchisee candidates legal advice. If a candidate has questions about the FDD, encourage them to review the document with a franchise attorney.

5. Territory Call

During your final call with the candidate before Discovery Day, spend time discussing franchise territory distribution and the territory that will be available to the candidate should they choose to buy a franchise business from you. This information is generally found in Item 12 of the FDD, which also explains whether the territory offered is protected, how it is assigned to franchisees, etc.

After explaining territory distribution with the candidate, take time to answer any remaining questions about the franchise and any of the topics already discussed during previous calls.

6. Validation

Since it helps establish trust between the franchisor and franchisee, validation is one of the most important aspects of the franchise sales and discovery process. Because transparency is key when it comes to validation, it’s a good idea to provide candidates with a list of existing franchisees they can contact to discuss what it’s like to be part of your franchise system – a practice that allows candidates to get real answers from real people with firsthand franchisee experience.

As a franchisor, it’s equally important to validate your candidates. The validation process is a great time for you to ensure your prospective franchisees are well-qualified, properly capitalized, and have the right mindset and skills to contribute to the growth and success of your franchise system.

7. Discovery Day

The purpose of Discovery Day is to allow franchisee candidates to meet the team behind the franchise system, ask any remaining questions they might have, and make sure the franchise is the right fit for their needs, goals, and qualifications.

Although the specifics of Discovery Day differ between franchises, the day usually includes opportunities for candidates to meet the franchisor and corporate team in person, usually on-site at the franchise system’s corporate headquarters.

The day’s schedule often includes breakfast and/or dinner with the corporate team, a tour of existing franchise locations where candidates can get a feel for what it’s like to be a franchisee, discuss finances, get answers to lingering questions, and other meetings and events that can help serious candidates make an informed decision about whether to invest in the franchise system.

8. Closing the Deal

Within 24 hours of Discovery Day, it’s expected that the franchisor (or a member of their corporate team) will call candidates and send letters of approval welcoming candidates to the franchise system. During this interaction, make sure to discuss the candidate’s funding and let them know how long you’ll be able to reserve their preferred territory.

Once the candidate has decided to purchase a franchise from you, the final step is signing the franchise agreement – and embarking on your franchising journey together.

If you’re ready to scale your franchise system, we can develop a sales process that works for you. Contact us or call (800) 976-4904 to learn more about the services we offer for franchisors at every step of their franchising journey.

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