How To Build Trust With Potential Franchisees

Happy new year and thanks to the hundreds of people who responded to the last tip “My Father the Mensch”. Some shared their personal reflections on what it means to them to be a dad, a son or a daughter. I love people disclosing a little of themselves because it builds trust (this works at the corporate level too – we call it transparency). And trust is of course a critical ingredient in successful franchising, which is the theme of this tip.

A recent article posted on LinkedIn by a colleague in the USA, Joe Mathews, has also generated a massive response. Joe is an expert on helping franchisors to sell franchises. You may have met or heard him as we have had him as a speaker at some of our events. In his article Game Changing Trends for Franchise Sales Lead Generation Joe reports for the first time in the history of an annual franchise industry survey, the top lead source for new franchisees was referrals from existing franchisees.

Franchisors Wasting Money

We all know the power of word of mouth marketing. It’s cheap and it’s effective. But it’s by no means easy because advocates (people who like to say great things about you) are created by the quality of their experience with you. This is just as true for franchisees as it is for customers

There has always been good evidence that positive referrals from existing franchisees results in higher conversion rates and delivers better quality future franchisees. What is “game-changing” about this new USA finding is that franchisors in the USA market have traditionally relied on expensive advertisements with online portals, costly stands at franchise expos and heavily commissioned franchise brokers to sell their franchises. Now they are getting back to what they should be doing, ensuring their existing franchisees are satisfied.

Joe also believes prospective franchisees increasingly value referrals from existing franchisees because there is a now a widespread lack of trust in large organisations as a result of the GFC. He is particularly critical of superficial marketing guff pumped out by franchisors in online portals and websites, as well as pushy phone tactics by franchise sales people. What potential franchisees want is good quality, credible information about your business opportunity.

New Research Into Franchisee Referral Behaviour

Given how important it is to ensure existing franchisees are advocates I will now share some powerful findings from our most recent Franchisee Success Study where we looked at why an existing franchisee will or will not recommend your franchise concept to others.

If you think it is how much money the franchisee is making you’d be wrong. And if you think it’s how much they enjoy running their business you’d also be wrong.The three biggest predictors of advocacy are whether they think the franchisor is trustworthy in its business dealings; whether they think senior executives have a credible direction and plan for the future; and whether they think the franchisor team genuinely cares about their success.

Of course if you are to have your franchisees believe this, you need to have cultivated certain values, attitudes and behaviours in your franchisor executive team. For instance, you will need to have communicated clear strategies around issues they care about, such as how your franchise system is dealing with the rapidly changing world of online retailing. (Speaking of which, I hope someone senior from your company has registered for the Bricks and Clicks Franchisor Forum on February 28. The growth of smart devices and online retailing makes this a compelling event).

In future tips we will continue to explore what franchising excellence means in practice based on solid research and our work with franchise systems around the globe. To view the existing Bricks and Clicks program and registration details click here.

Until next time,

Greg Nathan

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