Franchise Update Magazine Issue II, 2017 | Page 82

GROWING YOUR SYSTEM
It’s closing time
Facing the Brutal Facts
Franchise development, we have a problem!
BY ART COLEY
I
subscribe to the Stockdale Paradox.
Jim Collins made it famous in his best-
selling book Good to Great. Here it is:
“You must never confuse faith that you
will prevail in the end—which you can never
afford to lose—with the discipline to confront
the most brutal facts of your current reality,
whatever they might be.”
In development, we are great with the
“faith” and “prevail in the end” parts of
the quote. However, the “confront the
most brutal facts of your current real-
ity” part is another story. The proof is in
the data collected each year in Franchise
Update’s AFDR regarding lead genera-
tion, signings, mystery shops, conver-
sion rates, and other aspects of franchise
development.
I think we can do better. That’s why
I’m honored Therese Thilgen and Fran-
chise Update magazine have asked me to
join the team with a regular column fo-
cusing on the “brutal facts” and “current
reality” of franchise development—and
solutions for the challenges we face. Let’s
start with a basic outline of the process
and results we want:
1. Targeted lead generation of quali-
fied candidates.
2. An efficient and sustainable discov-
ery process.
3. Secure targeted number of franchise
agreements.
4. Successfully on-board new fran-
chisees.
5. Repeat steps 1–4.
If these five steps are what “prevail
in the end” looks like, we know that for
most brands this is not the “current real-
ity.” There is a development challenge for
many brands and it’s chronic. It’s systemic.
It’s deep and not easy to face or solve. Yes,
we have a problem, but one that is worth
addressing and conquering because your
brand’s future depends on it.
So, what is it we face? Here are some
areas to consider:
• Not understanding true develop-
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ment. Development is the timeline from
planning to lead generation through at
least the first 12 months of new franchi-
see on-boarding.
• Wrong metrics. Development is
more than the number of leads and cost
per lead. Through this column, we are
going to look at the critical metrics of
development and how you can track and
measure what’s really happening, and even
forecast the upcoming months.
• Lead generation. I’m going to show
you how to get it right, including how to
efficiently and effectively implement a
“multi-channel cross-media integrated
marketing strategy.” (I know, it sounds fancy
but I’ll explain why it’s critical, what you
need, and a simple way to implement it.)
• Initial fees approach is old school.
Today’s quality candidates must understand
these fees and why they are paying them.
• Recruitment as a profit center.
“How much money can we make from
‘selling’ franchises?” is the wrong ques-
tion. Focus should be on the unit econom-
ics and royalty created with a successful
new franchisee.
• Many best practices are failed
practices. Lots of preaching and regur-
gitation of practices that do not work or
are outdated. We must be willing to chal-
lenge our way of thinking… and that’s
what I pledge to do through this column.
• All the “reward money” is at the
signing. Big fees to brokers, commis-
sions, celebrations, etc. all happen around
signings, while the franchisee is terrified
about starting a