Franchisers – How Many Franchisees Will you be Keeping For a Lifetime?


Typically, franchisors focus on finding franchisees. These people spend tens of thousands of dollars yearly to exhibit at expos, operate ads in magazines and papers, and post their ads on Web sites, all with regard to getting a prospect to ask for info on buying a franchise.

Staggering price of capturing franchisees

We know, based on annual studies and recommendations, that it costs a franchisor about $10, 000 to get a qualified lead, and to will sell a franchise, well, the fee is staggering — it can be $25, 000 to $40, 000. When you think that may break-even proposition for most franchisors to sell one new franchise, you’ve got to wonder why every one of these companies is trying to sell franchises — at least 2, 000 for you to 2, 500 of them throughout North America alone!

It doesn’t trouble me that it’s a break-even proposition because the real associated with a franchisee is a duration of royalties. You get a franchisee paying out you $25, 000 for you to $50, 000 annually — and maybe much more — so you suddenly understand the value of franchising to the franchisor.

Now only if all franchisors understood the idea!

Franchisor’s job is to get and keep customers

Franchisors normally do a pretty good job involving capturing franchisees, but they no longer do nearly as well with keeping them. Some franchisors have a turnover rate involving nearly 50%! It’s not abnormal for the turnover to be in the product range of 20% to thirty per cent. The average American-owned business, based on recent studies, loses 10% associated with its customers annually — that means the business replaces half its customer base every five years!

Smart franchisors concentrate on keeping their customers – their own franchisees. While most franchisors avoid even budgets for keeping dispenses, smart franchisors make which budget item a priority.

The actual economics of keeping a franchisee for a lifetime is fairly simple. If this costs you $40, 000 to capture a franchisee, and also the franchisee pays you $40, 000 (if you’re lucky) after the first 12 months of running a business, you’re at break-even. 12 months after you invested your money! Shed the franchisee now as well as you’re in trouble!

Here’s the importance of franchising

Second-year, typically the franchisee pays you — if you’re lucky — $40, 000 in royalties and also other fees. Third-year a similar. Five years, ten years, eighteen years… $40, 000 12 months! Now you know the value of franchising to a franchisor. Let’s say you took $5, 000 a year simply to keep the franchise. Was this worth it? Obviously.

How much will it cost to maintain the value?

And many franchisors don’t spend anyplace near $5, 000. Given, they may not need to. Might take substantially less to keep a franchisee year after year. Might take as little as $500 a year — perhaps giving the franchisee a special reward now and then, or treating typically the franchisee and his team to breakfast every day or dinner.

But many franchisors don’t spend anything to preserve franchisees. Why? Three motives:

They don’t know that they should.
That they haven’t seen the monetary value.
They’re focused on acquiring new franchisees. That’s where the action is! They think these kinds are gaining market share by adding dispenses. Meanwhile, they’re very likely depreciating!
It’s easier to keep as compared to capture
They’re at least burning off opportunities and giving up much easier money. Because it’s significantly easier to keep a customer when you have got one, that is to get a new customer! So how could a

franchisor keep dispenses? Here are three ideas each franchisor can use immediately:

Call up them! Forget about email. Neglect the company newsletter or weblog. Pick up the phone and state this: “What can I because to help you build a more satisfying as well as a profitable business today? inch You won’t hear anything for any moment because the franchisee is going to be stunned. They’ll figure from the joke, or you’re going to hit them with the real reason behind your call. Just wait around a moment and let them procedure your question. You may have in order to repeat it. And they may inform you, “I don’t know. ” That isn’t because they don’t know, it’s because they may still be in shock. Explain to think about it for a moment and you’ll call them yet again… because you really do want to know. When you can help them build a more satisfying along with profitable business, you’ll keep these things for a lifetime! By the way, the CHIEF EXECUTIVE OFFICER needs to make this call. Clever ones do.
Coach these people. Every week. Every franchisor supplies support. Value varies coming from franchisor to franchisor. Inquire franchisees about the support and frequently they’ll laugh and point out, “Well, yea, you can get help if you can get them to call an individual back. ” Forget help. Coach them to success! Specify a staff member who does just coach franchisees by telephone — all day. The discipline will need a script. The particular coach will need to be trained. And once the coach goes toward work and gets effects for franchisees, the news will probably spread quickly that the franchisor has added to the value of France. Franchisees who are being taught tend to stay for a lifetime.

Build a mastermind. At a certain stage of their development, franchisees really will know more about the business than will the franchisor. That’s when they get started asking, “Why do I need to help sign on for another term using this type of franchisor? I can do this small business blindfolded. I don’t have to have them! ” Chances are, they. And what a huge loss it’ll be to you if you lose these individuals. Seasoned franchisees love masterminds. It’s an opportunity for them to connect periodically with their peers to match notes, to learn from 1 another (without the franchisor involved) and to hold one another dependable. Masterminds tap into the real main reasons why people buy franchises — and also smart franchisors are all above those reasons. When an operation continues to satisfy the needs of the seasoned franchisee, the franchisee stays for a lifetime!
There are many other folks ways to keep a franchisee for a lifetime; these three are the ideal start. You don’t have to use them just about all. You just have to use enough of them to keep every franchisee for years.

Smart franchisors are in the enterprise of capturing and trying to keep franchisees.. and for them, body fat questions the value of franchising. That’s because they keep nearly all of their franchisees year after year.

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