Franchise Sales Takeaways from the 2014 International Franchise Association Conference

What was said that can make an impact on your growth

By [googleplusauthor] and Thomas Scott

The 2014 IFA conference in New Orleans was a near record event, with IFA Chairman Steve Romaniello saying there were over 3,300 registered attendees. He reported that franchise system growth is not yet at pre-2007 levels, but the franchise industry is slowly climbing back from years of slow growth.

Last year was a better year than 2012, and 2014 is already shaping up to be better than 2013: Franchise recruitment is on the rebound. Lead generation is on the rise. Franchisors are spending more to recruit franchisees. In general, there are more franchise buyers doing research online; they are more qualified and, increasingly, banks are making small business loans.

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David Mihm, SEOMoz’s search expert, pointed out that there are more than 7 billion searches a month in the U.S. alone that relate to franchise goods and services. Many of these searches are for franchise opportunity information. In perhaps the most unexpected byproduct of Obamacare, thousands of people are investigating leaving their jobs to start businesses now that they can purchase health insurance. Over the next few years, the IFA expects an increasing number of people to invest in franchises. In anticipation of the upswing, many franchisors brought their entire development teams to the IFA conference to learn what’s new and what’s working, hoping to create a breakthrough in franchise sales results.

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Before we recap what they heard, let’s talk about what they didn’t hear:

Franchise development was absent from the convention. Like Ben Stein in “Ferris Bueller’s Day Off,” franchise sales professionals walked the convention halls aimlessly asking, “Franchise sales?? Franchise sales?? Franchise sales??”

For the first time we can remember, there was almost no organized content focused on franchise development. Traditionally, there have been several tracks at the IFA aligned around the job positions attendees have: sales, operations, marketing, leadership and legal. The IFA appeared to abandon these content distinctions this year. It changed the tracks to align with a franchise system’s size and age, addressing the concern that representatives of smaller systems often attended sessions that were not geared toward their place in the development cycle. While the attempt to address a real concern was noble, it perplexed many attendees.

Additionally, the IFA conference focused intently on franchise operations and support at the expense of the other, equally essential functions of a successful franchise system.

The VP of Franchise Development from a major printing brand brought his entire development team to the IFA and expressed frustration that there was little for them to do, since so few of the sessions addressed the content they hoped to see.

Franchisors who brought their franchise sales teams to learn best practices were about as likely to find them wandering Bourbon Street handing out beads as they would wandering the halls of the convention center and handing out business cards.

In the past, franchisors have complained that the IFA conference focused too heavily on franchise sales. This year, the emphasis was almost solely on operations and franchise relations. Hopefully next year, the conference will be able to offer content in both of these areas equally.

Franchise sales-related content was broken down into small round-table discussions.  Tables with topics such as “Lead Generation” drew attendees three to four rows deep, struggling to hear the discussion. The moderator of one of the lead generation tables expressed frustration that the content committee was so far off the mark in understanding what people wanted. His topic alone could have accommodated three or four tables, and just doing the introductions for 40 people at a 12-seat table took half his time. Attendees could have gone table to table, drawing different levels of tactics and expertise from each station rather than fighting to hear a single, overcrowded discussion.

For people who make a living in franchisee recruitment, the evergreen issues are: sales process, lead generation, lead systems, franchisor opportunity websites, franchisee recruitment skills and growth strategies. These items should be discussed every year at the IFA. It’s been FPG’s experience that the franchise buying process is transforming, and buyer behavior is changing. Franchisors need to adapt to stay current. They missed an opportunity to address the issue and brainstorm what it will take to stay relevant.

We hope franchise sales executives are vocal about what was missing and give the constructive feedback to the IFA’s convention committee.

FPG has always asserted that franchising is a two-metric game: franchisee profitability and franchisee-franchisor relationships. Therefore we applaud the IFA’s intense focus on what matters most. Franchising has always treated franchise salespeople as rock stars, leaving operations teams as the unsung heros franchising. We believe the field operations teams have the hardest jobs in franchising and support IFA’s focus on the issues that impact their job performance.

In summary, the IFA overcompensated. Hopefully next year we will have the same intense focus on franchisee profitability and franchisee-franchisor relationships AND lead generation and franchise sales best practices.

Popeye’s Cheryl Bachelder, CEO and Franchisee Relationship Rock Star

Popeyes CEO Cheryl Bachelder addresses attendees of the 54th annual International Franchise Association Convention.

Popeyes CEO Cheryl Bachelder addresses attendees of the 54th annual International Franchise Association Convention.

We loved, loved, loved keynote speaker Cheryl Bachelder’s presentation of Popeye’s brand positioning. We hope she represents a new generation of franchisor servant leaders and a departure from the old school, hard-charging ‘my way or the highway’ franchisor’s executive leadership style. She told a fascinating story about Popeye’s remodeling initiative. It was met with harsh resistance by the franchisees, who complained that it was too expensive and would offer a poor return on investment. While she didn’t say it, we were left with the experience that Popeye’s either didn’t include franchisees in the process or didn’t consider the franchisees’ perspective when deciding on the new design. Franchisees pushed back strongly on the new design.

Popeye’s had a choice: Scrap the new design and start over or ram it down their throats.

Rather than enforcing the clause in the franchise agreement that states every franchisee must conform to current design standards, Popeye’s took ownership of the situation, eliminated the program and started again, this time including franchisees in the process.

The net result was a remodeling package that was far more affordable and more effectively communicated the “Louisiana Kitchen” brand attributes. The franchisees embraced the new design because they felt heard and included in the process, and the final product solved their problem and addressed their needs.

This only happened because Popeye’s had already fostered a culture where brand was bigger than ego. When brand is bigger than ego and results are more important than who gets credit, breakdowns such as this lead to breakthroughs like the new Popeye’s design.  Not only did Popeye’s score a victory, they earned the respect of the franchisees, who will most likely stay in problem-solving rather than “fight mode” when the next breakdown occurs.

Popeye’s earned high marks on both franchisee satisfaction with profitability and maintaining a positive franchisor-franchisee relationship. We saluted Popeye’s efforts by buying two orders of their 3-piece chicken dinner (spicy, not mild) with side orders of red beans and rice on the ride home.

Content marketing for franchise lead generation

Lana Khavinson, Group Product Manager for LinkedIn, explained why content marketing matters: LinkedIn’s research shows that buyers are making 70% of the decision to buy a product or service BEFORE they make contact with a salesperson. 70%! Think about the implications for franchise sales.

It’s reasonable to assume leads are as addicted to their cell phones as franchise salespeople and therefore always have their phones within reach. Yet every year, they seem to be harder to reach.

If you plan on growing a franchise system in 2014, content marketing is now the cornerstone of a franchise lead generation budget.

In the following graphic we depict the changes in franchise buying behavior and the role content plays.Franchise Decision-making funnel.jpg

 

We’ve often written that franchisors have lost the entire first conversation to the internet. Franchisors have been fired as the gatekeepers of their story and replaced by self-directed research. The research will go on with or without the franchisor’s help.

We hear franchisors say, “I just want to whet their appetite with a little bit of information on the web. If they want the story, they have to talk to me. “

I still want to listen to Jethro Tull on 8-track tapes, but that’s not the world we live in anymore.  It’s not about what a franchisor does or doesn’t want. It’s about aligning your content strategy with the way people investigate and purchase businesses.   Franchisors need to flex muscles they have never developed before. They need to learn how to work leads who won’t take their calls. Hard? Yes. Impossible? No. Franchisors need to write down more of their story and post it on their website. How much is enough? We recommend two things:

  1. Mimic the type of content you would expect to find in an executive summary of a robust business plan.

  2. Present the information in story form. Make it an interesting read.

Content marketing starts with an article-format recruitment website independent from your consumer brand. While agencies and internal marketing departments may be skilled at communicating consumer value propositions, they often don’t get how people buy businesses. We talked to one franchise development executive who was forced to follow the recommendations of the brand’s internal marketing department only to create a website that resembled a glossy sales brochure chock full of slick catch phrases, but with no depth.

We also heard more than a few horror stories this year about expensive website rebuilds where the marketing department or IT department bullied the development department into folding the recruitment website into the consumer website, only to see results plummet.

Once the franchise opportunity website is in good shape, franchisors need to drive traffic primarily through article-format PR, blogging, social media posts, email campaigns, lead nurturing campaigns, paid search and retargeting. Some of the bright spots in franchising — like our clients Menchie’s, PostNet, Chem-Dry and Marco’s Pizza — are using these to the fullest. Some iconic brands, such as our client Huddle House, which staged an amazing turnaround last year, have used it to jump-start lagging franchise sales.

Buyer generation trumps lead generation

One of the trends we really liked hearing about was the shift from lead generation to buyer generation. For instance, Peter Holt of Tasti D-Lite was asked, “How many leads does it take to generate a buyer?” He immediately smiled and said, “One.” While in the past lead generation was a study in finding the many, buyer generation is more about giving the many the type of information they need to step up and be the one.

We talked to one franchise development director who mentioned that he had spent several thousand dollars a month on paid search to generate leads, using landing pages and targeting franchise terms. He was able to generate leads but never sold a franchise from the leads.

Why the fail? The franchisor is focused on lead generation — spending money to get a massive amount of people to fill out forms. We advocate a buyer generation strategy — strategic advertising targeting candidates who are further down the franchise decision-making funnel pictured above. By bringing in more relevant and interesting brand content, the franchisor invites the leads to become more emotionally engaged with the brand. The more educated and engaged a lead is, the more likely they are to step up and be “the one.”

Major changes in website design

The message from David Mihm, SEOMoz’s search expert and a speaker this year, was that as a general rule, franchisors build lousy websites.

Google desperately wants to shine a spotlight on worthy brands. “Google uses brands to sort out the cesspool of information that is the internet,” he said. Google wants to promote your company at all levels, but the typical franchise consumer site is not built consistent with the way Google categorizes information, which is key to higher rankings, or the way buyers buy things, which is key to higher lead generation conversion rates.

Franchise systems need websites that built to take advantage of organic and local search as well as websites that cater to customers and franchise prospects, giving them information consistent with the buying process they want to use, not the one your marketing department wants to force on them.

Most internal marketing teams, IT teams, ad agencies and website designers servicing the franchise industry lack the tactical knowledge of how to create a franchise sales breakthrough. Experience in consumer marketing does not equate to franchise performance any more than franchise sales expertise equates to success in selling consumer products.

The sad truth is many, perhaps most, franchisors will need to start over just as Popeye’s CEO did, by scrapping their franchise opportunity websites and building a new one with the franchise buyer in mind. While building websites seems expensive, a well-built site can easily offset the cost with an increase in franchise fee revenue. A franchise opportunity website that has a net cost rather than a net franchise fee revenue gain is underperforming.

Importance of salespeople creating personal brand connected to brand presence

Another key takeaway from the IFA this year was how important it is for your recruiters, VPs and admins to have public, personal brands connected to the company. Before a franchise candidate will determine whether the franchise model is credible, they will first determine whether the person delivering the message is credible. Franchise candidates will google the franchise salesperson’s name to determine whether or not they can be trusted.  More visible franchise salespeople who appear highly credible will receive more callbacks than those who cannot be found.

In addition to making sure your salespeople are easy for prospects to research, invest in training them to share valuable content on social networks. Join groups, pay to promote posts on Facebook and Linkedin and join in conversations so each becomes a visible authority. No matter what industry segment you operate in, the more visible your salespeople are and the higher the quality content they share, the better they will be at earning conversations and generating sales.

Rise of mobile devices for primary research

Mobile device usage is skyrocketing: 50% of local search is now on mobile devices and 15-40% of visitors to a typical franchise recruitment website are on mobile devices. The numbers are climbing rapidly as the number of desktop computers shrinks. This has huge implications for franchise sales website content and design.

We didn’t hear about mobile content marketing strategies or any information about how mobile device users differ in how they do research. Nor did we hear about the ways you need to change your approach to website design to make it easier for mobile users to connect with you.

Franchise buying process is transforming

The franchise buying process is being radically transformed by access to information, mobile devices, desire for more transparency and the preference for more self-directed research.

Franchisors need to master how to tell their story online and earn the franchise candidate’s trust through content rather than conversation. Franchisors are learning to earn conversations rather than expect them. Skilled franchisors can now intersect buyers at their point of interest and siphon buyers away from their competition with a well-told and easily searchable story anytime during the buying process. Franchisors who master the new franchise buying process, as long as they maintain solid franchisee relations and strong unit level economics, will achieve a breakthrough in franchisee recruitment results.

We love the IFA conference and for many attendees, it is the highlight of the year. What did you take away from this year’s conference?