Our Top 10 Takeaways from the IFA Convention
By Joe Mathews and Thomas Scott
Franchise Performance Group
This year’s International Franchise Association Conference had higher attendance than previous IFA franchise conferences. 2011 was a stronger year than 2010 for most operationally sound organizations with good business fundamentals and strong unit level economics. With the continued credit market crunch and uncertainty in the markets caused by the election cycle, many franchisors expressed cautiously optimistism for 2012.
Here are our top 10 takeaways from this year’s IFA conference:
- Focus on franchisees’ success. In the past we have noticed that franchise companies assume one of two basic cultures: “Franchise Sales” and “Operational Excellence.” The first are consumed with top line growth and franchise sales. The second are consumed with franchisees’ performance and profitability. While the “franchise sales cultures” often seem to dominate the spotlight in year’s past, this year we found companies with “operations cultures” were rightfully getting attention. It is becoming more clear that operations support teams have almost as much impact on franchise recruitment results as the recruiters themselves. For instance, in the session called “Franchise Sales Secrets” with Geoff Hill (Focus Brands), Rob Goggins (Great Clips), Don Fox (Firehouse Subs), and John Twist (Batteries Plus), we found that the greatest “sales secret” was the improved economic performance of the existing franchisees. As a result of what seems to be a renewed focus on franchisee satisfaction and profitability by many franchisors, we predict that franchisors will invest heavily training operations staff in sales coaching, problem-solving, and consulting best practices to create the best opportunity for a system wide sales and performance breakthrough.
- Out with “forcing franchisees into compliance” and in with win-win problem-solving and workable relationships. Smart franchisors are learning to avoid “command and control” techniques such as “default letters” to ensure brand standards. Franchise operations and field support team members are emphasizing using performance coaching, consulting, problem-solving, and influence techniques to create more consistency. And franchisees are more responsive, not because they HAVE TO but because they choose to. FPG has always felt that operations teams and field staff in particular have the hardest job and are the unsung heros in franchising. We’ve experienced a bump of interest in our Developing Peak Performing Franchisees CFE-certified training program for support teams. Amit Kleinberger, CEO of high-flying Menchies, which added over 100 franchisees in 2011, shared the following philosophy about growth. “Growth is not an objective. Growth is the byproduct of doing the right thing, the right way, and at the right time.”
- LOSOMO. This is a social media buzzword which describes the latest tactics companies use to promote their brands: Local, Social Media and Mobile Marketing. Brand after brand talked about how social media impacted customers on the local level and how marketing tactics need involve both smartphone and tablet devices. Highly centralized franchisors with low trust levels about letting franchisees manage local digital marketing are getting nervous! More decentralized brands with clear social media guidelines may have a competitive advantage over command and control franchisors who insist on controlling social media content themselves. LOSOMO affects local search optimization, local PR, local social media and just about any other form of digital marketing. Franchise brands need to plan on replicating national initiatives on the local level, such as local Facebook pages.
- Cause Marketing. In one of the roundtables about PR strategies, participating PR firms experienced an increase in the number of franchisees who are involved in local communities and charities. More franchisors are showcasing and celebrating this “independent operator” aspect of franchising as a competitive advantage over what other nonfranchised brands who typically don’t give managers the authority or budget to get involved with the community. For instance, CiCi’s franchisees go out of their way to sponsor teams and host school nights. In addition, cause marketing attracts viable franchise candidates who look for more meaning and purpose in their lives.
- Importance of Trust in Recruiting. We have written many articles about how franchise candidates look to join companies and do business with people they trust. The role of the franchisee recruiter as “trust agent of the brand” came up in almost every session and roundtable on franchise recruiting. In an effort to build more trust and transparency, some franchise companies such as Planet Beach added more meaningful content on franchise sales websites. Recently, Chem-Dry contracted with us to develop a 30-50 page brand story and franchise information report franchise candidates can download free from their franchise opportunity website. Franchisors are thinking more about how to develop and maintain high levels of trust levels and are paying more attention to online reputation.
- Storytelling as franchise sales and marketing best practice. If you ask a customer about your brand, chances are you are not going to hear about graphics standards, font sizes, signage, and logo usage. They are more likely to tell you what the brand means to them. You will hear stories about clean or dirty restrooms, helpful or harmful service, and other success or war stories. Put another way, you will hear narrative about the brand. Franchisors are looking to have a greater say in how their story is told and to whom. Content strategies – the art of corporate storytelling – is changing how people think about marketing. We predict more brands will hire writers and storytellers to create engaging and trustworthy content.
- Less Litigation – the new franchisor badge of honor is, “We have no current or pending litigation in our FDD.” Smart franchisors are learning that litigation and other forms of infighting is an expensive distraction, poisons the culture, and diverts resources from the core business. On top of creating insurmountable negative franchisee validation, litigation is often tried in the court of public opinion in cyberspace before it makes its way in the courtroom, leaving a permanent virtual scar on the brand. Public opinion almost always tips towards the disgruntled franchisees. Franchisors will find more ways to avoid litigation and stay in win-win problem solving.
- Importance of a Skilled Recruiter - Many franchisors do not have the discretionary budget to spend more money to generate more leads. There is a premium on franchisee recruiters who are on the top of their game. A franchisor’s top recruiter often is 100-300% more effective than the average recruiter with the same leads. More than once we heard, “I am looking for a franchise saleseperson, but I need someone good, not another typical ‘retread’ from another company.” Experience is no longer being confused with competence and productivity. Franchisors are going to to invest more time and money in the professional development of their recruitment staff and they will find a significant return on this investment. For instance, Rob Goggins of Great Clips cited a 300% increase in conversion ratios as a result of a focus improving his department’s skills.
- Referrals and Referral Programs For Franchise Recruiting . The franchisors who generate the most referrals are not the ones who pay the highest referral fees. They are the ones who maintain positive relations with franchisees and make the most requests. Smart franchisors are systematizing how and when franchisees are asked for referrals and are more strategic and organized in their approach. Asking for referrals is moving from an afterthought to an integral part of the overall lead generation strategy.
- More Intelligent Use of Item 19. Franchisors are becoming more sophisticated in how they present Item 19 data to their candidates. Smart franchisors are using the Item 19 as a way to improve brand narrative, as a way to tell a better story to their franchise candidates.
What were your take aways from this year’s IFA?