Franchise Development in a Digital World

Building blocks with business icons in a stairstep, with a hand reaching to build the top step. The imagery represents franchising.

It’s Time for a Mindset Shift 

When it comes time to expand and open new franchise locations, many franchisors rely on brokers to find and qualify prospective buyers for franchise sales. But brokers are expensive! When they’ve successfully matched a candidate to a franchise, brokers are paid referral fees that are typically 40-50% of the franchise fee. In the US, franchise fees can range from $5k to $50k, meaning franchisors might pay anywhere between $2k and $25k for a single match. According to the Franchise Brokers Association, the average franchise fee was $44k in 2019, making the average referral fee between $17-22k. 

Plus, brokers rely on a franchise-focused network. Location3 Managing Director, Crystal Ware, writes, “Working directly with brokers ensures access to a significant pool of opportunity; however, you may be limiting your profile to only users who are familiar with franchising. Your ideal franchisee profile may know nothing about the franchising world or might be a person who is not initially interested in such an arrangement.” 

This begs the question:  

Why rely solely brokers when you can use digital channels to refine your audience, reach the most qualified franchisee candidates, and reduce the cost per lead?  

The Biggest Mistakes We See in Franchise Development 

1. Treating Franchise Development as a separate marketing entity 

Location3 V.P. of Digital Strategy, Vera Shafiq, writes, “Many organizations treat Franchise Development marketing as a completely separate entity from Consumer marketing. The truth is that Fran Dev marketing is no different to Consumer marketing in that the goal is to drive your ICP (Ideal Customer Profile), or IFP (Ideal Franchisee Profile), to action in all the places they spend their time: social media, YouTube, websites, Connected TV, etc. If you understand your business metrics, set realistic KPIs and leverage the right media mix alongside a robust brand messaging strategy, you’ll be rewarded with a high-performing Fran Dev program. Prospective franchise owners are often already advocates of your brand and, if they’re not, they should be! So, it makes sense to activate Fran Dev marketing campaigns in sync with your Consumer campaigns.” 

2. Not enough budget 

While many systems are comfortable paying brokerage fees between $17-22k for a single sale, we don’t see that level of budget commitment to digital campaigns. While you can expect to see cost savings with digital marketing, these campaigns still require healthy budgets. As Crystal Ware puts it: “Franchise Development requires a significant investment, no matter what strategy a brand employs.” 

3. Not enough time committed

Hand-in-hand with sufficient budget is giving campaigns enough time to fully optimize and learn. When digital campaigns fail to immediately generate excellent leads, we often see franchises give up on tactics rather than seeing campaigns through the learning phase. More efficiencies can be achieved with more time to learn from digital campaigns.  

Franchise Development with Digital Channels 

Marketing your franchise opportunity via digital marketing channels can reduce the overall cost, while still connecting your franchise opportunity with the most qualified audience. And why stop at Fran Dev? Your brand will benefit from a unified approach to Franchise Development, Employee Recruitment, and Consumer marketing campaigns. Here’s how: 

The Halo Effect 

It makes sense to engage with prospective franchisees, employees, and consumers, under a unified web presence. Having cohesive marketing campaigns across these different audiences can have a halo effect: 

  • Captivating consumer messaging also attracts prospective employees and franchisees. 
  • Compelling employee messaging generates brand affinity for prospective customers and franchisees. 
  • Powerful franchisee messaging attracts prospective employees and consumers. 

Consistent Strategy 

The marketing principles behind driving consumer sales and employee and franchise recruitment are the same. By employing a consistent strategy across the different programs, you can take better advantage of automation, machine learning, and other advancements in marketing technology. And you’ll acquire better, more usable data for your efforts. 

Budget Fluidity 

Unifying your approach to Fran Dev, Employee Recruitment, and Consumer marketing will provide agility and flexibility to shift marketing dollars from one bucket to another, based on market conditions and business needs. For example: 

  • If there is a labor shortage, shift budget to the recruitment program. 
  • If you’re in growth mode, apply more budget to Fran Dev. 
  • If consumer acquisition and retention is top priority, allocate more budget into the consumer marketing program. 

In Summary

A strategic franchise development strategy using digital channels can connect you with strong candidates and offer better ROI than brokers. Location3 can help you establish a unified approach to your marketing initiatives. Learn more about Franchise Development with Location3.  

If you’re ready for cohesive application of cutting-edge tactics and technology across Franchise Development, Employee Recruitment and Consumer marketing, contact us today. 

Sources: 

https://www.franchiseba.com/how-much-does-a-franchise-broker-make/