The 3 Biggest Franchise Development Challenges for 2021

The Hurdles Franchise Development Executives Are Talking About – and What They’re Doing to Generate Growth

By Courtney Stillings, Senior Client Consultant, Franchise Business Review, and Michelle Rowan, President & COO, Franchise Business Review

The best part of franchise events for us are the ideas people share at the roundtables – something we’ve been missing over the past year with live events cancelled. But, in true franchising fashion, franchise executives quickly adapted to virtual peer groups and roundtables to keep collaboration going. Twice a month, FBR invites franchise leaders to our own roundtables to help folks continue networking, and since not everyone has the chance to join, we thought we would share the common themes being discussed in 2021. 

With the pandemic came a jump in people out of jobs and access to cheap money. Many brands are experiencing full pipelines that led to faster growth in 2020 and 2021 than in 2019, but others are struggling to find candidates to continue growing the brand. Either way, sales is still a complex balance of education, relationship building, and moving people through your process.

Here are some of the challenges we tackled:

1. Finding QUALITY candidates. Whether digitally or at expos, the consensus is franchisors are seeing fewer leads in the pipeline, but higher quality in the connection rate and conversations. But everyone needs more leads to build those pipelines, so here’s where folks are focusing their efforts:

• Social media. Besides the usual tools (referrals, marketing to customers, through their own site), franchisors are spending money on social media with an emphasis on providing content. Some have found success on LinkedIn, others on Facebook. It’s important to know where your candidate audience is online.
• Brokers…sort of. Franchisors are split on using brokers. While it is a big investment, those working with brokers felt it was worth it in markets where they don’t have a big presence, or to scale more quickly. 
• Third party reviews. Not to brag, but FBR’s leads were mentioned several times. Our awards and lead generation are based on franchisee satisfaction and ONLY available to award winners. This shouldn’t be news to most, but people care about data and third party reviews before they make a purchase! Clients share their FBR survey data to show transparency, speed up validation, and close more deals. 

2. Creating brand awareness and differentiation. Some franchise brands are trying to expand in areas where they aren’t as well known, while others are in a popular segment of franchising with strong competition for candidates. These are some of the tactics they’re using:  

• Showcasing culture. Brands are putting their company culture on display to differentiate themselves. Potential franchisees are looking for a business they are passionate to build, and proud to be part of. If you have strong relationships with your franchisees and employees, share stories and data to support WHO they are potentially joining.
• Addressing COVID upfront. Talk about COVID impact on your site! Candidates definitely want to know how the business was impacted, what you did to help franchisees during the crisis, and what changes you made that are here to stay. Sharing this upfront shows transparency and offers something for them to talk about more with you. 
• Publicizing support efforts. If you’re offering innovative ways to help franchisees through challenges, make it public. Hiring is a significant challenge for many franchisees right now, so Donatos started on the spot “dinnerviews” to help franchisees attract job applicants. 

3. Responding to longer deal lengths. Everyone has been dealt a lot of change this past year and it’s understandable this could make candidates more cautious or thoughtful about big decisions – like investing in a franchise. It’s your job to help educate them, and work through whether they are the right fit for your brand, and you are the right one for them, while at the same time balancing that with your quota for 2021. Here’s are some of the ideas franchisors shared to shorten the sales cycle:

• Overcome F.U.D. F.U.D. is Fear, Uncertainty, Doubt. Address it head on by acknowledging it, then providing real information to help candidates that are “stuck”. Earlier this year we shared a piece about using data to overcome F.U.D. :  Beyond the List: Why the Data Is More Valuable Than the Recognition in 2021.
• Again, acknowledge the COVID impact. Talk about the impact on your franchisees, the brand, and your processes. Share data and franchisee stories or testimonials (even better on video) to reinforce how you supported them through the uncertainty. 
• Set expectations. Some candidates are trying to negotiate fees or personal guarantees more often than in the past. Preparing your team on how to respond to these requests can help set expectations of what is non-negotiable. 

In addition to these ideas from our recent discussions, at the end of 2020 we asked franchise executives to share their 21 Franchising Predictions for 2021. As we near the halfway point of the year it’s a great time to review their ideas on staying successful this year and maybe find some new things to consider for the remaining six months. And with the return of live events and we want to share some of our favorite events where you can start reconnecting in person:

Opportunities to find new franchisees

• Franchise Update’s Multi-Unit Conference, August 31 – September 3. 
• Franchise Expos are back, with the big one in NYC, September 24-25.

Opportunities to network and learn

• Fishman Publications and Fisher Zucker’s Springboard for emerging (and reemerging) brands, September 26-28.
• Franchise Update’s Leadership & Development Conference, October 19-21.
• International Franchise Association’s (IFA) Franchise Development & Marketing Conference, October 27-28 (no details on the site yet).

We’ll be continuing our roundtables this summer, and we look forward to sharing more of the insights that develop. Spaces are limited, but please reach out if you would like to join the conversation and we will share any available dates. We look forward to seeing everyone IN PERSON soon! 

Related Resource: 

5 Operations Pitfalls That Are Stunting Your Franchise Growth

Before you spend another dime on development efforts, learn five common operations pitfalls that franchisors miss – and how to fix them. Download our free guide to learn how to mitigate risks like:

• Letting franchise manuals languish
• Training and support that’s “good enough”
• Underestimating the role of culture
• Relying on unit level economics
• Treating symptoms, not the cause