Franchisers try new approach to finding franchisees
Traditional ways don't always workDenver Business Journal - by Ed Sealover, July 22, 2011
Lea Bailes, CEO of Guier Fence, set about looking for a Denver franchisee for his fencing company the traditional way: through print directories, franchise brokers and Internet franchise portals.
But he found no one he wanted.
So he started pitching stories about his company to trade publications. He used social media. And he participated in multicompany franchisee webinars. Through those means, he’s signed six franchisees nationally and developed a handful of promising Colorado leads.
Guier Fence, a 32-year-old Kansas City, Mo.-based company, just began franchising last year, but it didn’t take company leaders long to learn what many longtime national brands have discovered: Traditional methods of finding franchisees no longer work.
Regional expos and thick directories that get franchisers thousands of bad leads are out. Now what works is one-on-one interaction and more subtle media mentions that inspire truly interested candidates to find out more about a company before committing.
“The decision-making is different. Now people do a lot more background research on these companies before they ever decide to submit a request form,” Bailes said. “The stories of success are what drive people toward a franchise ... There’s a lot more interaction, and I think people now demand that and expect that.”
At the end of 2010, Colorado was home to 18,135 franchise businesses that employed 197,294 people and generated $5.3 billion in payroll, according to the International Franchise Associationof Washington, D.C. The number of franchises is predicted to rise 2.5 percent nationally this year.
The type of business people looking to buy into franchises has changed, said Steve Beagelman, CEO of SMB Franchise Advisors of Doylestown, Pa. Longtime executives who lost jobs or decided to leave companies during the economic downturn have been drawn to owning their own business and being their own boss.
And these new franchisee candidates, especially in computer-savvy cities such as Denver, aren’t the type to pick up 100 business cards at a franchise show or flip through a directory, officials said. So companies must change their recruitment methods.
Max Muscle Sports Nutrition, a nutritional supplement and athletic apparel shop, used to advertise on portals that attracted what Tom Sampson, senior vice president for franchise development, termed “midnight clickers and tire kickers” — people who surf the Internet looking for new career options.
But the Anaheim, Calif.-based company, which is looking to open four more franchised shops in the Denver area, found it needed 125 to 175 leads from a portal to find one candidate to award a franchise.
Max Muscle tries Facebook, LinkedIn
Now it advertises on Facebook and LinkedIn, targeting website users of a certain age and occupation in parts of the country where the 150-store chain wants to grow, Sampson said. And it’s participating in webinars hosted by Beagelman where 10 companies can pitch their stories to a captive midday audience serious about learning about the businesses.
Using targeted Internet marketing, Max Muscle has been able to award one franchise for every 25 to 30 leads it’s gotten in the past year, Sampson said.
Beagelman noted these methods are not only more cost-efficient, but also allow a franchiser to hone in on the Denver or Colorado Springs area rather than throwing darts blindly at the U.S. map.
“The startup and the smaller franchisers [of 50 stores or less] have seen a huge benefit because it builds name recognition for them,” Beagelman said. “You’re finding people in Denver that are finding out about a brand with five units in New Jersey.”
The Pita Pit, a 320-location restaurant based in Ontario, Canada, that’s 90 percent franchised, used to get most of its store owners from the crop of devotees it spawned in its college town locations, said Kevin Quinn, director of franchise development. But with the chain moving into cities that aren’t college towns — it does have locations in Fort Collins, Boulder and Greeley, but also is looking to open its first in Denver — it’s had to contract a public relations company that specializes in social media ads, he said.
Other franchisers looking at Colorado aren’t spending any money marketing themselves, either in traditional or newfangled ways. Terry Corless, CEO of MadDogs British Pubof San Antonio, which is looking at Colorado for a possible expansion, said he’s put up signs in his main location that draws tourists and conventioneers, drawing inquiries from many out-of-state business people.
While earned media and social media are today’s best methods for finding franchisees, Sampson cautioned companies to remain nimble to stay up to date on newly evolving methods.
“Any franchise company that is paying attention, they have to be where the eyeballs are looking,” Sampson said.
