How Does The Sale Of Franchise Licenses Work?

Franchise License Sales vs Lead acquisition

At this point, we will briefly go into the definition of these two terms, as both are often lumped into “one-pot”. In view of the success of both measures, we consider it extremely important to make a clear distinction here.

A lead is a contact with a prospective franchisee. A “hot lead” that can lead to a franchise partnership.

A lead is a lead if someone has given a franchisor at least his first and last name, email address and telephone number out of interest in the franchise partnership he is offering.

A franchisor needs to attract enough leads to pursue its expansion strategy. There are different ways and channels for lead generation.

As soon as a franchisor has developed and successfully started its lead acquisition concept, and the first interested parties send a contact request and their personal data, everything has been done correctly in the lead acquisition. Excellent! And now? Now the supreme discipline begins – the franchise license sale.

Challenges in franchise license sales

Between the first contact with your potential new franchise partner, the first personal conversation, the signing of the contract and the “onboarding” of the new partner, a lot of questions and – experience shows – also a few pitfalls.

Although this process is initially similar to a typical application process, the franchisor must be clear from the outset about one important difference: The primary goal here is not to find a suitable candidate for the franchise system, but above all to successfully selling the giver’s franchise concept.

The best franchise license sales process is redundant if it is not completed with a contract signature often enough.

A franchisor can rely on external help in the form of franchise consultants to implement this important process in his system with a clear conscience. So far, he’s spent a lot of money getting enough leads.

Now it is important to avoid the many mistakes that can creep into a sales process. Consultants with experience in franchising implement this psychologically demanding process in the franchise system and can pass on a lot of tips and tricks to everyone involved.

Young franchise systems and their license sales process

The following tasks have to be solved by those involved in the course of implementing a franchise license sales process (not a complete list):

  • Use targeted lead management
  • Definition of “the ideal franchise partner”.
  • Practice the selection of potential franchise partners
  • Enabling the franchise license seller to actively and efficiently manage all leads in the daily sales processes
  • Introduce automation in the process
  • Learning to resubmit and communicate
  • ask the right questions and respond appropriately at the right time for everyone involved
  • Act and communicate in all directions with as little judgment as possible
  • create suitable handouts
  • Consider pre-contractual duty to inform

Always with the aim of putting every potential new franchise partnership on a solid and long-term sustainable foundation right from the start.

Only if a franchise system deals with its leads in a professional and structured manner can they transform them into new franchise partners? Always remember: without new franchise agreements, there is no growth for a franchise system.

Proven franchise systems and their license sales process

Experience has shown that every franchise sales process still offers potential for optimization. Often, many processes are run in when selecting potential partners and should be reconsidered.

If, for example, applicants repeatedly drop out during the course of the selection process for no apparent reason, it is worthwhile to take a closer look at the sales process. Existing franchisors should ask themselves the following questions:

  • Is the applicant getting the right information at the right time?
  • How does communication between franchisor and franchisee prospect work?
  • Which documents are used? How and when is the interested party contacted?
  • Is the exchange of information between the franchisor and the interested party a give and take?

Here, too, an external consultant can temporarily provide very helpful support and bring in his or her experience and perspective in a promising manner.

Do I need an employee to sell the franchise license?

Yes. If there is one position in a franchise network that should be singled out, it is that of franchise seller, franchise developer or franchise manager.

A franchise system can only grow when sufficient franchise licenses are sold. This is why the experience has shown that it is so important to hand this central task into appropriately professional and competent hands of a specially responsible employee.

If you do not want to or cannot fill the position of license seller yet, you should still ensure that the license sale tasks are clearly distributed in your system headquarters.

A franchisor can also hand this important process into the hands of external franchise experts at any time.

In close consultation, the process can be implemented, lived and perhaps bridged one of the other personnel bottlenecks. Some franchisors have completely outsourced this process.

What tasks does a franchise license seller have and what role does he have in the system headquarters?

Your employee responsible for franchise license sales looks after all incoming leads and guides them through the application and sales process as the main contact.

The most important task and the ultimate goal is to convert as many leads as possible into new franchise partners and to conclude franchise agreements.

He or she telephones with your prospective franchisee conducts the personal first, second and follow-up calls, supervises and organizes the signing of the contract up to the system integration of the new franchise partner.

Your responsible employee should work closely with the relevant departments right from the start: with the marketing / PR department when it comes to lead generation and with partner management when it comes to developing existing franchise partners.

If a partner wants to open another business at a new location, the franchise license seller should be informed that the location may change. It may no longer be available for a license sale (multi-unit locations, succession, etc.)

How do I get suitable employees for the franchise license sale?

This occupation is – similar to that of the partner manager – not an established and standardized training occupation. The most important criteria when selecting a suitable candidate are very good sales and distribution skills.

In addition, it is an advantage if he or she can demonstrate basic knowledge in the area of ​​franchise and marketing / PR. Potential employees with know-how in the area of ​​a franchise can be found primarily on the Franchise Campus in Weilheim.

External franchise consultants or experts may also have a large network and many contacts in the franchise industry. And don’t forget your cooperation partners.

Important: The best franchise license sellers may already be right in front of you, in your franchise headquarters, and are currently entrusted with other tasks.

Franchisors should go through their best and most enthusiastic employees in their heads and consider carefully whether one or the other might not be a very good ambassador for their system and thus “seller” for their brand.

You can literally “save” technical training. Not to mention motivation and enthusiasm.

The following questions should serve as a mental basis and inspiration for your own (future) franchise license sales process.

Catalog of questions for partner acquisition for franchisors

1. Is it easier to acquire new franchise partners for a franchise system with many or a few franchise partners?

2. How can a franchisor find out who is the ideal franchise partner for their system?

3. Does the idea of ​​an “ideal franchise partner” help you? What characteristics could you use to describe them?

4. Should a franchise system win new franchise partners quickly or rather slowly?

5. How do you define “fast” and how “slow” growth of a franchise system?

6. Who should be responsible on the side of the franchisor for partner acquisition: the franchisor as the owner himself? A salaried employee? A freelancer?

7. Instead of “partner acquisition”, other terms such as “expansion”, “development” or “license sale” are often used. Which term do you prefer?

8. How does a franchisor know before signing the franchise agreement with a new partner, whether this will be successful?

9. Does the use of test procedures for personality diagnostics make sense when choosing the right franchise partner?

10. Do you call franchisees as soon as you have received the contact details of a franchisee for the first time? What would the goal of the call be? Is it done in between, or is it a challenge?

11. How many franchise partners can an expansion manager gain per year?

12. What is your conversion ratio of

  • Leads on the first phone appointment
  • Leads for an initial personal meeting
  • Leads for (pre-) contract conclusion
  • First interview to the second interview
  • Initial discussion on (preliminary) contract conclusion
  • Second conversation to the third conversation
  • Initial discussion on (preliminary) contract conclusion
  • Third-party discussion on (pre-) contract conclusion
  • (Pre-) conclusion of a contract for financing commitment for business start-ups

13. How long are the periods between the milestones of the license sale?

14. Do you create the essential statistics for analyzing your license sales again and again by hand, or can you generate them at any time from your license sales software at the push of a button?

15. What is your lead acquisition budget, and what are your costs per lead and per franchise agreement?

16. What conversion ratio of leads to the conclusion of a franchise agreement can you realistically achieve?

  • Less than 40 leads = 1 franchise agreement
  • 40-60 leads = 1 franchise agreement
  • 60-80 leads = 1 franchise agreement
  • 80-100 leads = 1 franchise agreement
  • 100-120 leads = 1 franchise agreement
  • 120-150 leads = 1 franchise agreement
  • over 150 leads = 1 franchise agreement

17. How would you describe your image of a man and what impact does it have on your sales talks with potential franchisees?

18. Do you have the opportunity – analogous to a headhunter – to address potential franchisees directly?

19. What expansion strategies are you pursuing?

20. Are you more likely to have the setting with a low filter to conduct an initial personal interview with as many franchisees as possible, or is it more expedient for you to select the potential franchisees as strongly as possible before the initial interview?

21. Between security and delusion of files I: Which documents and documents should you absolutely request from your potential franchisees before concluding the franchise agreement?

22. Between safeguarding and filing madness II: Which documents and documents should you hand over to your potential franchisees before signing the franchise agreement?

23. As a franchisor, you have pre-contractual information obligations. Do you explain this to your franchise prospects?

24. How long should an initial personal conversation with a prospective franchisee last and where should it take place?

25. Does it make sense for a franchisor to get to know the life partner of a potential franchisee personally in the course of the sales process and when would be the right time for it?

26. Before concluding the franchise agreement, does it make sense to have a discussion with the interested party at home?

27. Do you give your prospective franchisees assistance in applying for a commercial bank start-up loan, and if so, what?

28. How do you license salespeople to find the right path between enthusiasm and seriousness and between individuality and mass processing?

29. How can you make the initially invisible grains of sand visible in the gears of the license sales process?

30. In which situations do license sellers have no chance of successfully concluding a franchise agreement?

31. What subliminal, unspoken promises do you and / or the franchising as a whole make to a potential franchisee?

32. Contrast the cost of partner acquisition with the income from the entry fee: what remains?

33. Have you written the guide for your license sales process?

34. Do you work with franchise agents in partnering? What are your expectations of the collaboration? How are your experiences?

35. Would your prospective franchisees want individual regulations in the franchise contract? If so, how do you deal with it as a franchisor?

36. When do you start the system integration of a new franchise partner: after signing the franchise agreement or after the expiry of the cancellation period?

37. In which phases of the license sale should the license seller wait for the initiative of the interested franchisee about the conclusion of the contract and when should he take the initiative himself?

38. A franchise agreement has finally been concluded. Do you have an admission ritual?