Franchise Update Magazine Issue IV, 2012 | Page 38
Grow Market Lead
percent, quality leads at 11 percent, and the sales person at 10
percent. Commenting on the results, Olson cautioned about a
possible over-reliance on the many excellent sales automation
tools franchisors are using. “I sometimes find franchisors can
become too dependent on the technology to do the sales person’s work. Technology can’t sell deals, people do. Technology
by all means helps, but don’t depend on it to compensate for a
sales person’s poor performance—because it can’t.”
• Start-up costs. No surprise: they’re down this year. Four
in 10 (41 percent) of franchisors in the survey reduced startup
fees in 2012. Among that 41 percent, seven in 10 (69 percent)
lowered the investment amount, one in four (23 percent) reduced the franchise fee, and one in 12 (8 percent) lowered the
royalty fee. While this might be bad news for franchisors, it’s
great news for franchisees. “The continuation of this trend
makes this the best time ever for new and existing franchisees
to buy because of the ongoing incentives, the commitment to
better unit economics, improved support services, lowering
startup costs through smaller footprints and build-outs, and
better deals available with suppliers,” says Olson.
• Franchise sales performance. Goals (and expectations)
are tricky: franchisors must set them, but with so many variables to consider it’s a combination of the science of metrics,
economic forecasting, and some art. Overall, 50 percent of
respondents met or exceeded their goals in 2012: 34 percent
met their goals and 16 percent exceeded them.
• Franchisors exceeding goals by category. Two sectors—food and service—stood out by exceeding their goals
in 2012, food brands by 24 percent and service brands by 16
percent. Retail brands in the survey also exceeded expectations,
by 7 percent, while retail food brands hit their goals, but did
not exceed them.
• Franchisors exceeding goals. What makes franchisors
excel? We can find good clues among those who exceeded
their goals in 2012. Nine in 10 (88 percent) have higher
budgets allocated toward achieving their goals. Three in
four (73 percent) provide FPRs. One in three (33 percent)
increased their sales staff. All reported that conditions are
good or neutral at the unit level. Seven in 10 (69 perc [