Conversion Franchising Success Strategy
Franchising and Conversion
Conversion franchising has been around for awhile. Most of the early conversions found hotels converting to brand affiliations (Ramada, Holiday Inns, etc) and real estate independents converting to the likes of ReMax and ERA. In these early cases, converting was associated with potential resource advantages coupled with the benefits of picking up a well-known brand with an organization behind it that has a good grasp on technology and marketing. The competitive advantages seemed to make sense and the goal of selling franchises was realized.
Today, I am hard pressed to believe that someone who has a profitable, well-run business would even entertain the idea of converting into a franchise system. The costs in this instance would make it difficult to get a reasonable return on the investment of re-branding. And how about the community good-will that could be jeopardized by customers who feel that the mom and pop lost it’s soul? On the other hand, would there be an advantage of a franchisor converting a mom and pop that wasn’t successful? An intriguing dilemma that has as many positives and challenges.
Positives:
- System wide economies of scale
- Additional franchise royalty stream
- Easier than opening a new franchise units
- Quicker candidate approval
- Market penetration
- Less monitoring
- Reduced local competition
Challenges:
- Modification of franchise agreement
- Typically a reduction in fees
- Significant management time in the initial setup phase
- Integrating the independent into system
- Re-training in franchise system and best practices
Developing A Conversion Strategy
A number of the franchisors we represent have a “Conversion Strategy”. Our thought is that the greatest challenge in using conversions to grow into a new market is ensuring that the initial advantages of the brand, technology, social media strategy, etc. begs franchisors to make “some adjustments” to their sales strategy to attract well run businesses. The franchise conversion strategy should be part of the franchise sales strategy. Cause and Effect. ”Be”cause we are flexible in how we approach and adjust to the needs of the well-run business, we have the best opportunity to convert and sell them on the advantages of joining our franchise team.
Our feeling is that new franchisors should have a conversion strategy built into the sales strategy from early on. You never know when an opportunity may present itself. ”Be”cause you are prepared to address the possibility.
Learn More About Franchise Conversation Strategy and Sales
The Franchise Sales Solution is available to assist you with your franhise sales program. Contact us if you would like to discuss your franchise conversion strategy.