The 3 Steps to Attracting Your First Franchisees

July 23, 2014

Once all the ink is dry, the forms are filed and everything is approved marking the birth of your franchise, the next step is to attract potential franchisees. You need quality, high-octane, dedicated individuals running your business, so it is important to find the right people and to make sure that they can find you.

There three leading factors in the process of finding and attracting your first franchisees and we will be unpacking them in this post. With a strong business model, the right types of buyers, and your support and direction, soon your franchise will be incredibly strong, selling itself in the marketplace.


1.) Determining Your Franchise Fee

There is no such thing as a standard franchise fee. They vary from $10,000- $100,000’s based on a variety of different factors. Most of it comes down to worth in the market place, dictated largely on a successful tract record and demand.

A brand new franchise holds an interesting place in the market. While you have proven the model, showing a history of success in the business, there isn’t a proven track record with franchisees.  This makes buyers, and brokers, timid and unsure.

In my gaming franchise, we overcame this hurdle by offering a relatively low franchisee fee, for example $15,000. We could do this because we were confident in the business model, and looking toward the greater goal, royalties. With a low franchise fee, we will be able to get dedicated candidates buying into the business, proving the model and developing a successful tract record as a franchise. With 11 franchises in the works, we will be able to up the franchise fee next year, say to $30,000, when we re-register.

Another important key is to understand that the real money in franchising doesn’t come from the franchise fee. It comes from the royalties and reoccurring revenue. While the initial fee is nice, it doesn’t compare to the long-term income opportunities through reoccurring revenue.


2.) Marketing Your Franchise

Working with Business Brokers 

There are four common approaches to attracting franchisees. The first is through a business broker. They charge a commission in exchange for providing qualified candidates. Most brokers won’t find a brand new franchise appealing. Their main selling point is a proven success. The quickest way to overcome this is to offer a high commission. With our gaming franchise, the high commission combined with the low franchisee fee motivated business brokers, made the franchise more appealing to potential franchisees, and jumpstarted our efforts of attracting new franchisees.


Growing From Within

The second approach to attracting franchisees is to look in house. Perhaps you have an aspiring manager looking for more growth and revenue opportunity. A dedicated supplier looking for additional business outlets. That one patron who is so in love with your business that they know your services by heart and can recite every promotion you have ever had.  

Whoever it may be, the key here is to look for people who are close to the business and who would be passionate about striking out on their own.

Franchise Directories

There are always entrepreneurs looking for new or their first franchise opportunity. Many of these individuals utilize brokers, but they also perform their own research. There are countless directory lists online and through brokers. It is critical that your franchise is listed in these public arenas where future franchisees are looking for their perfect fit. This will give you the opportunity to showcase your franchise and go head-to-head with others. The keys here are a proven track record, easy to understand information on your franchise and a competitive franchise fee as noted above. Hopefully with all of those elements working together your franchise will stand out from the rest.


Growth Through Success

As your franchise grows and your storefronts or services become more common your success itself will act as a marketing engine for you because others will want to get involved with a successful franchise and the easiest way to showcase success is growth.

Growth will lead to organic interest in your franchise that will boost the inquiries you receive from potential franchisees in all of your outreach channels. Potential franchisees will come looking for you as well. As this begins to happen it will be important to have easily accessible online resources that discuss the selling points for why someone would want to open a franchise with you. Then once they are interested you can direct them to a broker or directly to your team if you have the appropriate staff to handle inquiries from potential franchisees.


3.) Validating Buyers

However you go about bringing in franchisees, remember to examine them through a lens a little more in depth than if you were going to hire them. Remember, they will be running your business. Just like a management level employee, they need to have leadership skills, the ability to manage the day-to-day, solid people skills, and a strong business sense to ride the roller coaster that is business.

One differing characteristic from hiring an employee, a franchisee also needs to have a strong financial platform. You are very familiar with the upfront costs of opening your business, and maintaining it until it gets off the ground. An undercapitalized franchisee will end up struggling, most likely leading to closing doors. Make sure they are financially able to take on the responsibility of buying your franchise.   

While the road to bringing in top-notch franchisees might not be the easiest, taking steps to ensure that you have quality people running your franchises will pay off in the end. And I don’t just mean royalties. It will also help spur continual success and growth in your business empire.



To see if your business is something that can be franchised, please reach out to us today. 

Feel like you need a mentor? We also have a mentorship program with Bob Steinberger to provide you with one-on-one support from someone with hands on experience. Send us an email or give us a ring – contact info can be found here.

Author: Bob Steinberger