Franchise Industry Shakeout Coming? {Part 2}
My first post about the topic of there being too many franchise consultant/brokers in the industry now, has prompted a pretty good discussion on a blog I contribute to, BlueMauMau.org, a very popular blog that is targeted to current and future franchise owners. More………
There were over 60 back and forth comments about this topic as of Sunday evening {8-5.} I am quite passionate about this subject, so are some others in the industry….check out this discussion.
{Please come back here when you are done, to continue reading.}
The biggest problem I have with the amount of new “consultants” coming into our industry, is how they are being sold the bill of goods. Jim Coen, a 25 year franchise industry veteran up in New England, and fellow blogger, gives one example of a franchise that sells franchises, to those that want to sell franchises. {Confusing, huh?} See Below:
- No Experience Necessary
- Huge Demand and growing demand for our service
- No Cold Calling Required
- Work with the best franchises
- Tremendous Income Potential, earning up to $25,000 for a single transaction
- Complete Training
- Start from your Home
- Work Part time
- Only $19,900 to get started
$19,900 is quite the bargain, with no cold calling! Some franchises that sell franchises to those that want to sell franchises, have $30k-$50k Franchise Fees up front. To those folks that may be reading this, that are thinking about becoming a “consultant”, what do you think “no cold calling” means?
What this means, in a nutshell, is that these franchises that sell franchises to folks that want to sell franchises will be sending you somewhat qualified “leads.” Well kind of “leads.” More like what I have been calling them for the last 5 years, inquires. A “lead’ is someone who is fairly interested in learning more about what you offer. An inquiry is a tad more of a casual look-see.
{These are my definitions, others will disagree] Don’t care. It is what is is. {IIWIIS}
A typical call to a “lead” that you may receive most of the time goes like this:
Us- “Hello, This is Joel Libava {or Jim Coen}, and we are responding to an inquiry you made online concerning franchise opportunities.”
Lead- “Yes, are you from Blimpie’s Subs“?
Us- “Well, actually no, we are franchise consultants/brokers, and we work with a large number of franchise company’s..blah blah blah…..”
Lead- “Well I specifically wanted information on Blimpie’s, do you work with them or not?!!”
Click.Click.Clickarooni.
Well, that was enjoyable. On a positive note, it only takes about 75-100 internet “leads” to find 2-3 folks that really might work with you, and hopefully one that will actually buy a franchise that you represent.
{End of Part 2} Part 3 Coming Soon Enough
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The biggest problem you have with the amount of new “consultants” coming into the industry, is how they are being sold the bill of goods? It seems this is a problem with ANY industry where the nature of the job is being a 3rd party sales group. You have the top tier sales consultants, then you have the new and not-so-good sales consultants who undercut you on price and blur the market, making the choice of a consultant difficult to research.
I think the industry should move toward a more organized system like the real estate brokers, where there is a centralized listing service and buyer/seller brokers split fees. That is really the only solution.
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Great posts, Joel. I really enjoy your writing. By the way, I run a big Article Directory and if you have some articles for distribution, you are very welcome to post them.
Regards,
Alex
http://www.wowarticlesonline.com/Category/Franchise/248
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Thanx a lot, Alex!
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I really do not mean to be a jerk here, and trust me when I am being an intentional jerk you will know it, but considering my general demeanor toward franchising I have to wonder “what are you complaining about”?
For instance, you wrote:
Us- “Hello, This is Joel Libava {or Jim Coen}, and we are responding to an inquiry you made online concerning franchise opportunities.”
Lead- “Yes, are you from Blimpie’s Subs“?
My comment:
So you do not know how to take the leads comment on Blimpie and turn it into a lead in to your service?
Once again, I am not trying to be a jerk but, what more do you need? Qualify the suspect, see if they are a prospect, if they don’t fit the bill, give them a little free advice and then work for a referral.If that doesn’t work start working with them to get their finances in order or whatever else you need to shape them into a real prospect. It may take yo a year or three to shape them but you will get referrals and possibly an eventual sale from them.
I read your lead in, this sounds like and is a sales position. I’ll tell you something the “lead” they gave you is better than the leads most IT sales people get. So, when you “buy” a high commission sales opportunity you should expect to need to sell.
You wrote:
Well, that was enjoyable. On a positive note, it only takes about 75-100 internet “leads” to find 2-3 folks that really might work with you, and hopefully one that will actually buy a franchise that you represent.
My reply:
And what is your point? You dial 75-100 numbers and get over a 2-3% hit rate, that is freaking awesome!!! Tell yourself you are dialing for dollars 14 hours a day and get dialing.
For once I see myself actually defending a franchise. 20k up front for the chance to earn multiples of 25k commissions. Heck if I was not simply booked for the next couple (because I know how to sell my services) of years I might go for it myself.
Basically, it is what it is. You are simply buying yourself lead generations for 20K. All in all, that is not bad.
Regards,
FuwaFuwaUsagi
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You have made some interesting observations..Thanx!
The larger question about these types of “leads” is: Am I willing to become a telephone consultant, and dial 100 times to MAYBE help someone get into a franchise, and make a living from it. For me, it comes down to lifestyle. And how would you compare a “lead” that an IT guy or gal gets, to a”lead” where one may be investing their own money into a new business, and have never been a business owner?
How is a 2-3% “hit rate” awesome? Compared to what?
This is a case of “If you ain’t in our business, you don’t know what you don’t know.”
That is not meant to be a slam on you. This comes down to choices. I do not “choose” to chase hundreds of supposed “leads” to find a pebble that may turn into a nugget. The other parts of my life are more important than to waste time on that type of business model. Maybe that is why brokers have been leaving the telemarketing franchise broker company called Franchoice, in droves. They work all day on the phone, and the numbers do not always add up.
Franpro
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Joel writes:
You have made some interesting observations..Thanx!
My reply:
I try and bring value to the forum once a year whether I need to or not.
Joel writes:
The larger question about these types of “leads” is: Am I willing to become a telephone consultant, and dial 100 times to MAYBE help someone get into a franchise, and make a living from it.
My reply:
I looked at this “opportunity”. It was clear to me this was a dialing for dollars type of job. And here is where I am being sort of a jerk. I cannot help but feel that anyone who has the testicular fortitude to promote themselves as a franchise broker darn well ought to know darn well how to figure out what they are buying before promoting themselves as someone who is goign to go around assisting others in franchise selection.
Stated differently, my sympathy level under these circumstances is apparently exceptionally low.
Joel writes:
For me, it comes down to lifestyle. And how would you compare a “lead” that an IT guy or gal gets, to a”lead” where one may be investing their own money into a new business, and have never been a business owner?
My reply:
I suspect you do not realize that many sales positions are 100% commission and with no benefits, so you are in effect a contractor.
Joel writes:
How is a 2-3% “hit rate” awesome? Compared to what?
My reply:
Compared to any dialing for dollars job, which this clearly is.
Joel writes:
This is a case of “If you ain’t in our business, you don’t know what you don’t know.”
My reply:
Or perhaps a case of if you don’t understand the business you are in…??? Maybe, just maybe?
Joel writes:
That is not meant to be a slam on you.
My rpely:
Doesn’t hurt me at all. I am a big boy.
Joel writes:
This comes down to choices. I do not “choose” to chase hundreds of supposed “leads” to find a pebble that may turn into a nugget.
My reply:
Then with all sincerity I would suggest that buying a sales job with only suspects for leads is inappropriate.
What it appears you want, at a minimum, are pre-qualified prospects.
Frankly, if they zor had that they would use captive, reduced commission salesmen.
Joel writes:
The other parts of my life are more important than to waste time on that type of business model. Maybe that is why brokers have been leaving the telemarketing franchise broker company called Franchoice, in droves. They work all day on the phone, and the numbers do not always add up.
My reply:
Once again, where was their due diligence? They could not figure this out? And they are going to steer prospects to a manful of solutions?
Perhaps I missed something here. But it seems like these brokers are simply being bit by the same lack of due diligence their prospective franchisees would probably be bitten by by utilizing their services. This smacks of poetic justice to me. Then again maybe I just don’t see it.
Regards,
FuwaFuwaUsagi
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