This Is When Your Franchise Needs to Outsource Vendors, and How to Find Them
There comes a time when all franchisors need to outsource certain functions. We're here to help.
Emerging franchisors learn early that no matter what their business experience is, franchising is something entirely fresh which puts new demands on their time and internal resources. The franchisor's current staff may simply not have the bandwidth to meet all the needs of a growing franchise network. After all, many franchisors continue to operate their non-franchised units and are building and launching their franchise program at the same time.
For emerging brands, outsourcing job functions in the early stages of growth often makes good business sense. The franchisor's cash flow may not yet justify hiring new staff even for positions that may eventually evolve into full-time positions (like marketing or real estate development). Hopefully, in time, these positions can be paid for through franchise program fees and royalties.
What types of vendors do franchisors often need?
Lead generation and sales
Some vendor options that may be part of an early network of advisors will focus on sales and lead-generation activities. A new franchisor should interview marketing firms that specialize in franchise marketing for lead generation. There are networks of franchise brokers who can also assist with franchise lead-generation, although it admittedly can be more difficult for a young franchise system to get accepted into these networks. Franchise sales outsourcing organizations can also provide franchisors with a professional alternative to the traditional in-house franchise-sales team.
The number of technology providers in the franchise space continues to grow. Franchise marketing, operations, compliance and communication-management software in one form or another is ultimately needed by almost every franchise organization. Franchisors will want to look for a system that can grow as the system grows, allowing modules to be added as needed. Franchisors should also ensure they have a good understanding of any platforms' ongoing support options.
Territory definition and mapping
With many franchise agreements lasting up to 20 years (including renewals), franchisors need to be sure that territories are the right size and in the right markets. Some early stage franchisors use free, or nearly free, online tools. However, when possible, outsourcing territory mapping to vendors is a desirable choice. Vendors who offer these tools and guidance are able to conduct deep analytics about customer characteristics based on address, while also helping to identify necessary specifications of a franchisee territory, appropriate future territories or markets and ranks based upon opportunity or other variables. Some of these companies can also provide more detailed research, including customer psychographic information.
Depending on how aggressively the franchisor is looking to expand, recruiters specializing in franchising may be a resource to consider for filling positions such as Director of Franchising, CFO or COO. A good recruiter will specialize in franchising with a track record of placements throughout the industry. They can also be experts at proposed compensation packages and other personnel matters. In earlier stages, they may also be able to provide customized solutions such as part-time or contract-to-hire options — if the full-time employment of certain in-house executive roles is not yet financially feasible.
These are just of the few vendor categories available to growing franchisors. There are vendors available in so many more categories, including insurance, mystery shopping, bookkeeping and more.
Once franchisors have identified areas of need to outsource, how do they find suitable vendors? They should start by asking any franchise experts, consultants, attorneys and other professionals they have been working with to refer vendors who have significant experience in franchising. Franchise consultants can be a valuable resource in identifying the experts in key areas who can help build the franchise program intelligently and efficiently. New franchisors should also network with other experienced franchisors or other companies aligned with the franchise industry. Regularly scheduled franchise conventions and trade shows can be a good way to meet many of the most experienced vendors in franchising, all in one place.
A good approach is to interview the principals behind any vendor company and see if their backgrounds or philosophies indicate a good fit with the franchisor. It is also good practice to ask to speak with other franchisors whom they have worked with. The key is to not waste the franchisor's already limited time or resources by working with a vendor that is unfamiliar with franchising.
Some of the most well-intentioned vendors who have had success in another market want to break into franchising. That's admirable, and it often works well, but emerging franchisors don't usually have the luxury of being a test case. Franchisors should remember to vet several vendors within each category by attending online demos, calling their reference lists and checking with other contacts in the industry to gather their opinions. It also helps to bring in the organization's own team members who will be working with these vendors to ensure that there is a good fit.
In the end, smart franchise growth is achieved by leveraging outside expertise when necessary and knowing how to find and vet the best options available.