-Based on 1,000s of franchise sales calls…

While there is an increasing number of sophisticated multi-unit owners, confident in running a full financial analysis of the business model, rarely did the many potential franchisees I spoke with venture into a full ROI analysis of the model.

The reality is, often franchise owners will own one location, and be enthusiastic about operating an “independently owned and operated” business. As such, financial inquires typically address the unit level functionality. And while “Item 19”, the financial performance representation within the FDD, addresses certain factors, it is expected that franchise prospects will seek direct reassurance regarding the model’s operations.

Having Franchise “Ambassadors’ is a key part of the sales process, particularly when it comes to validating the financials.

Regardless of the reasons someone seeks to operate one particular franchise brand over another, there is one unifying objective – to be profitable. Franchisees want to feel confident that the franchise they choose will afford them the opportunity to be financially successful.

And while the franchisor should not speak about the financial matters outside of what is expressed in the FDD, it is important that the sales team knows about the financial interests of potential franchisee, and how to address financial questions. Being able to introduce future franchises to the network to discus financial information is a key part to shedding light on business operations, and a key part of the sales process.

The sales team should have confidence in utilizing the franchise network; confidence that the “ambassadors” will be able to educate potential franchisees on the “numbers” because they understand the margins that will enhance the franchisee’s ability to achieve their desired financial goals for the business.

Conclusion

Having a established protocol for addressing these 7 important financial metrics, and other financial questions, will make you sales process more effective; because the financial position affects every aspect of the franchisee’s business, from hiring staff, to taking on new jobs, to expanding by reinvesting profits back into the franchise business.