Bought, Sold or Awarded?

It’s a great question that demonstrates the power and importance of terminology and how the words we use to describe a process can influence the philosophy we use to direct that same process.  It is also a question that can help all of us understand the danger inherent in using a simple term to describe a complex process when that term can be easily misinterpreted.  By the way, the correct answer to this question is “yes”.

The introduction of the term “awarding” in relation to franchises first came into widespread use in the 1980’s.  It was a brilliant technique designed to cause franchisors to focus on selecting new franchisees who had the characteristics needed to be successful in their systems.  Prior to this, the standard criteria for acceptance of a new franchisee was that they could fog a mirror and write a check. 

The philosophy of awarding franchises was that this was no longer a “sales” process but rather an “information exchange” process where both parties would gather information, evaluate each other and then make a decision about whether to go into business together.  It became a process of mutual elimination where either party would simply notify the other if they found that the match wasn’t right for them.

The franchisor could create an “review committee” to pass judgement on all the prospective franchisees who wanted to join the system and pick those few people who appeared to have the best chance of success, from the horde of aspiring applicants that were banging on the door to get in.  A wonderful idea so far. 

The approach started developing problems when some franchisors decided that awarding franchises meant that there was no longer a need to have a strong and effective “sales” system in place.  “We’re not selling anymore, we’re awarding” was a common refrain. 

This decision led to some immediate benefits for these franchisors.  They could save a lot of money that they used to spend attracting leads, producing and distributing the finest quality promotional tools available and hiring the best sales people who could close a lot of deals each year.  Of course, this change also led to many a short and lonely meeting of the review committee as the hordes of applicants disappeared.

Everyone who has been involved in franchising for any length of time has noticed that there are franchise systems that grow very rapidly in spite of the fact that they don’t have a very good opportunity at the unit level, they don’t provide good support to their franchisees, and in many cases they have a significant amount of litigation and unit failure in their track record.  How is it that many qualified prospects will go right past a number of A+ franchises in order to buy a C- opportunity?

The answer is simple.  Before franchises can be awarded, they have to be sold.  It’s a multi-contact, reasonably non-threatening process conducted over the span of a few weeks, but it is a sales process.  A franchise that’s a C- opportunity with an A+ sales system is going to outgrow (by leaps and bounds) any A+ franchise opportunity that has a C- sales system.

The two most important determinants of success for a franchise sales system are:

1. The strength of the prospect’s feeling that you are the “right” people for them to be in business with.  People want to get franchises from people they like, they trust, they feel comfortable and identify with. 
2. The degree of urgency to make a decision that you can create in the mind of the prospect.  It doesn’t matter what the decision is as much as that it is made on a timely basis.

In order to be most effective, the sales system must address the intellectual as well as the emotional needs of the prospect.  It must also lead the prospect through a logical and organized series of steps that naturally leads to a point where a decision is made. 

The bottom line of any development effort is the number of qualified prospects who decide they want to become franchisees with the company.  This is what provides the grist for the review committee mill.  A strong sales system that brings a large number of candidates to the review committee is essential to create strong growth in a franchise system.