Discovery Days have been a marketing tool for franchisors for many years, and for some franchisors, they are the most important element in closing the sale.
We’ve asked Michael Seid, managing director of Michael H. Seid & Associates, one of the nation’s leading franchise advisory firms, to give us some guidance on how franchisors should take advantage of the discovery day process.
Please note: This scenario is based on questions we have received from readers. Any resemblance to a living person or client of MSA is purely coincidental and in no way intentional. But, if you do see your system being described, be sure to read carefully.
Our franchisor schedules periodic discovery days at their headquarters in New York City. The franchisor uses a lead generation service (broker network) to assist them. Historically all franchisees are asked to attend a discovery day at the franchisor’s headquarters, but because the franchise brokers are able to create the impression of a third party endorsement for the prospect, the franchise sales staff believes that it is possible to close some of the franchise sales without any face-to-face meeting, including the Discovery Day. To increase the possibility of closing as many sales as they can, the franchisor is thinking about following the advice of its sales team.
Many years ago Bill Rosenberg, the founder of Dunkin Donuts, taught me a lesson about selecting franchisees. It was simple, inexpensive, and direct. Bill would have coffee at the prospect’s home. No matter how much they tried to tidy up their house or how polite they were, Bill could tell whether they were the type of people who would respect the Dunkin brand and be good franchisees. Our advice to the franchisor is easy: No. It is essential that every franchisor meet with their prospective franchisees face-to-face before they are granted a franchise.
Discovery Days are a wonderful tool that allows franchisors and prospective franchisees the chance to meet and get to know each other. It is a great opportunity to get the prospect excited about the opportunity and, when used properly, can significantly shorten the closure process.
Some franchisors schedule the Discovery Day at the beginning of the recruitment process, others near the end. Both techniques can work, but we generally recommend to our clients that Discovery Days be held as early as possible, as it allows the franchisor to meet the prospect and evaluate them before they have invested considerable time, manpower and expense in a candidate that may not meet their standards. Meeting early also creates a bond between the prospect and the franchisor as it allows them to get an understanding of the franchisor’s system up front and personal, obtain an understanding of the strengths of the brand, the franchisor's management, and allows them to ask all of the questions they have.
When done well, the franchisor is able to convey to the prospect that they are serious about selecting only the best candidates and set the tone that allows them to leave excited about the chance of being invited to become a franchisee. Franchises are “sold,” after all, when the prospect can emotionally see themselves as the owner of the business. And as Bill Rosenberg observed so long ago, since you learn as much from a person’s behavior as you do from what they say, having your management team meet a prospect in person gives you the chance to observe the way they handle themselves in a business and social setting.
You should allow a full day for the Discovery Day, and it should be structured and scripted to ensure that the prospect receives the information they need to make their franchise decision. The prospect should meet with the franchisor’s management team, including the field staff responsible for supporting them in their business if they are ultimately approved. This is the beginning of establishing a long-term relationship, and it is important that each side have clear expectations for the future.
Many franchisors start the day by launching into a presentation about the franchise system. To set the tone of the relationship, and to let the franchisee know that their becoming a franchisee is dependent on their being invited into the family, MSA recommends that the prospect be asked to make a five or ten minute presentation on why they believe they have the skills and the background to become a successful franchisee and why the business will flourish in their market. By doing so, the prospect will be selling themselves to you and in the process will be convincing themselves why your franchise is right for them. It will let you know if the prospect has what it takes and what is important to them so you can customize your presentation to meet their needs. Each of your management, support team, resource, and influence centers should meet one-on-one with the prospects and, whenever possible, bring the prospects to one or more of your franchised or company-owned locations during the day.
The Discovery Day will often be your chance to meet with your prospect, so be certain you give the prospect a copy of your Franchise Disclosure Document and have them sign and date a receipt. The first meeting is the best time to present the document. Even though you can now electronically disclose, we believe that in most situations nothing replaces a walk-through of the document with the prospect where you can carefully put the document in its best light. In the hands of a knowledgeable franchise sales tactician, the FDD is still one of the best sales tools you will ever have. Don’t waste this opportunity just to be expedient.
Following the Discovery Day, decisions should be made quickly while impressions are fresh in everyone’s mind. It is often too easy to confuse people or issues after a couple of days have passed. As soon as possible the Approval Committee should meet. Listen to the impressions everyone has of the candidate. If any member of your management or support team has some concerns, while it may not warrant a veto of the candidate, it certainly is worth a bit of probing before reaching a decision. Once a decision has been made, and certainly within no more than 48 hours, the prospect should be contacted and informed of your decision.
When delivering bad news it is important to take control of the conversation and deliver the news quickly to prevent undue embarrassment for the prospect. If they are qualified, move the prospect to the next step by giving them some “homework” to keep them reaching for your opportunity. Don’t fall into the trap of trying to close the sale by “selling” the franchisee on the opportunity. If your team did its job well during Discovery Day, the prospect understands the value of your opportunity, and you should keep them in the mode of selling themselves to you and moving to working on getting to the close so that they can get their business up and running.
One trick of the trade is to have one of your development team members pick up the prospect at the airport, if that is possible, and bring them back to the airport at the end of the day. Back to Bill’s advice, the time you spend in the car can be the most telling and give you a great vantage point on determining what a prospect is really thinking and whether they will fit into your culture. In the quiet, non-threatening venue of the drive to and from the airport, prospects are more at ease, and “off the record” remarks often reveal far more than they do in a formal setting. But remember, just because it's not a formal setting, you still need to be certain your staff stays within the bounds of your franchise sales compliance program. To ensure they don’t make any mistakes, make certain that everyone involved in meeting with the prospect, and that includes even the receptionist, has been trained in the franchise selling procedures.