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5 Reasons it’s Harder to Find Qualified Franchisees These Days
And what you can do about it - now

Let’s face it, franchising ain’t what it used to be.

Franchising is rapidly becoming a more crowded, competitive and complicated space and smart franchisors are recognizing the need to keep up.

Here are five reasons why it’s harder to find new franchisees:

  1. Geography is less of a barrier

Some say that more than 75% of world trade growth will come from developing countries over the next 20 years. Small wonder that geographic barriers are less and less critical when it comes to franchise expansion.

In the past, operational, logistics and supply chain constraints made it smarter for franchisees to look locally or regionally for growth. Now, thanks to technological advancements and distribution economies, local chains are pushing national boundaries and “going global” faster than ever before. Competitors are colliding in more markets, more often, and fighting for the same customers.

  1. Technology takes franchising to a new level.

With the advent of cloud-based systems, all aspects of converting a current business to a franchise model are getting less expensive and less complicated. Intellectual property can be easily replicated by multiple suppliers, allowing franchisees to cost-effectively duplicate equipment, design, food items, etc. in different regions and foreign markets.

  1. Imitation is the sincerest form of flattery.

Thanks to the omnipresence of information online, replicating an existing successful franchise model under a different brand name is simple – and getting increasingly hard to protect against. Before, a franchisor could preserve its brand identity because it was harder for others to learn about its operations, locations, marketing tactics, and business strategy. Today, entrepreneurs halfway around the world have everything at their virtual fingertips to research and create a similar enterprise at home.

  1. Each “hot” industry quickly becomes saturated.

Differentiating your franchise brand is more challenging, as categories that used to have one or two players now can have three times as many competing for the same audience. A recent example is the pizza category, previously dominated by four to five key players. The disruptive quick casual pizza niche lets customers design their own pizzas that are ready in less than 10 minutes for under $10. What started as a few test balloons on the west coast has proliferated into a rapidly growing, highly competitive space – giving prospective franchisees many business alternatives.

  1. Too many choices … with too little return.

Will the population keep up with supply? In the restaurant industry, the culinary space continues to evolve with consumers looking for inventive cuisine, locally sourced food items, and memorable dining experiences. With new outlets opening daily, it’s no surprise that fewer seats are consistently filled – with brands that haven’t innovated dropping out because they can’t compete. It’s the classic scenario of oversaturated supply tempered by flat demand.

So what’s a franchisor’s best bet for finding new franchisees?

  • Steer clear of old-school recruitment techniques that put your brand in the same pool as every other “great franchise opportunity” – along with anything that markets to a nondescript “general public.”
  • Maximize positive word of mouth and referrals from your current franchisees, because there’s nothing stronger than a third-party endorsement. If you have happy franchisees, they should be one of your strongest sales assets.
  • Get proactive using direct targeting. Take a look at this B2B lead-generation solution that uses a global database of franchise owners and executives in more than 100 countries to put you directly in touch with only qualified and proven franchise prospects.

 

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