In Case You Haven’t Heard, Franchising is Booming!
For the sixth consecutive year, the International Franchise Association (IFA) has projected small franchise businesses will grow at rates that will exceed non-franchised small businesses.
The IFA is also forecasting growth of more than 13,000 new franchise units, and growth is expected across all 10 franchising sectors.
With so much growth projected for the franchising industry, one would expect a seller’s market mentality among franchisors. However, with more than 3,000 brands in the franchise space, many companies are offering terrific incentives to help candidates launch their new business.
“There are a lot of competing franchisors in the space today, so when you find a good candidate to open a franchise unit, you want to give them every reason to choose your brand,” said NTY Franchise Company COO Chad Olson.
Olson’s company is a leader in the resale sector, featuring five franchise brands, including bellwether franchise Clothes Mentor, one of the largest women’s upscale resale brands in America. In March, NTY Franchise Company released details of its new Jumpstart program, offering $40,000 in funding for marketing initiatives for new franchisees of its Children’s Orchard, NTY Clothing Exchange and New Uses brands.
The $40,000 breaks down to $20,000 in grand opening marketing dollars and then an additional $20,000 that will be paid in $5,000 increments every six months over two years. The program will apply to the first 20 franchises opened for each brand in 2016.
“This is one of the most aggressive efforts ever put forth by a resale franchisor to support new franchisees,” Olson said. “It should send a clear message to franchise candidates regarding our commitment to their success.”
Other franchise brands are actively involved with IFA programs such as VetFran, which offers substantial discounts to military veterans interested in franchising. Moran Family of Brands, one of the nation’s leading franchisors of general automotive repair, transmission repair and automotive accessories, offers $5,000 off the franchise fee to military veterans through the VetFran program.
Lawn care specialists Lawn Doctor offers 50 percent off its initial license fee to not only veterans but minorities and experienced professionals in the landscaping industry, as well. This saves the candidate $15,000 off the normal $30,000 fee, plus encourages desired segments of the population to give Lawn Doctor a serious look.
“We are always happy to participate in IFA initiatives to bring more vets and minorities into franchising,” said Lawn Doctor Vice President of Franchise Development Jason Barclay. “Extending the discount on our initial license fee to people who already work in the green sector helps us bring more experienced people into our franchise family.”
Lawn Doctor also offers in-house financing of up to 50 percent of the initial franchise investment, sweetening that benefit by requiring no loan payments until March, 2017, for a limited time.
“This really helps new franchisees get their business up and running without worrying about their note and equipment payments due to us until next Spring.”
For candidates interested in multi-unit franchising, many brands offer substantial discounts on franchising fees. Wine & Design, the popular lifestyle-based business model hosting popular paint and sip parties, offers successful franchisees half off the initial franchise fees to open a second location.
One of Rhino 7’s brands named Scout & Molly’s, a women’s clothing boutique, has made multi-unit franchise ownership incentives a top priority. Scout & Molly’s offers candidates tens of thousands of dollars in savings to those wanting to develop multiple stores. A commitment to open five units saves the candidate more than $100,000 in franchising fees than if they purchased the one at a time. At 10 units, the savings is worth $240,000.
Rhino 7 founder and CEO Doug Schadle says they try to appeal to candidates looking to grow an organization, not just run a franchise unit.
“The critical piece of this is deciding they want to be a developer up front, not a single-store franchisee,” Schadle said. “As a franchisor, offering a steep discount on a multi-unit commitment gives us the ability to forecast an area’s development with greater accuracy. For the franchisee, it gives them an advantage in terms of developing real estate in the years ahead.”
Franchise executives agree that even appealing incentive plans like these are secondary considerations when it comes to selecting a franchise. Lifestyle design, personal and professional goals, skill-set match and a fit with a company’s corporate culture still rank as the top indicators of future success. However, once all parties agree that a franchise agreement would be mutually beneficial, the right package of incentives could be a candidate’s deciding factor.
“Once we’ve done our due diligence on a candidate and are reasonably certain they’d be a good fit, we want incentives like our Jumpstart Program to convince candidates to join our team,” Olson said.
Franchise business consultant Jim Judy has spent the past 20 years in the franchise industry, gaining insightful knowledge and a keen eye for opportunity. His passion is developing relationships with current and hopeful entrepreneurs to assist them on their journey to franchise business ownership. Jim leverages his experience, success and close relationships in the franchise industry to provide valuable consultation free of charge to entrepreneurs looking to explore the benefits of a franchise.
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