If you're interested in starting a franchise, you have a lot of company. FranData reported that a record 500-plus new companies began offering franchises in 2006 alone--bringing the total, at least by some counts, to over 4,500 active franchisors in the U.S.
With that many franchisors for franchisees to choose from, how do you stand out from the crowd? How do you create a Unique Selling Proposition (USP) that will allow you to compete against your more established brethren?
Finding Your Small Pond
When facing the task of creating this USP, you should start by understanding that every buyer's universe is different. No franchise buyer would ever attempt to analyze all 4,500 franchisors in the marketplace.
Some will start by choosing a specific industry segment in which they are interested. Perhaps they have always wanted to own a restaurant. Maybe they want to buy a franchise that capitalizes on their particular set of skills or experience. They may narrow the list based on how they examine the marketplace--whether through the use of brokers, trade shows or franchise directories. Or perhaps they'll use the more encompassing--and more readily searchable--internet to help them to narrow their search.
Some will be interested only in established franchisors, while others will be looking to get in on the "ground floor" of a franchise poised for explosive growth. Many will eliminate franchisors quickly based on size of investment and their available capital. In short, every buyer's process--and his or her franchise universe--will be both different and smaller than the universe of all available franchise concepts.
For you, as a new franchisor, this is good news. Although most franchise buyers are not fishing in your pond, the buyers that are will be fishing in a much smaller body of water. That means an understanding of your specific pond, and what fish are in it, should be the first order of business.
Armed with this knowledge, you must then narrow your buyer profile as much as possible.
A part of this process can be intuitive--a chiropractic practice will certainly want to focus on chiropractors--but even that knowledge will not get to buyer motivation. More often, the only way to really obtain this understanding is research--talking to either your own franchisees or the franchisees of your closest competitors. (And if direct competitors are not readily identifiable, even a good understanding of "comparable" franchises will be better than no research at all.) This data will provide insight as to buyer motivation, media, "hot buttons" and the specific message that will sell to your audience.
The Many Sales of Franchising
The savvy franchisor also instinctively understands that there is not simply one sale to make, but rather four separate sales that each franchise salesperson must undertake. Prospects are likely asking themselves four basic questions:
- Should I go into business for myself?
- Should I go into the widget business?
- Should I go it alone or buy a franchise?
- Should I buy your widget franchise?
The answer to the first question, of course, is a mainstay of any franchise sales presentation. But this answer will be similar for most franchisors--allowing little room for a truly unique selling proposition.
Again, the answer to the second question will certainly need to be woven into the fabric of your sales and marketing strategies. To answer this question, you need to understand and develop the selling proposition for the widget industry, but chances are that selling proposition is not "unique"--it will be a shared message promulgated by all your closest direct competitors. Only when you're in the enviable position of being the only player in a market segment can this question yield a true USP.
One cautionary note here: Being first to market is rarely enough. For the vast majority of franchisors, there are certain to be imitators. So if a market-based USP is to be the foundation of your value proposition, you must quickly establish yourself as the dominant player in the marketplace--as first in does not necessarily mean you'll capture the dominant brand position in the long-term.
The third question offers little room for uniqueness. Do you offer any support services not offered by others in franchising? Do you provide any guarantees? For most franchise concepts, while the question is integral to franchise sales, the answer will be similar across thousands of franchises.
So the core of the USP lies not in differentiating a concept from the vast herd of franchisors, but in differentiating it from your closest direct competitors. This is where you should focus your creative efforts.
Putting the "U" in USP
U means unique.
While certainly a behemoth now, the McDonald's juggernaut started with a single location. Before they captured the American consumer's "mind share" for fast-food burgers, they had dozens of competitors.
Some of us still remember companies like Burger Chef, Dee's Drive In, Sandy's, Red Barn and Druther's (which, to give you a feel for its originality, began its life as Burger Queen). Geri's, which was in part owned by a former vice president of McDonald's, had numerous similarities to McDonald's, including the use of a cartoon icon that was very similar to McDonald's. Another concept, Wetson's was basically designed to duplicate the McDonald's concept, but instead of "Look for the Golden Arches," Wetson's used the slogan "Look for the Orange Circles."
So why was Burger King successful while so many others failed? While there were numerous contributing factors, the main factor can be boiled down to a single sentence: "Have it your way." Burger King positioned itself to be different from McDonald's, not just a "me-too" operation. More important, they positioned themselves in a way in which McDonald's could not respond competitively--because in order to do so, McDonald's would have had to revisit their entire kitchen operations.
Years later, no one thought any burger operation could crack the market, yet Wendy's did. Their secret: "We Don't Cut Corners by Making Square Burgers." While McDonald's and Burger King were slugging it out, trying to capture the hearts and stomachs of the nation's children with Happy Meals and cartoon characters, Wendy's was hiring an octogenarian spokesperson and touting their freshly ground "old-fashioned hamburgers" and asking "Where's the beef?"--targeting a different customer from the Big Two.
More than One Way to Skin a Cat
As the above examples illustrate, there are a number of ways in which a company can differentiate itself. Of course, it starts at the consumer level. For those fortunate enough to be the first into a new industry or industry niche, the most dominant position to seek is that of market leader within the segment. To achieve that status, a company must generally grow rapidly enough to achieve brand recognition.
For the rest of us, we need to become the best at something. To paraphrase from retail consulting firm McMillan|Doolittle's groundbreaking study on successful strategy, one must be the "best" at something--either the biggest (most assortment), cheapest, fastest, easiest (best service) or hottest (fashion). McMillan|Doolittle goes on to point out that a company can perhaps try to be two of these things at once, but companies that try to be "all things to all people" find quickly they will only succeed at being mediocre at everything--a guarantee of long-term failure.
Aside from the concept itself (always the best place to start), you can also differentiate yourself based on size of the initial investment, target market (either at the franchisee or consumer level), target geography, quality of services provided to franchisees and even franchise structure. Another cautionary note: For those with an undifferentiated concept, being the "cheapest" is often a road pitted with disaster. Those taking this route should focus on minimizing the franchisee's investment, and generally not on minimizing the royalty structure.
Regardless of where this differentiation occurs, it is imperative that you "stake out" the areas where you want to excel, develop a USP around those areas and acknowledge the areas in which you'll allow your competitors to play unabated. If you follow these steps, you'll have developed the first key to successful franchise marketing. If you don't, remember the Orange Circles.