When trying to close the deal and sign up a new franchisee, one inevitable point to discuss is royalties. While the knee jerk reaction of the franchisee is to bemoan the franchise royalty payment, it’s actually a good thing.
Here are 4 reasons why.
We hope these help you explain why your royalty payments should be welcomed.
The systems built by the franchise are the recipe for a successful franchise owner. When you buy into a franchise you get the blueprints. All you have to do is follow the plan. It takes years and a lot of R&D money to figure out how to run a business successfully – from the big decisions down to small everyday operations decisions. A big part of your royalty payment is for the systems you’ve built, which can evolve and change over time, making an ongoing royalty payment necessary.
2. Equipment, Parts, Services & Discounts
Many different businesses require parts or equipment or outside services in order to function or sell their product to the public. By buying into a franchise, the franchisee doesn’t have to do the work to figure out which products or services or equipment work best and are the most cost-effective. All of that work has been done for them by the franchise. Plus, franchises often have better buying power because of their ability to buy in much larger quantities, which trickles down to the franchisee.
3. Lead Generation
One of the hardest things about owning a business is getting customers and people to buy from you. Buying into a well-known franchise can generate leads for your business just off the name. Franchises also often have access to better marketing programs than an individual small business owner.
4. Ongoing Support
It takes time to learn to operate and successfully run any business. Franchisees need a lot of help and go through a large learning curve in the beginning, then continue to learn to run the business over the course of months or even years. Being a part of a franchise that offers ongoing support is a great asset for the franchisee to have at their fingertips.
If you aren’t already including these points as part of your franchise presentation, or feel like you could use some help to develop a better franchise presentation, we would be happy to help. If you have any questions about our franchise consulting services, give us a call.