How franchisors can make the most out of their updated Franchise Disclosure Documents
May first has passed. What an exciting time for you as a franchise development executive. You just got the keys to a brand new shiny FDD, and you get to take it out for a spin. For the past 12 months, you have been presenting from an FDD built from 2019 data. Now that we are post-pandemic, that feels like a lifetime ago for someone considering a franchise. We all know what is on the candidate’s mind: how did your franchisees perform during COVID, and are you rebounding?
Let’s hope that you and your team planned ahead. You knew this would be on the candidate’s mind, and you built the FDD with the right data to tell the story of how the pandemic impacted your franchise and how you are doing now to move forward. Your FDD reflects your teams’ leadership, and a candidate needs to know they are partnering with an organization with their best interest in mind.
So now that you are filed what is the first step? The first thing you need to do is go through your FDD to pull out the “good news.” Look for those external messages you can use in your marketing and candidate presentations.
Help franchise candidates find the “good news” in your FDD
You can’t rely on a candidate to find these key themes on their own while they are reading the FDD. With typically more than 300 pages, the FDD is a flat-out tough read. A candidate doesn’t know the document as well as you do or what to look for. It would be very easy to overlook something significant in the FDD and completely miss the benefit it could offer franchisees. Here are some “good news” items to look for.
- Item 2: Were there any key executives added to the leadership team? If yes, what do they bring to the franchise?
- Item 7: Was there a reduction in your item 7? If so, why? Has the brand created efficiencies in startup marketing cost, build-out or more?
- Item 9: Were there any responsibilities that shifted from the franchisee to the franchisor? For example, was there a call center or new software system added? Did the franchisor hire a PR or recruiting firm? Maybe the franchisor has a new product partnership that will reduce your cost of goods.
- Item 12: Have you dialed into your target audience more effectively? Is that reflected in how a territory is defined?
- Item 14: Did the franchisor patent or copyright any part of your business giving franchisees a competitive advantage over their competition?
- Item 15: Has the franchisor made the decision to allow semi-absentee ownership which could open your target franchise candidate?
- Item 19: This is everyone’s favorite. How did your corporate locations and franchisees perform during 2020? If you are a home-services brand that saw an increase in home repairs, how did that increase your sales and bottom line? If you were a fitness concept and you were shut down from March through September, how did you rebound from October through March? Be sure to spend plenty of time on your item 19, as this will be the primary item franchisees use when determining if your franchise has what they are looking for financially.
- Item 20: Did you add new locations in 2020? If yes, how many and why? When candidates see that other people are making the decision to become a franchisee, it helps validate their own decision and builds confidence.
These are just a few examples of what you should look for as you comb through your new FDD in search of external messages to increase your lead flow and new franchisees.
Once you have identified the key themes from your FDD, it’s time to update your marketing. The first thing you need to do is identify the story you are telling. Are you an established franchise model where you can lean on your validation, proven systems, and financial performance over many locations? If yes, then be sure that message is clear in your marketing materials and candidate presentation. The same is true if you are more of an emerging brand. If you are an emerging brand, your key message may be that you have a new cutting-edge way of doing business, you leverage technology better than your competitors, you have wide-open territory and you are quick and nimble, unlike your large and established competitors. Your story needs to be clear and it needs to solve a problem. Position your franchise brand as the next best thing in franchising.
The last thing to do is update your marketing and candidate-facing materials. This includes your website, online ads, portal webpages, broker portals (2-minute drill, one sheet flier, open territory, etc.). Of course, your candidate-facing documents need to be updated as well—things like your introduction presentation, unit economic presentation, and supporting collateral. Be sure your validators have been contacted and understand the message that you are conveying to the candidate and adjust your confirmation day to be sure these themes are discussed throughout.
Your new and shiny FDD is now reflected throughout your discovery process and you are ready to go.