Joel LibavaOtherwise, you’re going to create future headaches for yourself, and your franchisees.
A major headache.
Today’s franchise owners need to know that they’ll have exclusive territories. Protected territories. Once they pay their upfront franchise fee, and sign their franchise contracts, no other franchisees can sell or market in their area. Period. The world of franchising needs this in order to maintain it’s strength.
Think about where some of your prospective franchise owners are coming from…
They’re coming from places like corporate America. Some of them are coming from pretty lousy situations, in which they were downsized.
Those coming from a sales background may have been squeezed out of their jobs because of cutbacks. I’d wager that some had exclusive territories, and were doing just fine until management decided that their sales model had to change, and those “protected” territories became unprotected.
Then it simply became survival of the fittest. The sharks usually came out on top. Some of the losers of these battles are looking at your franchise concept.
Commit to an Exclusive Sales Territory Model
Franchise executives; don’t create an “open territory” franchise model. You’re going to create a bunch of franchisees with serious resentments. I’ve seen it happen with my own two eyes.
I helped some outstanding people get into a certain franchise concept that specializes in property damage restoration. Here’s what they do;
Let’s say that your water heater blows, and it leaves a serious amount of water damage in a pretty large area of your home. Employees of this business come out and dry things out, using their special equipment, and it’s just like new. Cool business. The owners make sales calls all day. They call on insurance agents, fire departments, etc.
One day, I get a call from one of the folks I helped get into business. He tells me that there’s a new franchisee who’s aggressively selling into his territory. My guy was pissed. I was too. I told him that I would call the franchisor, and find out what the deal was. (I’ll do this for anyone that I’ve helped get into business.)
I talked to the sales rep at franchise headquarters. He told me that “franchisee’s receive a ‘protected office location,’ but it’s not an ‘exclusive territory.”
What?
I asked him what a ‘protected office‘ was, and wasn’t satisfied with his answer. That’s because it was a bunch of bull, as far as I was concerned.
No wonder my guy was angry. Heck, I was angry! And there was nothing he could do. This franchisor had sold a territory right next to this guy’s, and the new franchisees were sharks.
I felt really bad, and I called the president of the company. Who never called back. (Maybe his assistant shared her thoughts about my demeanor.)
My guy closed his business.
Do you think he told anyone about his negative experience? (About 50-60 people, I would imagine.)
He’s wasn’t the only angry franchisee in this franchise system, as I found out later. There were several. And it’s making it that much harder for the franchise sales representatives to sell new franchises. Prospective franchise owners that are calling the current franchise owners are probably getting an earful from them about “how this franchisor just doesn’t care where they sell franchises anymore. They just want to sell as many as they can…” Etc. Etc. And, etc.
Now go meditate
If you’re just starting to set up a franchise concept, and you’re even thinking about not offering protected territories, please take a personal day off to go someplace to meditate. I’m serious.
Make it easy for highly qualified good people to buy your franchise. Make them feel safe. Protected. And once they do become franchisees, don’t screw them. It will come back to bite you. Just commit to an exclusive sales territory model.
Are you a franchisor who has an open territory system? Why?
