If you’re looking to enter into the world of franchising right now, you’re stepping into a crowded marketplace. According to Statista Research Establishment there were an estimated 790,500 franchise businesses in the United States in 2022, and in 2021 the economic output of franchises was approximately 790 billion U.S. dollars.
With the pressures of the ongoing cost of living crisis central in everyone’s minds right now, investors and would-be franchisees are naturally extremely cautious about signing on the dotted line of a franchise agreement and making what can be a considerable financial investment. That’s why now, nailing your franchise brand and package’s USP and using it to its very fullest advantage is more important than ever before.
A USP (Unique Selling Point) is the unique quality or characteristic of your brand which makes customers choose you over the competition. For a franchisor, there are two USP’s that need to be on point. Firstly, the core business’s USP – what drives your target audience to buy your product or service, and what will keep them coming back for more too. But just as crucially, what is it about your franchise opportunity that will attract a potential franchisee and encourage them to commit to you financially rather than any other franchise brand offering an outwardly similar opportunity in the same industry. What is your franchise USP?
The first step in identifying your franchise’s USP and then using it to the absolute max would be to ensure that you have clearly identified your target franchisee. Who would want to buy your franchise? What type of persona do you want to attract to your brand and to your franchise network? What will they want to achieve from their franchise business? In drawing up a detailed buyer profile, you then can start to identify specific traits and features that your potential franchisees are likely to want to see in a franchise opportunity, factors that are likely to be significant in their decision making process and drivers that will encourage them to invest.
A next step is to analyse the competition. Few franchisors are in the enviable position of being the only ones in their marketplace and industry – and if they are, that situation is unlikely to last long. Most of us will be operating in sectors where there are a number of or many other franchise brands all offering what seems to be a similar product or service and also looking to sign up new franchisees to expand their network and presence. What does your franchise opportunity offer that differentiates you from them, and what will encourage your potential buyer to choose you over them? This could be investment level or management/royalty fee structure (though using price as your sole USP can lead a franchisor down a potentially dangerous route in attracting the wrong type of individual or a buyer with differing motivations to the brand), support structure, territory, availability of income streams and ability to diversify, technology or something else that the competition do not or are unable to offer.
Take the burger franchise giant’s McDonald’s and Burger King. Both operate in a highly competitive and crowded marketplace. Both are incredibly well known brands with iconic products and inspire customer loyalty. The franchise investment level is relatively similar. Yet Burger King has managed to hold its own against it’s longer-established franchise fellow by really drilling down into their USP, identifying their differences to their rivals and shouting out about those differences at every opportunity. Burger King was the first fast food outlet which enabled customers to custom-order their burgers – “Have it your way” being their famous slogan – and is creative and entertaining in its marketing. Its USP centres on excellent customer service, creativity and innovation, whilst McDonald’s leverages its brand history and traditions, integrity and community engagement. Whilst their product might seem similar and comparable at first glance, both brands have clear identities and values which resonate with their customers and their franchisees and make them their brand of choice.
Identifying your franchise USP is a vital step towards franchising success. Once you have it, you can and should use it to its maximum advantage, in your marketing messages to potential franchisees and in your discussions and negotiations with them. But what is equally important is keeping your USP under review. As recent years have shown us in quite a dramatic way, customers and buyers wants and needs can and will change over time, driven by trends or circumstances. Whilst you don’t want to be constantly changing or swapping over your USP as that will only cause confusion and appear unauthentic, remain aware of changing marketplaces, incomers to the industry and other influencing factors. A savvy franchisor will always be looking to stay fresh and one step ahead.
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