Skin in the Game: The Difference Between Franchisees and Employees

As an entrepreneur, we often times don’t need an alarm clock. Our adrenaline is running higher than a typical person’s might and we generally are under pressure….most of all directed from ourselves, but none-the-less, we are driven by things like paying the bills, upcoming payroll, rent and other obligations that associate with business ownership. It is this line of thinking that often takes precedence when discussing franchise development and whether the franchise expansion model makes sense for a business. Often, the discussion starts with something around the topic of “I’ve hired so many people who haven’t worked out, they just don’t seem to be motivated to go sell or do their job the way I want them to.” We’ve all heard of the 80/20 rule when reviewing performance where a large percentage of the productivity comes from a small percentage of your staff. Hiring is difficult regardless of industry or business, even more so in a time where generations are defined by laziness and entitlement characteristics, it’s understandable why you would consider giving up sometimes and just doing everything yourself. Of course, that’s not the answer, we need to continually focus on scale and leveraged growth. When opening the discussion around whether to franchise a business, the question certainly is directed to what’s the difference going to be from an employee vs. a franchisee? Skin in the Game is an odd saying in some ways, but it also is incredibly simple and has a great deal of logic behind it.

Someone who invests in something is going to care more for it than a person who is handed an opportunity. The “Dutch Disease” is one example of the downside of human-nature’s inability to carry respect for wealth or items which are not earned, Franchising is an example for the positive side of this equation. A franchisee makes the entire initial investment into the business they are starting, which many times could be in the millions, certainly in the hundreds of thousands of dollars. This is Skin in the Game from a financial meaning, when someone puts enough money into a business, they immediately develop a sense of ownership, pride and willingness to do more to make the franchise model succeed. Franchisees tend to be more successful than employees or managers by a large margin due to the investment they have made in the business and the financial commitment it takes to get a franchise open.

The second definition of Skin in the Game relates to the franchisee’s commitment to focus. Many times, both entrepreneurial franchise buyers and new franchise owners tend to bite off more than they can chew. When you franchise your business, during the franchise sales and recruitment process, you certainly have the opportunity to choose who you grant the franchise opportunity to. Some franchise investors will make poor business owners while others will be exceptional, it is your responsibility during the sales process to qualify and sell your franchise to the right person. A franchisee who has skin in the game is committed to focusing on the franchise model. They don’t invest in several businesses at one time, keep their current job while they are operating the franchise business and they certainly don’t hire someone to run the business before they work in the operation themselves. They jump in with both feet and dedicate themselves to the success of the franchise model.

Franchising can be a powerful expansion tool when managed well. Good franchisees work with the commitment, passion and energy that a business owner has. No employee can have the same dedication to their trade as a franchisee who has Skin in the Game.

For more information on how to Franchise Your Business, Contact Us:

How to Franchise:  Managing the Franchise Development Process

When you take your business into the franchise market, there are a multitude of responsibilities, requirements and strategic initiatives that must be addressed in order to make this transition work.  One of the key elements of a successful franchise expansion model is understanding the franchise marketing and franchise sales process that will work for you and your business model.

It is important to do a self-evaluation as a business owner and soon to be franchisor, how good of a salesperson are you?  As a new franchisor, even with the support of a franchise development team and franchise brokers, you will still be a key element of the franchise sales process.  The franchisee ultimately buys into a franchise system because they believe in and connect with the owner of the company.  Particularly with a new franchisor, the owner’s involvement in the franchise sales process is critical.  So if you take a look in the mirror and decide that you aren’t the right person for the job, then it might be an opportunity to bring in a franchise development manager.

Then it’s time to consider franchise marketing and lead generation.  The franchise sales process requires a strong and consistent inbound marketing effort in order to generate franchise sales.  Luckily, there are countless ways to generate franchise leads and get your brand out in front of potential investors. It starts with the Internet and utilizing franchise portals or franchise lead directories, these are simple and easy ways to generate franchise leads quickly for a brand.  In most cases these leads are looking at a variety of brands at one time, so the lead quality isn’t the greatest, but you will get consistent lead flow and candidates from these sites.  You then need to consider driving traffic to your corporate site through SEO, Pay Per Click and direct marketing methods, this can be more expensive, time consuming and long-term, but worth the effort to build traffic for your specific franchise.  Franchise Public Relations work can be extremely effective to find franchise buyers through building your brand awareness through news, articles and other PR sources.  In addition there are countless franchise tradeshows in virtually every market across the United States.  The key is always lead volume….getting enough candidates to speak with to find the right buyer for your franchise model.  Generally it requires about 150 leads per franchise sale.

Once you have your marketing process defined, it’s time to get a good franchise sales process in place.  A solid franchise sales process should be enticing to the buyer to get into the sales funnel and also one that qualifies the buyer carefully to make sure that it will be a good match.  You should have a franchise CRM in place to manage the leads and be able to report on leads as to where they are in the buying process.  There are countless, affordable franchise CRM’s on the market.  A franchisor should have a caller or someone who is tasked with tracking down the candidates and doing the initial calls to get people engaged in the sales process.  Good franchise sales people are great at developing activity and making a high volume of calls each day.  Email marketing, lead nurturing programs and other sales techniques can supplement calling.  Once you get franchise candidates deeper into the sales process, you will want to invite them to a discovery day to experience the franchise model in person.  Here is where you as the owner, or your Franchise Development Manager needs to shine and really connect with the buyer, it is the point in the process where the actual sale takes place.

Many different businesses have successfully utilized franchising as a growth mechanism, it can be done successfully with different personality types, industry segments and business models.  The key is to have a good understanding as to what is required to make this model work and then plan appropriately.


For more information on how to franchise your business, contact Christopher Conner: