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Expanding from within Featured

7:00pm EDT February 28, 2007

SearchPath International’s Tom Johnston leads a program that encourages franchisees to be recruiters.

A company in the business of franchising need not look any further than its own franchisees for a great way to expand, says Tom Johnston, president and CEO of SearchPath International.

“The best salesperson you can have for a company is somebody who has already come in, looked at what you’re doing, decided to move forward and purchased a franchise,” Johnston says. “That’s helped us grow the company quickly, hit the market with a lot of credibility, and it’s helped us keep our corporate overhead down because our franchisees are also our sales force.”

The key to making a franchise referral program work is ensuring that the existing franchisees have the right tools to identify and recruit new franchisees who will help the company continue to grow.

“The right way to do this is not to go out and say, ‘Hey, do you want to buy a franchise?’” Johnston says. “We follow a very traditional recruitment process.”

Johnston says that as a talent acquisition professional services firm, SearchPath is very familiar with recruiting. But the steps to acquiring talent apply to any type of franchising organization.

“The first thing you normally do is you talk to them and find out where they are in their life,” Johnston says. “What are the things that are important to them? What, ultimately, are they trying to get to? The proverbial question I always ask is, ‘Where do you want to be three to five years from now?’”

Johnston says it comes down to “being able to truly identify the needs, both emotionally and financially, from a career point of view.”

Recruiting is obviously a vital part of a franchise referral program, Johnston says. But one mistake companies often make in developing a program is building it around a territorial concept.

“The reason why many of the franchises were built on territory when they first started doing business had nothing to do with anything other than long-distance [phone] rates,” Johnston says. With “the cost of doing business back in 1975, when you were doing recruiting, you wouldn’t allow anybody to make long-distance phone calls because they were two or three dollars a minute. You did all your business locally.”

With advances in technology and with the world becoming smaller every day, territorial boundaries should no longer be an obstacle to growth, Johnston says.

“Unless you are fortunate enough to get a very large territory in a desirable area, I think you run into a problem,” Johnston says. “It’s creating restrictions that make it almost a nonincentive.”

One enticement that encourages franchisees to be recruiters is to make them master franchisees, meaning that they get a percentage of the franchise fees and royalties for bringing in new people rather than paying that to someone else.

“They get short-term and long-term revenue,” Johnston says. “We look at the opportunity to create these master franchisees, where they have a vested interest in helping the people that they bring in to be successful. We build that in as part of our support network.”

Franchise referral programs can be “very, very aggressive,” Johnston says, but they can also be very simple.

“Even if it’s just, ‘Hey, if you run across someone who you think would be a good referral, send them on in and we’ll send you a gift certificate, or we’ll give you a couple thousand bucks,’ it can’t hurt,” he says. “The people that have bought in to your organization that are happy and doing well, they are your best salespeople.”

HOW TO REACH: SearchPath International, (216) 589-0431 or www.searchpath.com