Proven Match


Developing incentive programs to speed up growth

During this week’s edition of the Proven Match blog, we’re going to investigate a few of the ways that some successful franchisors have developed incentive programs to speed up the growth of their brand and incremental outlets. These are sometimes referred to as Loyalty or Rewards Programs and go a long way towards helping land new franchisees and keep their existing franchisee base engaged and satisfied. Since there are obvious differences in the strategic tactical approach to the programs, we’ll divide them into incentives that reward existing franchisees first, then delve into how these incentives attract the next generation of owners.

According to a recent article in Entrepreneur magazine, a study conducted by the Chief Marketing Officer Council discovered that Americans participate in over 1.8 million incentive-based memberships (think Airline Miles!). In addition, the average U.S. household participates in more than 14 different customer rewards programs. Grocery store loyalty programs are probably the most common example of this. Grocers track your buying habit and present worthwhile discounts at the checkout line. So it should come as no surprise that many franchisors have developed ingenious incentive programs to build incremental business among its franchisee’s customers. 

One of the best benefits of buying a franchisee is that you’re buying into a proven system. One that includes professional marketing outreach such as incentive programs. Most, if not all, franchisors have some form of incentive program for their franchisees to offer their customers. Whether it’s a free sandwich from Subway after buying six or a discount on services for referring new customers, the programs are only limited to the imagination and implementation. And because more and more customers are seeking an experience with brands, the results are paying off.

When it comes to franchisors using incentive programs to recruit the next generation of owners, well-documented examples are abundant. VetFran, the International Franchise Association’s (IFA) Women’s Franchise Committee, and MinorityFran help thousands of prospective franchisees launch their entrepreneurial careers. But there are even more specific and inventive ways for prospective franchisees to take advantage of carefully planned incentives.

Some franchisors have taken steps to offer special or discounted financing options if they’re trying to attract franchisees into a specific market. Other franchisors have offered incentives in the way of bonus stock inventory or equipment upgrades. For some creative franchise brands, even a modest extension of territory reach for a prospective franchisee is not off the table. Perhaps one of the most common tactics we’ve seen includes the suspension of royalty payments for a set period of time—usually the first 12 months. The value lies in the fact that avoidance of royalty fees to the franchisor can help a new business get off the ground in its first few lean months.

The ultimate franchisor incentive is the money-back guarantee. Some have even cleverly referred to it as their “Happiness Clause.” It states that, for whatever reason, if the new franchisee is unhappy with the purchase of their own business, the franchisor will refund the full start-up fee, buy back all equipment and assets and rental/lease agreements. Franchisors that participate in such programs are therein offering the highest form of an incentive to new candidates—a factor in which franchisees literally can’t lose.

As you can see, franchisor incentive programs are designed to benefit both the franchise brand and, by extension, its army of franchisees. This, in turn, offers the franchisee’s customers a reason to keep coming back. After all, recurring business is the lifeblood of any entrepreneurial operation. If your franchise brand participates in an incentive program, be sure to evaluate the program’s results for effectiveness from time to time. That way, you can adjust your reward program for maximum benefit.

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As a franchisor, you’ll want to know which existing and potential franchisees best fit your business concept. Proven Match is the proven solution in determining those factors. Through our proven behavioral assessment techniques, predictive analysis becomes a predictive success for your franchise concept. If you’re ready to show your leadership by getting started, give us a call and we’ll put you on the path to a more productive year in 2017.

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