Here’s How Brands Can Use Incentives to Drive More Leads

From restaurants and health care to residential services and retail products, the franchise market is becoming increasingly crowded. But as more and more businesses spring up in all sorts of niches, franchisors are forced to get a little more creative in order to stand out.

For many, this means offering big incentives. New and small chains are offering discounted franchise fees and reduced royalties in an effort to ease the way for first-time buyers who have trouble landing financing. Meanwhile, larger chains with more name recognition are targeting incentive deals at existing owners with multiple stores. No matter the method, one thing is certain—with nearly 800,000 franchises throughout the U.S., the competition in a buyer’s market is fierce, and brands need a little extra oomph to garner the attention of potential owners.

Consider Buffalo Wings & Rings. At 60-plus units, this smaller franchise utilized incentives to spur big growth. In 2013, the brand awarded three locations. In 2014, after slashing the franchise fee to $5,000 from $35,000, the Cincinnati-based chain awarded 17. All things considered, Phillip Schram, chief development officer for Buffalo Wings & Rings, believes that $30,000 probably doesn’t seem like that huge of a price cut—but in the end, as their 2014 signings prove, a $5,000 change can make all the difference.

“It’s a great way to persuade buyers who may have previously been on the fence. To many investors, every single dollar counts,” Schram said. “It was a simple idea, mostly to benefit existing franchisees, but because of that simplicity, it has made new franchisees’ decisions to move forward with us much easier. That growth has led to more growth, and now we’re heavily in expansion mode. Whenever you get that momentum and are viewed as a growing company, that always interests prospective franchisees.”

Bigger franchises are embracing incentive programs, too. In early 2016, Denny’s launched its Million Dollar Incentive Program. Franchisees who open six restaurants in new and emerging markets can save up to $1 million through reduced royalties, reduced training fees and lower initial franchise fees. On a smaller scale, franchisees can save up to $320,000 if they open two restaurants in new and emerging markets.

“The opportunity to grow market share through more new development in low-penetrated geographic areas is very attractive," said Steve Dunn, senior vice president and chief global development officer of Denny’s, to The Wall Street Journal. “Our current incentive program is offered to attract new growth capital and experienced operators.”

Other companies like Checkers* & Rally’s believe it’s important to offer incentives at the employee level. When Rick Silva took over as the brand’s CEO and president in 2011, he brought with him a plan to show employees just how much they’re valued. After appearing on the CBS television show “Undercover Boss,” he realized how general managers all the way to fry cooks appreciate incentives. A few years ago, Silva infiltrated a few of his 800 Checkers & Rally’s restaurants under the guise of a regular employee. But one worker in particular left a mark on him, Johanna, and to this day, that experience inspired him—just ask about one-third of the company’s total payroll, who now take home monthly performance bonuses because of Johanna’s conversations with a man she believed to be just another co-worker.

According to an article in the Alabama Business Journal, the company already had an incentive program in place, and actually considered it proactive because it included both manager and assistant managers. But after Silva’s experience with “Undercover Boss,” Johanna explained that other employees felt left out. As a result, Silva turned things around, and every single Checkers & Rally’s employee became eligible to earn a bonus every month for hitting a target derived from a balanced score card that includes everything from guest satisfaction and speed of service to sales, profits and team member turnover.