This is part 3 on the topic of renewals.  The focus of this post is adding value at the time of renewal.  One of the challenges I hear from franchisor is the reluctance of franchisee to sign a renewal agreement.  As a result franchisee goes on at nausea under the old franchise agreement after expiration. 

 Here are some thoughts on getting franchisees to “Yes” and sign the new franchise agreement: 

 1.       Create some buzz.  When new franchisees come into a system, there is a grand opening, there is an announcement in the franchise community, and the franchisee is given onsite support from the franchisor.  How about doing something similar for the renewing franchisees?  Celebrate 10 years of the franchised business with a marketing anniversary campaign, make a big announcement in the franchise community, visit the franchisee, and find out their successes and challenges. 

 2.       Give value for the renewal fee.  The trend is for franchisors to charge increasing amounts for renewal fees, but at the end of the day, the value is the royalty stream under the new franchise agreement.  How about turning the renewal fee into value for the franchisee and the franchise system?  Tenured franchisees are sometimes using old advertising materials, outdated software, stall websites/micro sites, or worn out signage/fixtures.  Think of what you give or sell your new franchisees during start-up.  Is there a package or discount program that you can offer your renewing franchisees to bring value to their business, and your brand? 

 3.          Evaluate territory boundaries.  Make renewal a time of assessment.  Is the franchisee fully utilizing the entire franchise territory?  Is the franchisee’s growth stymied by its territory size?  Consider the selling of additional territories, buying back a portion of the territory, or offering the franchisee incentives for transferring/selling a portion of its franchise territory.

Renewals Part 3: Add Value at the Time of Renewal

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: