Boost Referrals, Boost Franchise Sales, Part 2

Referrals are vital to franchise system growth. As noted in the May FUSR, studies validate the power of referral sales. Close rates for direct referrals are typically three times higher than for other leads. According to Franchise Update Media Group's Annual Franchise Development Report, referrals continue to be a top franchise sales producer every year.

How to increase participation

Some franchisors aren't generating any significant referrals. If their problem is triggered by poor system support and struggling operators, this is very understandable. But some franchise systems with good validation still lack referral activity. This is often the fault of the franchisor. Sometimes franchisees haven't been asked for referrals. In some cases, they weren't educated about the advantages of having franchise neighbors and national growth. Consequently, these owners may be reluctant to refer prospects, concerned only about potential territory encroachment by a new franchisee

.

Savvy franchisors recognize they must communicate the direct benefits to their franchisees about how franchise growth can increase branding and equity, reduce costs, provide greater competitive strength, expand research and development, etc. Ironically, some franchisors emphasize this powerful message when they recruit new franchisees, but then stop spreading the word once they join the system. Promoting the growth benefits of franchise development is a year-round effort.

Put it in your agreement

The best time to introduce your referral program is when your franchisee signs the contract. Include a clause that requires franchisees to participate in promoting franchise opportunities, with an agreement to display corporate brochures in their operations, and acknowledge that "franchise opportunity" taglines can appear in their retail pieces. I know of a sign franchisor that incorporates a franchise brochure rack into all store designs, clearly specifying that its exclusive use is for recruitment material and that it must be stocked at all times.

But how can franchisors get some of its older, less enthusiastic franchisees to actively contribute to a referral campaign?

Create a VIP referral program

Develop a special referral program providing additional recognition and rewards for franchisees who embrace franchise development with their full participation by validating your system success, displaying and distributing franchise materials, and producing qualified candidates through their efforts. The greater incentives in such a program can prompt other franchisees to join in, especially when they see a higher referral fee for the VIP participants.

Recognize your top franchisees

Tell your franchise system who your franchisee builders are. Recognition is a powerful motivator. Applaud those who champion the expansion of your brand.

At your annual convention, consider referral awards as part of your franchisee presentations. Individuals assisting in the growth of your franchise system deserve special recognition. Illustrate the important contribution of referrals, asking franchisees in the audience who were introduced to your system through other franchise owners to stand up. What a powerful impact this can make.

What does your plan look like?

If you haven't yet, build a referral plan into your recruitment program for next year. The costs are minimal and the long-term payoffs can certainly be rewarding!

This is an excerpt from my book, "Grow to Greatness: How to build a world-class franchise system faster." Order copies at www.franchiseupdate.com/magazine/growtogreatness/

Published: May 26th, 2010

Share this Feature

Comments:

comments powered by Disqus
Golden Corral
ADVERTISE
SPONSORED CONTENT

Franchisor Topics »

Premium Services

Proven Match Business Opportunity

Proven Match
Proven Match provides science-based insights and screening tools to...

FranConnect Business Opportunity

FranConnect
FranConnect is the #1 provider of franchising solutions in the world with...

Xpressdocs Business Opportunity

Xpressdocs
Xpressdocs' proprietary marketing platform houses a diverse mix of...

AXIS Integrated Business Opportunity

AXIS Integrated
With over 25 years of experience in the franchise industry, AXIS...

IMN Business Opportunity

IMN
IMN creates engaging and relevant lifestyle, entertainment, and industry...

Vizion Interactive Business Opportunity

Vizion Interactive
Vizion Interactive is a leading digital marketing services agency...

Franchise Leadership & Development Conference Business Opportunity

Franchise Leadership & Development Conference
Oct. 10-12, 2018 Intercontinental, Atlanta, GA. Over 350 franchise...

Scorpion Business Opportunity

Scorpion
Scorpion offers ROI-positive online marketing solutions that can get your...


Franchise Update Magazine

A targeted, quarterly magazine that takes CEO's, VPs and Sales Executives to the cutting edge of franchise development.

Subscribe to Franchise Update Sales Report

A Franchise Update Media Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2017. All Rights Reserved.

In Loving Memory Of Timothy Gardner (1987-2014)