Friendly's Bets Big on Early Franchise Incentive Strategy

In the ultra-competitive franchise sales arena, savvy brands are constantly exploring creative ways to attract new franchisees and drive system growth. Friendly's Restaurants is aiming to do just that in 2024 with the introduction of its enticing Early Franchise Incentive Program.

The iconic family dining chain is putting its money where its mouth is by dramatically reducing the royalty burden for franchisees who move quickly from signing to opening their doors. For the first 15 franchise agreements inked this year, Friendly's is waiving the entire royalty fee for the first six months a new restaurant is in operation. Even after that, the fee is slashed to just three percent for the ensuing six-month period.

It's an aggressive incentive strategy that leadership hopes will catalyze franchise expansion by making Friendly's an even more attractive investment opportunity. By minimizing one of the largest ongoing costs in that critical first year, the program gives franchisees more financial runway and working capital to fuel areas like staffing, marketing, and other operational expenses.

Brix Holdings, franchisor of Friendly’s, has set its sights on the Sunbelt states, where people are increasingly looking for more space, warmer weather, fewer government restrictions, and a more affordable cost of living.

"We’re taking a very strategic, market-centric approach to franchise development right now," said VP of Brix Holdings, Luke Mandola. “It makes sense to go where the growth is happening.”

Fueling Expansion with Decisive Action

The limited-time offer is straightforward – sign your franchise agreement in 2024 and have your new Friendly's restaurant open within 12 months to qualify for the royalty fee waivers. It's a carrot designed to reward decisive action, while compelling prospective franchisees to move quickly to take advantage.

Of course, the success of any such incentive strategy still depends heavily on the underlying quality and profitability of the franchise program itself. Friendly's is banking on its 87-year heritage, updated prototype, and new leadership team to excite franchisee buyers. But there's no denying the appeal of built-in royalty concessions that could equate to tens of thousands in savings for franchisees in year one.

As acquisition costs for franchisee recruitment continue spiraling upward, creative incentive programs are likely to become even more commonplace as franchisors aim to gain an edge in driving commitments. Friendly's new Early Franchise Incentive bet is an example of a brand swinging for the fences in hopes of accelerating expansion with a generous short-term financial incentive.

Whether it pays off has yet to be determined. But franchisors across all sectors will certainly be monitoring the outcome as they explore ways to sweeten the pot and capture more franchise prospects in an increasingly competitive marketplace.