Gift Cards Can Provide Cash-Strapped Franchisees with Immediate Cash Flow
By the time you read this, you have likely gone deep into your strategy for how to respond to the effects of the Covid-19 pandemic. There are essentially two camps I see: 1) the doom-and-gloom people who think the sky is falling and will not come out of their house until this completely blows over, and 2) the positive people who see this as an opportunity to out-think, out-work, and out-do their competition.
Clearly, I am in the positive camp!
Restaurants have been among those hit the hardest by the pandemic. However, we are seeing some of our customers who pivoted early toward curbside, car-side, online, and delivery models. Those merchants are doing a bit better than those who did nothing. Some service industry brands on the exempted list of most stay-at-home directives are also doing relatively well in the pandemic.
What can you do now?
As a payment processor and loyalty program platform, we are advising our customers and friends to do several things right away.
If you are a restaurant brand, you probably already have a gift card program. If your vendor is knowledgeable about franchising, they have likely set you up with “corporate pooling.” This is a method where a gift card is purchased in one location and the funds are pulled from the franchisee into a corporate account and held there until they are redeemed. We always encourage this method as it makes dealing with escheatment laws much easier to manage. It also protects the franchise brand in the event a franchisee de-brands or goes out of business. As a franchisor, you would have the money to cover a customer who couldn’t redeem a gift card.
Right now, the best thing we can all do is keep cash flowing for franchisees. Why not suspend corporate pooling for a few months until the coronavirus passes, and make a major push for gift card sales so franchisees can use that money for cash flow now? As a franchisor, you can’t expect them to sell a bunch of gift cards if they are more worried about keeping their doors open and there is no immediate benefit to them.
We are currently rolling out gift card programs with the above strategy to companies you might not think of as traditional gift card merchants, with great success for their franchisees. These include service such sectors as window cleaning, automotive repair, flooring, painting, plumbing, etc.
Think about it. Not only does this strategy help these verticals, but even if they are not currently doing a ton of jobs, what are consumers doing right now? Sitting at home watching “Tiger King” and surfing the Internet looking for deals and offers to fix whatever issues they might notice around the house during their weeks of confinement.
If they come across your brand’s website and like what they see, they just might purchase a gift card that locks in future service and provides your franchisees with cash flow that can help them stay open or reopen sooner. Without this incentive, your industry will reopen and consumers may no longer have the time to have your service people come to their home. The likely outcome is that they will go back online searching for a good deal. And since they have not prepaid for your service, they also will look at your competitors.
Are you a multi-brand franchisor or a franchisee of a company with multiple brands? Open up your gift card and loyalty programs to work across all of your brands and help franchisees receive leads and referrals from sister brands. If I am sitting at home looking at my old window treatments and engaging in a brand that offers that service, you can bet I am also looking at walls that need painting or flooring that needs updating.
What else can you do now that will affect the next 30 to 90 days?
Whether you like it or not, Covid-19 has changed the ways consumers want to do business. Because coronavirus happened so fast, changing hardware quickly has been difficult for most brands. Engage with your POS and software vendors now so you can begin migrating your franchisees to touchless payments. I have long talked about how the U.S. is years behind adopting payment technologies most of the world already has in place. Last October, when I said how cash and even plastic credit cards would be going away soon, I had no idea that “soon” would mean March 2020.
Consumers won’t want to use cash, checks, or even have your employees touch credit cards because of coronavirus fears. Touchless payment technology exists not only to help you overcome these customer objections, but also will enhance the customer experience by keeping them feeling safe patronizing your business.
Take a look at your loyalty program if you have one. If not – get one! No matter what vertical you are in, your customer count is down. Customers who are coming in need to feel the love. Increase your reward levels now and lock in a share of their wallet. Some are coming to you because you are open or more convenient than your competition. Don’t let those customers go back to the competition when this is over! Make them brand advocates!
In short, it’s not the good times that define a franchise brand and make it more successful, it’s the hard times. This is an opportunity that may present itself only once. Make it happen for you, your franchisees, and your brand!
Tom Epstein is the founder and CEO of Franchise Payments Network and POLN8, whose services include payment processing, loyalty programs, POS solutions, mobile solutions, and working capital. Contact FPN at 866-420-4613.
Share this Feature
Comments:comments powered by Disqus
- Multi-Unit Franchising
- Get Started in Franchising
- Open New Units
- Featured Franchise Stories