Franchise Growth: Are Concessions and Discounts Necessary?

This article is based upon a recent discussion in a LinkedIn franchise group. The original discussion posted the question, “What kind of discounts or concessions are required now to get a franchisee candidate to move forward?” and generated many responses and different views. The following is my response when my view about getting back to basics was preceived to be fine during “normal” times as opposed to during more difficult times, such as the present. A subsequent response from another franchise professional implied there are too many franchisors. I’ve addressed that as well.

discountAlthough it’s certainly easier to accomplish franchise growth during “normal” times, the basics need to be in place even more so during tough times. That’s not to say we don’t need to think and act outside-the-box to make something happen. It just means we need to be extra prudent and diligent in our actions and not use the economy as an excuse for poor execution of skills.

If we are to offer discounts and concessions in awarding franchises we need to be extremely careful we don’t oversell or create the perception of desperation. By doing so, we’ll either lose the deal or create a situation whereby the franchisee will not have respect for the franchise system and feel if one or two concessions were made initially, why not more moving forward? And then, there’s the perspective of franchisees already in the system that paid full amounts without concessions. What’s in it for them?

Nevertheless, with reports like Franchise Update’s about poor franchise sales performance and practices, I can’t help believe franchise systems wouldn’t be in better shape if their sales basics were perfected. It has to start with the basics before changing direction or considering revisions to the program.

In any business, just like in any sport, when a slump is emminent, it’s the fundamentals that need to be worked on before anything else should be considered or entertained. Once that’s done, then it makes good business sense to consider other options. At the very least, it should be done simultaneously. If not, what’s going to be the excuse when concessions and discounts don’t work?

PS – Saying there are too many franchisors is akin to saying there are too many businesses of the same kind. What happened to free enterprise and entrepreneurship? Maybe, franchising could be better served by more regulation, licensing and policing, to weed out the weaker (for whatever reason) franchisors and make it more difficult to become a franchisor. Unfortunately, I don’t see that happening because the “big boys” of franchising will squash those efforts in a New York minute. I look forward to debating this topic in a different discussion or forum.

About Paul Segreto

Entrepreneur, Franchising & Small Business Professional, Top 100 Champion Small Business Influencer Awards 2014 & 2015, Popular Blogger & Podcaster
This entry was posted in Franchise Development, Franchise Sales and tagged , , , , , , . Bookmark the permalink.

3 Responses to Franchise Growth: Are Concessions and Discounts Necessary?

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  3. Joel Libava says:

    Hi Paul,
    I don’t see any reason to discount a $30,000 FF by say, $5,000. No value in doing it. It reeks too much of “closing the deal.”
    The Franchise King
    Joel Libava

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