How to Get Franchisees to Open More Outlets

If you are a franchisor you want your most successful franchisees to operate more outlets. In other words you want them to buy more franchises and you are probably even willing to give them a discount because there will be no training involved since they already own one or more units.

It is a well-known fact in business that it is much easier to sell something to a current customer than to try to go market, advertise and get new customers to come in and buy. The same thing applies to franchising organizations. So how do you get your current franchisees to open more outlets?

Many franchisees do not wish to open more outlets because that means they are required to put up more capital. Many franchisors do not want to spend their capital to put in company-owned stores, because they need to conserve their resources so they can continually grow exponentially.

One way to get franchisees to open more outlets is to offer them more territory, yet in doing this sometimes franchisees feel that if they opened stores too closely to their current stores they will cannibalize sales that there were already getting.

This may or may not be true originally, but by opening another story you will increase the brand name in the region and increase the total pie or number of buyers in the area and therefore both locations can succeed.

Starbucks figured this out, although they are not a franchise, when they start opening more outlets closer together. At first the new outlet would cannibalize sales from the existing location, but over three or four months new customers would start going to the new location and the Starbuck’s brand would become more popular in the area and both locations would do better. Please consider this in 2006.

Article Source: http://www.content.onlypunjab.com

Lance Winslow, a retired entrepreneur, adventurer, modern day philosopher and perpetual tourist.

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