THE CARROT: ENCOURAGE AND REWARDING FRANCHISEE’S COMPLIANCE
all franchisees to adhere to the letter and spirit of your franchise
agreement. Sometimes franchisees think they know better. Sometimes franchisees
find it difficult to follow a detailed operating system. Sometimes franchisees
have difficulty making ends meet.
The moral authority
of your franchise agreement will, in fact, cause most franchisees to
comply. People generally tend to live up the agreements they enter into.
What to do about the few who can’t or won’t? Of course,
there is the legal route: default notices, probation, mediation and
termination. Before this, though, smart franchise companies systematically
reduce the number of franchisees who don’t comply.
noncompliance by providing strong incentives to franchisees to comply
with their system.
At Kern & Hillman,
LLC we help clients design and implement systems that make it clear
to their franchisees that strict compliance with company policy is the
Some programs include:
- Contests with
valuable prizes for good performers.
- A formal system
of ranking franchisees into tiers by performance, with benefits attached
to the status of high performer.
- Programs that
recognize good performance and publicize it to others in the system.
- Significant economic
benefits such as contract extensions or subsidies for point of sale
marketing materials or equipment for high performers.
- These programs
and others like them are proven to encourage good performers to be
better and poor performers to raise their level of compliance.
Make sure that these
programs, which discriminate among franchisees, do not run afoul of
your franchise agreement or local franchise law and regulation. Look
to us as the Franchise Law Source to assist you with implementing
these important incentive programs.
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