- Golden Corral, a 491-unit grill-buffet chain based in North Carolina, added a new incentive program for its franchise owners that includes credits in reinvestment, local marketing and staff hiring and training for those who incorporate the new restaurant design, according to a press release emailed to Restaurant Dive.
- Franchise owners can receive incentive plans ranging from $10,000 to $140,000, depending on which Gateway design package works for their restaurant. Incentive credits can fall under reinvestment, where the credit would go to help offset the cost made in the remodel based on a restaurant's sales growth after the remodel; a remodel marketing credit, where Golden Corral would work with a franchisee to develop a local marketing plan and cover the cost of the plan; or as a training and hiring credit, which would go toward retraining and rehiring the restaurant team during the remodel to help them improve the guest experience.
- The company plans to have 60 updated restaurants in 2020, from the 17 current completed restaurants and 34 in the remodel pipeline.
There are few doubts that creating a symbiotic relationship with franchisees provides an advantage for franchisors, and providing such comprehensive incentives — from remodeling investments to marketing support — is a good place to start. Golden Corral said its new restaurant design was created with franchisee input, which is another, more intangible incentive.
A further benefit to this incentive program, especially for a remodeling plan with such a wide investment range, is that the benefits are tailored to franchisees' specific needs depending on their real estate. This provides operators with significantly more control than if the incentive plan was blanketed across the system.
A lack of control tarnished a few franchisor/franchisee relationship recently, most notably with McDonald's. The company's aggressive timeline for its Experience of the Future remodeling program caused some pushback among franchisees last year. Those franchisees then formed the National Owners Association to gain more leverage. The remodeling timeline has since been extended.
Jack in the Box franchisees have shared their grievances over a number of corporate-driven decisions, forcing a no-confidence vote last year. During the company's most recent earnings call, its best since 2015, CEO Lenny Comma said the company is now working with its franchisees with a focus on improving their profitability. Subway, which has been dealing with increased tensions with its own franchisees, also rolled out a $100 million grant program to provide $10,000 grants to franchisees to help with 25% of remodel costs. The sandwich chains plans to remodel over 10,500 units by the end of next year.
Golden Corral is certainly not alone in providing incentives for its franchisees. Global Franchise Group, parent company of Round Table Pizza, Great American Cookies, Pretzelmaker and more, knocks 25% off the initial franchise fee for military veterans, for example. It's also worth noting that monetary incentives are certainly not the only tools used in such a program. Some brands, like Jersey Mike's, also embrace training programs, while others, like Wingstop, heavily promote recognition culture.
Incentives can help companies attract better franchisees and retain them. They can also create a positive image of the company. Plenty of customers care about how a company treats its employees now, and that includes franchisees.
For Golden Corral, specifically, this program seems to be par for the course. In September, Entrepreneur magazine ranked the chain 14th on its list of Best Franchises for More Than $500,000, which highlights top brands and successful companies within the franchise restaurant community. Earlier this year, Golden Corral ranked No. 34 on Entrepreneur's Annual Franchise 500 list. Criteria is based on 150 key business factors, including franchisee support and stability.
The restaurant industry is crowded and the competition is intense, not just over customers but also franchisees. Incentives can not only attract the right franchisees but also spur growth when growth is hard to come by.