Have you ever been shopping and seen a cheaper price for something you just bought? Sucks doesn’t it!? You feel cheated and wonder why another business sold it for higher and it might even lead you to never shop at that business again.
The big problem for franchises is that the person shopping will probably decide to not shop with the whole franchise brand and not just blame that one outlet as they don’t identify each outlet as individually owned.
We have been on the receiving end of this on a few occasions and it is extremely annoying to have lost a customer (and have to deal with irate ones) due to another franchisee within our system.
Our experience with incorrect pricing
The first instance was where another franchisee within a few minutes drive from us was selling a combo offer on bread that we were not supposed to be selling. We had a customer order and expect that offer and when we didn’t sell it in a combo they walked away saying they were going to the other location. Great that they were still going to shop with the brand but I’m sure the customer was annoyed.
Some will say I should have honoured that combo deal but then I would have been discounting when I shouldn’t have leading to deflating the brand’s value and confusing more customers, while also reducing my profit. IF it was advertised I would’ve honoured it but it was not a current offer and was not allowed to be offering it.
Another time another franchisee accused me of selling my bread for a discount near the end of the day. This is sometimes used to get rid of waste by local bakeries to at least make some money from what was already produced. I get it, but this was not our system’s policy. What this in fact does is train customers to only shop with you at the end of the day and you lose out on selling your product for the right price and maintain your profit margins.
I never did this and we later found out it was a manager working for a corporate store. The other franchisee was right to be annoyed as he was losing loyal customers to discounting and by bringing it to head office’s attention was trying to protect the brand.
Our most recent example of a franchisee not sticking to correct pricing is in our current business. We were the second franchisee to move into a region and the existing franchisee was extremely annoyed and called a meeting where she stated that she was afraid that I would discount to get business and this would lead her to losing business.
I soon learned that she was offering her new prospects a discounted rate in the hope that they would book her, see the great value and re book the following year for a higher price. Now that she has moved on and I am receiving inquiries from these same clients and I have to explain to them that they received a great deal first time around (in some cases a few times around!) and that I had to stick to my franchise pricing guidelines.
The inevitable question is “So why do I have to pay more for the same thing??” This is tough. I don’t want to lose them to another company but at the same time I don’t want to lose money (in some cases) by giving them cheap prices to keep them happy. They unfortunately have the idea that our service is only worth what she charged and nothing will get them back.
I have been able to gain some ground on some of these clients but others have just been disappointed and walked away. And I get it. We are a premium service and she has told them that we are just like all the others.
Don’t be the weakest link
At the end of the day you are not doing yourself, your franchise or even your customer any favours by discounting. I get that when you are trying to build a customer base there are some things you need to do to get sales. Just don’t discount! Add value if you have to, give them a one time offer of an add on or if they buy a certain amount of a product/level of service add a small amount to the deal but do not offer cheap prices that you can’t (and shouldn’t!) continue with.
Just remember why you bought into your franchised business – for the systems and market recognition it gave you to become successful. Don’t damage your business as well as the brand for short term gains that you can’t sustain. Look for ways to build your business while sticking to your guidelines. If you can’t think of any ideas go visit other franchisees in your system, they have a vested interest in you being successful and not being THAT franchisee that annoys their customers!
Good luck and like always if you need any tips give us a shout!
P.S. If you are reading this before buying a business check out our eBook “The Pros & Cons of owning a Franchise” to see if you will like belonging to a franchise network.