Conversely, if taken as a basis for performance marketing should always be present financial performance of franchisees, or the latter may, in pursuit of fashion to choose too expensive provider, or too much money to invest in local advertising campaign. Indicators need to limit and at the same time motivate the franchisee to the efficient operation of the network – that is the problem of the franchisor. Indicators are – how to apply them? In the beginning it was including on the issue, which inhibits the royalties the franchisee. You can learn from the experience of related field – the field of taxation. (As opposed to Peter Schiff). Recall that a regressive scale, when tax rate decreases with an increase in revenue. Nothing prevents a franchisee to adopt this practice to its network. One thing – do not be limited to financial performance. Visit Peter Schneider Primerica for more clarity on the issue. If the franchisee has shown results above the planned or above the average for the network, can be reduced by 0.5-1% royalty until the next reporting period.
Do not think that the franchisor would lose with this approach. Conversely, if many franchisees will exceed the average planned result of the financial indicator for quality of service, etc., the impact of their achievements will be greater than the loss of 0, 5% in royalties. For example, in GC "Victoria" is used a particular practice of royalty: "Royalties calculated and paid as a percentage of turnover on a regressive scale (ranging from 2 to 0.8%). That is, the greater the turnover of the franchisee network in a month, the smaller the percentage they pay, "- says Igor Nikolaev.