National Accounts – Leveraging the Scale of Franchising

National Accounts Programs

National Accounts programs are mostly associated with services and products and have been around in some variation nearly as long as franchising has. National Accounts customers are companies that are typically larger than any single franchisee can service, have specific pricing or account management requirements, or are spread out over significant geographic territories.

National Accounts epitomizes the scale that franchising affords and can be a tremendous revenue generator for both franchisees and the franchisor. Many potential franchisee candidates have come to expect these programs from the sophisticated franchise brand they are investing in. Because they bring a sense of validation and prestige to the brand (even though not all franchisees will benefit the same from the program), a National Accounts program can be great sales tool for recruiting new franchisees.

Do not let your franchisees get too dependent upon your National Accounts program and not adequately develop their local markets. It can be a disaster if the National Accounts customer abruptly drops its contract or sales volume, leaving the franchisees to scramble for sales of their own. Franchisees must understand that National Accounts customers can come and go and the revenues they produce should be used to augment their own efforts.

The National Accounts program must be transparent and done in partnership with your franchisees or it will be the proverbial can of worms for you. When franchisees believe their franchisor is driving revenue only for increased royalties or processing fees rather than for their unit profitability, issues such as territorial encroachment, refusing work, payment disputes, sub-contractors issues and others can manifest themselves within the National Accounts program.

It is best to build a National Accounts program into your franchise system from day one and allow it to grow and evolve with the brand. If you want to introduce a new National Accounts program into an existing system, my advice is to engage a reputable consultant (such as me) that has experience in this area. Work with your legal counsel to review and structure the program. No shortcuts can be taken in this area, because an improperly designed National Accounts program can quickly cause sour relationships with your franchisees and prompt legal disputes.

Done properly, a National Accounts program can significantly enhance franchisee relations, unit profitability, and propel a franchise system to national status.

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