Key takeaways

  • There are two types of franchise referral programs: the first type helps you find new franchise owners, and the second helps your franchises find new customers.
  • If you're planning on running a program across multiple franchises, or using a multi-step reward structure, make sure your referral software can support these processes.
  • To set your program up for success, select motivating rewards, make it easy for referrers to share, and promote your program so your target audience knows about it.

Looking for a new way for your franchise to expand? Look no further than your existing customer base. Referral programs are a powerful marketing tactic for franchise companies to scale their growth, whether that’s through new franchises or new customers across franchise locations. No matter which of these franchise referral program types is right for you, we’ve got all the tips and best practices you need for success.

What is a franchise referral program?

A franchise referral program is a streamlined way to reward your previous customers for sharing your franchise company with their friends and colleagues. It’s important to note that this strategy involves automated tracking of referrals, via specialized software. It’s not a manual program where people give their friends’ or colleagues’ names and you must keep track on your own

Two types of franchise referral programs

Franchise referral programs can be divided into two types:

  • Franchise owner referral program: In this type of franchise referral program, you invite  people to attract new franchise owners, to expand your number of franchise locations.
    • You could invite existing franchise owners, brokers, consultants, and people connected with franchise owners to make referrals – essentially, anyone who is familiar with what’s needed to run a franchise.
fibrenew franchise referral
  • Franchise customer referral program: This is a referral program that your franchises use to convince your existing customers to refer new customers.
    • In this scheme, each franchise might have their own referral program portal, but all the referral programs are usually very similar in how they operate.
    • Or, all franchises might link to the same referral program. A prime example of this is the Weed Man lawn care franchise referral program. Each program has a similar appearance and reward rules, and each is run with the same referral software.

weed man franchise referral program

In this article, we’ll talk about best practices for both of these types of franchise referral programs.

Why do you need a franchise referral program?

All franchise referral programs, regardless of their type, bring several benefits to your franchise:

  • They let you easily track all referrals people make: Thanks to software, you’ll be able to track every single referral in real time, from the moment the referral is made to when it results in a franchise opening or new customer.
  • They harness the power of trust: People trust their peers far more than ads and other messages your franchise puts out. They’re more likely to become a franchise owner or customer if a peer refers them to you.
  • They’re cost-effective: You’ll only need to pay once for the referral software, and then pay for the rewards once your referrers earn them. These rewards tend to cost much less than what you would spend on ads. 
  • They’re low-risk: Unlike other marketing methods (like ads), you only pay for real results when you’re running a franchise referral program. You’ll only give out the referral rewards when someone’s referral brings in a new franchise owner or new customer.

Added benefits of starting a referral program to find new franchise owners include:

  • Built-in vetting: Franchise owners (and other connected parties) know what it takes to run a franchise, so they’ll refer high-quality franchisee candidates
  • Referred parties are more likely to open a franchise: Franchises are massive purchases that take lots of consideration. Since they trust their peer, referred franchisee candidates are more likely to make the purchase of a franchise

And added benefits of starting a referral program to find new customers include:

  • Referred customers are more likely to purchase from you: The trust people place in their peers makes them more likely to convert when someone refers them.
  • Referred customers tend to be more loyal: Referred customers have a 16% higher lifetime value on average, compared to non-referred customers.

Are you ready for a franchise referral program?

Not all franchise businesses are ready for a referral program. Before you start one, make sure you have the needed factors in place for success. 

To successfully run a franchisee referral program (franchise owner referral program), you need: 

  • A fairly large company, with several franchises already, for the referral program to be worth your while
  • To familiarize referrers with what you’re looking for in an ideal franchisee
  • Knowledge of the rewards that would motivate referrals 

To successfully run a customer referral program for franchises, you need: 

  • A healthy list of satisfied existing customers (ideally, with some customers who already referred you without prompting)
  • Quality products or services worth referring
  • Buy-in from your franchises, to help maintain the program
  • A high level of customer satisfaction (checking your reviews is a great way to confirm this)
  • An existing online presence to direct referred leads to (say, a website)
  • Knowledge of the rewards that would motivate customers to make referrals

Franchise referral program best practices: For all programs

Now that you’re aware of the franchise referral program benefits, and you know whether you’re ready for one, it’s time to set your program up for success with these best practices. This first set of best practices is essential no matter what type of franchise referral program you run.

Use referral software to track your program

Referral software is essential for the best franchise referral program. The right referral software streamlines your program creation process and automates all aspects of program management. 

If you’re planning on running a program across many franchises, you’ll need a software that’s capable of managing those multiple programs. And if you want a complex reward structure, like different rewards for different numbers of referrals or stages in a franchise buying process, only a select few software programs can handle this structure.

Referral software lets you track exactly where every referral came from, and instantly issue rewards for successful referrals. It also collects program data that you can use to measure success and refine your program for optimum results.

Referral Rock software offers best-in-class referral tracking, sharing, and engagement experiences, with concierge onboarding – no developers required. It’s flexible enough to run programs for multiple franchises, and handle more complex rewards like tiered and stepped programs.

Utilize referral links

The best way to make referring easy is with custom referral links, generated for you with referral software. This way, people can copy and share the links anywhere they’re conversing with peers digitally, and you’ll be able to track the referrals instantly via your software. 

You should also have an option for direct email sharing, where the referral link is automatically included in the email. Similarly, consider including a direct social media sharing option, with the link automatically included in the social media post.

Design a simple referral form

Franchise referral programs tend to ask for a lot of information, but too many questions can get overwhelming quickly – and could deter someone from making a referral. Only ask for the info you need to track who the referral came from and contact the new lead. You can ask the referred person for more information later, if needed.

Consider one of these simple lead form combinations:

  • Referrer name, phone, and email; lead name, phone, and email
  • Referrer name and email; lead name, phone, and email
  • Referrer name and email, lead name and email

goburrito referrals

Make the sharing process seamless

Referrers should be able to access your franchise referral program, and share your franchise with their peers, in as few clicks or taps as possible.

Once people are on the referral page, make it as easy as possible for them to share your franchise:

  • Create an enticing headline that states exactly what people should do (share) and what’s in it for them (the reward)
  • Concisely explain the program, and what someone must do to earn the referral rewards, in a few simple steps
  • Include an easy-to-find call to action button to activate the sharing – it’s best if the button is in a color that stands out from the rest of the page
  • Give multiple options for sharing, based on the ways that people naturally share things they love with friends (including email, social media, direct messaging, and a referral link that customers can copy and share anywhere)
  • Direct customers to an FAQ page if they have other questions

crunch fitness franchise referral program steps

Nail your first impression with a message from referrer to friend

The message the referred friend receives through your program is often their first impression of your franchise company. Make sure the whole message sounds like it’s coming from a peer, and is written in their name.

Ideally, at least part of the message should be in the referrer’s own words (a personalized, typed message that the referrer adds before sending to a friend). 

But you can also use a prefilled message that sounds like the referrer wrote it, or suggest what they could include in the message, to make writing it easy. 

If you choose to create a prefilled message:

  • Explain the main points of why someone should purchase a franchise or purchase a product
  • Include an eye-catching CTA, to encourage the friend to take action
  • Be sure the message sounds conversational, and not salesy – like something the referrer would write

Express your thanks for referrals

Thanking referrers encourages them to make more referrals, because they feel appreciated. So, be sure to send a personal thank you note  whenever someone’s referral is successful – in other words, when the referral results in a purchase or brings in an interested franchisee candidate, at any stage. 

You might also post a public thank you for the referral on your social media page, especially if the referred friend purchased a franchise or made a big-ticket purchase

Franchise referral program best practices: For franchisee recruitment programs

If you’re planning on starting a franchisee referral program to grow your number of franchises, these additional best practices will help you achieve success:

Offer tiered (stepped) rewards to referrers

Why are tiered referral programs the best option when looking for referrals of new franchisees? The discernment process someone goes through when they decide whether they want to buy a new franchise is long. After all, opening and running a franchise is a major business decision, and takes considerable time, money, and effort. 

Many franchisee referrals won’t result in a new franchise opening – and if the referred person does open a new franchise, that usually happens a long time after the referral is first made. So, it’s vital to keep your referrers motivated to keep sharing. 

 You’ll want to reward referrers at different stages of the franchisee referral process, to incentivize continued referrals:

  • Give the first and smallest reward (say, a $5-$10 gift card) when a prospective franchisee reaches out
  • Give the second and larger reward (say, a smaller cash payout or larger gift card) if the candidate is qualified
  • Give a significant reward (say, a large cash payout, valuable tangible reward such as a tech item, or even a travel expense paid) if a referred candidate signs the franchise agreement and buys a franchise
    • Since franchise purchases are large investments, the ”purchase” reward for the referrer should reflect the value of the franchise purchase your advocate drove 

Referral Rock is flexible enough to run a multi-step referral program like this, with completely customizable incentives and reward stages

Promote your program in the right ways

Even with a well-designed referral program, it won’t get any traction if people don’t know about it. People need to know about your program for it to bring in interested franchisee candidates.

So, be sure to promote your program:

  • On your brand’s main website
  • In referral emails sent to your existing franchisees – all franchisees should receive an email, but the email should feel personal
  • In newsletters and other updates that your franchisees receive from you, that aren’t specifically focused on your program
  • Through social media posts
  • In email signatures and social media bios
  • In your franchisee portal, if you have one
  • In direct conversations – don’t be afraid to ask for referrals!
  • By asking franchisees to ask their friends, family, and colleagues if they know anyone who would be interested in buying a franchise

Make referral terms clear

Make sure referrers know the rules of your program:

  • Who should they refer (What makes an ideal franchisee? What are the requirements for someone to buy and maintain a franchise? Who would not be a good fit?)
    • Make sure detailed requirements for owning a franchise are clear – especially for people who don’t own franchises themselves
  • When does someone become eligible for different referral rewards?

Pro Tip: A referral program FAQ is an easy way to clear up concerns about terms, without cluttering your main referral program interface. 

Keep advocates in the loop about referrals

Referrers want to know if franchise candidates they referred expressed interest, were qualified, or even chose to buy a franchise – they’re invested in the process, so keep them informed. With software, it’s easy for referrers to check the progress of all candidates they referred. Being transparent about the  progress of referred candidates makes people more likely to refer in the future.

Franchise referral program best practices: For customer programs

Ready to get new customers throughout your network of franchises? Follow these additional essential tips when starting a referral program:

Get franchises on board

When you run a customer referral program across multiple franchises of the same brand, the branding and relative structure should look the same across all franchises. Ideally, referral programs should offer similar rewards across all franchises, but franchisees should have some flexibility to vary rewards. Referral software can help you maintain uniformity by hosting one program for all franchises, or multiple regional programs under the same brand.

Choose the right franchise referral rewards

Double-sided rewards (rewards for both the referrer and friend) are the best reward structure for a customer referral program, as they motivate frequent referrals as well as first purchases from referred friends. 

The most ideal rewards for the referring customer depend on their average purchase frequency.

  • Credits towards purchases, cash back on the purchase, free products, and upgrades are great rewards if purchases are made frequently, as they can be applied to later purchases
  • Gift cards to other businesses, event tickets, tangible gifts, and cash back (referral fees) are great rewards for service businesses and other businesses where purchases are infrequent, since the referrer won’t be expected to purchase again for a while

Rewards for the referred  friend, on the other hand, should always be directly tied back to your company. This will encourage the referred friend to make their first purchase. Discounts, credits towards purchases, cash back on the purchase, and upgrades are great friend rewards. 

Culligan International — a global leader in providing better water at home, at work, and on the go — recognized that organic word-of-mouth was a crucial part of its business. Many of its dealer groups already ran successful referral programs, but the process typically only rewarded the “referrer” and rewards were often issued manually.

The company piloted Referral Rock to test the idea of a more formal program that integrated with each dealer group’s CRM and made reward management easier.

“It took time for the new referral program to match the volume of the manual referral program,” says Allison Mortland, Senior Digital Marketing Manager at Culligan International. “But once we shifted to 2-sided rewards — where both the referring member and the referral are rewarded — that’s when the change happened and the numbers really started to go up.” 

Culligan Water referral program
Culligan Water’s referral program dashboard on Referral Rock.

Consider tiered and gamified rewards to motivate repeat referrals

Think about using cumulative incentives, which increase the reward customers receive each time they successfully refer a lead. This adds even more incentive for customers to keep referring several of their friends.

You might also enter all referrers into a drawing for a larger reward, like season passes or a tech item – one referral equals one drawing entry. 

Not all referral software can handle tiered referral programs and referral contests – but Referral Rock is robust enough to run programs with these complex structures.

Know when to ask for referrals

One of the best ways to ask for referrals is to simply ask, so don’t be afraid to ask for referrals. Timing is key here, though – the best time to ask is when you know your customers are happiest. For instance, you might ask customers for referrals when:

  • They’ve purchased from you
  • You’ve received a positive review from them
  • You’ve received a positive social media comment from them
  • They give you great in-person feedback
  • You know they were satisfied, and you’re sending an invoice
  • You know they’ve already recommended you outside of your referral program

Promote your program on a variety of channels

A well-designed referral program isn’t enough to motivate referrals on its own. People need to know about your program for it to generate new sales! Strategic promotion is key to getting your referral program in front of interested eyes. 

So, promote your program:

  • On your website (place a hero image or banner where it’s easy to find, and/or buttons in the top and bottom menus)
  • In mass emails focused on your program
  • In personal referral emails sent to your most satisfied customers
  • In news/update emails, confirmation emails, invoices, and other emails unrelated to your referral program
  • Through social media posts
  • In email signatures and social media bios
  • In direct conversations – don’t be afraid to ask for referrals when you know a customer is satisfied!

franchise referral facebook promo

Set and track revenue-related goals

Setting and tracking program goals tied to revenue will help you know whether your program is successful at a glance. Mainly, you’ll want to track your conversion rate: percentage of referred leads that become customers. In addition, it’s recommended to track the percentages of customers making referrals, revenue generated through your program in given time periods, average purchase value of referred customers vs. all customers. 

Once you’ve been running the program for a while, check your ROI, and use your data to inform any changes you make to your program (or to support maintaining your program structure).

Wrap-up

A franchise referral program is an amazing way to expand your reach of franchises or grow your customer base. If you’re ready for both, you can even run both types of referral programs at once. Be sure to follow the tips and best practices we’ve outlined above. And choose a software like Referral Rock that’s able to handle the detailed nuances of franchise referral programs — book a demo to learn more.