Kitchen facelift franchise Dream Doors has revealed that it has implemented a radical realignment of the management service fee (MSF) paid by franchise owners. The new system is designed to encourage sales with a staggered set of discounts to reward high turnover.
"This new deal adds thousands of pounds to our top performing franchise owners' bottom line," said Dream Doors Managing Director Troy Tappenden. "Those who continue to push themselves each year and help Dream Doors to grow more rapidly could see a 20 per cent increase in their profits as a result of the new initiative. The move is a huge incentive for our existing franchise owners and will also encourage new franchise owners to join Dream Doors. For many, this is the icing on the cake!"
Six existing Dream Doors franchise owners are already benefiting from the new scheme, with their turnovers having surpassed the £400,000 mark and qualifying them for reduced rates on their MSF.
"Dream Doors' current MSF is calculated as a percentage of a franchise owner's turnover.," Troy added. "For those that sell up to £275,000 of kitchens and kitchen facelifts, the fee is set at 9.2 per cent. Once this first benchmark is hit, the fee automatically drops down to 6.2 per cent of turnover secured over £275,000. On sales of more than £400,000, the fee plunges to a mere 4.2 per cent, well below the current market average of 12 percent for most franchises.
"The 9.2 per cent MSF had been fixed for many years. Today we feel the new staggered arrangement offers the best deal for all our franchise owners - it's a much fairer, more incentivised system that has gained wide support from the network. Experienced franchise owners are more motivated than ever and we still have all the resources we need to sustain our award-winning training capabilities and support system - particularly for new entrants."
Dream Doors' staggered MS fee deal starts on January 1st each year to encourage franchisees to hit higher targets before the end of the financial year, and so benefit from the reduced MS payments.
"In franchising, the MS fee is there to ensure franchise owners get the right level of backup they need," says Dream Doors Operations Director Kelly Chambers. "It also provides franchisors with a vital revenue stream to invest in marketing the brand, growing the franchise network, and providing training and support for all franchisees. We spend hundreds of thousands of pounds each year on these things. Without the MSF it simply wouldn't be possible to sustain a brand the size and scale of Dream Doors."
"Lowering the fee for increased turnover could be seen as a risky strategy, but we're confident the net income to Dream Doors will be more or less the same. Ultimately, it will encourage those franchise owners that are happy with a turnover that sits around the mid £300,000 mark to push that little bit harder and break through the £400,000 barrier. Doing that will make their businesses more profitable, secure more revenue for Dream Doors as a brand and help fund further developments within the business."
Published: 9 November 2009
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