Photo by Vardan Papikyan on Unsplash
August 29, 2024
Should Other Retailers Offer New Franchisee Incentive Packages Like Batteries Plus?
Batteries Plus is launching an impressive incentive package valued at over $107,000 to attract new franchisees who commit to opening a store by the end of 2024. The comprehensive offer includes benefits such as waived franchise fees and discounts for veterans, first responders, and BIPOC owners, as well as free inventory, waived royalties, and freight relief incentives. This initiative is aimed at easing the entry process for prospective business owners and fast-tracking new store openings.
Joe Malmuth, chief development officer at Batteries Plus, emphasized the company’s commitment to supporting franchisees from the outset.
“Batteries Plus is committed to empowering our franchisees with the tools and support they need to succeed from day one. This incentive package is designed to remove barriers to entry, making it possible for new franchisees to open their doors and start serving their communities within this calendar year. The demand for our products and services has never been higher, and this initiative is all about meeting the needs of customers who are eager to have a Batteries Plus location in their community.”
Joe Malmuth, chief development officer at Batteries Plus, via PR Newswire
He noted that the incentive package is designed to eliminate barriers and enable new franchisees to start operations and meet community demand promptly. With ambitious goals for 2024, including opening 39 new stores and signing 45 additional locations, Batteries Plus is accelerating its expansion efforts. The company, based in Hartland, Wisconsin, currently operates over 800 stores nationwide and aims to extend its footprint further through this new franchisee initiative.
According to its official website, Batteries Plus estimates that new franchisees can usually “expect to spend anywhere from $199,025 to $361,200 to open their new Batteries Plus store.”
This includes a one-time franchise fee of $39,000, which grants the right to use the brand name, access the proven business model, and benefit from support resources. Additionally, up to $40,000 for leasehold improvements will be needed for the store location. Initial marketing expenses are estimated between $10,000 and $20,000 to promote the grand opening and attract customers.
According to the website Franchise Resales, Batteries Plus is a well-established brand in the battery and light bulb industry, offering a diverse product range that appeals to a broad customer base. Franchisees benefit from comprehensive training, ongoing support, and assistance with site selection, store setup, and marketing. The consistent demand for batteries and light bulbs ensures a steady revenue stream while being part of a larger franchise network. This also provides economies of scale and cost savings.
However, on the negative side, the site notes that starting a Batteries Plus franchise involves a large initial investment. Franchisees must also pay ongoing royalty fees, which can reduce profits. The market is competitive, with other retailers and online options offering similar products. Success is highly dependent on location choice, and the franchise’s focus on batteries and light bulbs limits product diversification. Additionally, strict franchise agreement terms can restrict business operations, requiring careful review before commitment. Evolving technology with LEDs and new battery types could also prove to be detrimental to existing product lines.
By reducing upfront costs and providing additional support, the incentives may mitigate some of these initial drawbacks, making the venture more attractive and accessible. This could provide a more favorable starting point for franchisees, allowing them to establish their business more quickly and efficiently.
Meanwhile, franchisees in the fast-food sector have been facing significant challenges.
For example, in California, rising minimum wages for fast-food workers have led to increased menu prices, causing some consumers to view fast food as a “luxury.” Brian Hom, a franchisee of Vitality Bowls in San Jose, reported in April that customers are reconsidering dining out due to these price hikes, opting instead to prepare meals at home. Hom has already increased prices twice this year to cover the wage increases. The trend is affecting fast food nationwide, with similar concerns voiced by other franchisees, like Scott Rodrick of McDonald’s.
Furthermore, Subway’s recent $6.99 footlong sandwich promotion has ignited backlash from its largest franchise group, the North American Association of Subway Franchisees (NAASF), which “represents about 2,500 franchisees companywide, who operate roughly half of Subway’s nearly 20,000 North American restaurants,” according to the New York Post. Bill Mathis, NAASF’s chair, has advised franchisees to opt out of the promotion, citing concerns that the discount could lead to substantial losses.
Discussion Questions
How can retail franchises manage significant initial investments while adapting to competitive pressures and shifting consumer expectations?
What is the impact of franchise incentive packages on the long-term success of new stores, and how can they be designed to benefit both franchisees and the franchisor?
With the rise of data-driven pricing, how can retail pricing strategies balance competitiveness with ethical transparency?
Poll
Loading …BrainTrust
Bob Amster
Principal, Retail Technology Group
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Neil Saunders
Managing Director, GlobalData
Recent Discussions
More Discussions
How Can Retailers Crack the Gen Z ‘Riddle’?
Gen Z is becoming an increasingly important consumer demographic, but an elusive one to map. How…Does Bath & Body Works’ Scented Holiday Campaign Pass the Sniff Test?
Bath & Body Works is kicking off a new campaign with scent being at the fore…Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?
Demand for the things Batteries Plus sells is certainly still present in the market from both a consumer and business to business standpoint. The problem is that it is a retailer that often flies under the radar, so it needs to nudge people into starting a franchise, especially in new markets. Once a franchise is opened in a location, Batteries Plus has a pretty good track record of growth – which is why this expansion drive makes sense.
As a franchisor, the challenge for Battery Plus is attracting their share of the next wave of corporate employees ready to strike out on their own. They’ve created an attractive franchisee package to reduce the risk of opening a new location while publicly signaling their strong commitment to franchisees’ success. Battery Plus is creating awareness that most other franchise companies (excluding the well-known names) must consider as they compete for franchisees. Through this incentive program, Battery Plus is reducing the entry barrier (both economic and psychological) and garnering greater market awareness, which will benefit the company and its future franchisees.
Wait… there’s a store that sells nothing but batteries? (Perhaps the “Plus” part is bigger than one might think?) But the novelty doesn’t stop there: what better way to befuddle the anti-DEI army than to put both POC and Veterans in the mix? If nothing else, I give this effort A+ for creativity; but for practicality…uhm…harsh as they may seem, fees and covenants and requirements and the whole slew of “must have”s that are easy to dismiss as “barriers” exist for a purpose; I’m not sure it’s wise to eliminate them – at least arbitrarily – however laudatory the ownership goals may (otherwise) be.
Batteries Plus doesn’t sell hamburgers or fried chicken, printing, carpet cleaning, or frozen yogurt, and most of their stores are in small strip malls, sandwiched between larger mattress stores, larger Fed Ex Office stores, sushi restaurants, or Chipotle restaurants.
AA batteries and light bulbs aren’t as sexy as foot long deli sandwiches, furniture, or holiday gifts, so Batteries Plus probably wouldn’t be the first franchise entrepreneurs would consider.
However, the demand for batteries and light bulbs is constant and universal, driven by the need for everyday household and commercial use. From powering remote controls to illuminating homes and offices, these essential items are always in demand. This steady requirement makes Batteries Plus a reliable and potentially lucrative business opportunity.
Their target market includes consumers and businesses that require reliable sources for batteries and light bulbs, such as homeowners, small businesses, and tech enthusiasts. They cater to customers who value convenience and specialized service for their electronic needs. Additionally, they attract people looking for hard-to-find battery types and lighting solutions.
Although batteries of all types are available in every type of retail store, car wash, and on several pages on Amazon, customers who need help choosing batteries often visit Batteries Plus.
Franchisee incentives are a good way to attract attention, as they did here, and they’re probably much needed. Db
Attracting good operators has always been a challenge in the franchise game, and it hasn’t gotten any easier. Offering attractive upfront incentive packages can certainly help operators like Batteries Plus standout from other franchise opportunities, but the challenges remain. Opening stores is relatively easy, and the allure of business ownership is compelling for people wanting to be their own boss. However, delivering a consistent experience for shoppers, maintaining operating standards and remaining profitable in the long-term is difficult for many networks.
Taking on a franchise requires capital, understanding the business model, a thorough analysis of the financial plan and prospects, as well as identifying availability of desirable locations. All franchise opportunities are different.
Incentives can be an effective bootstrap to get started and, to the extent that the franchisor can withstand the initial cost, incentives can be a win/win.
Data-driven pricing and the resulting competitiveness are not endemic to franchise operations. Data-driven pricing, whether seasonal, EDLP, or dynamic applies to all retail businesses
Batteries Plus stands out not just for its comprehensive assortment of batteries and bulbs, but also for its service offerings, which make the business qualitatively different from most other franchises.
Fixing auto key fobs, mobile phone repair, tablet screen replacements and watch battery replacement all require trained technicians, not minimum-wage clerks.
The assortment itself is costly to maintain, I suspect, with numerous slow-turning SKUs that must be kept on hand to accommodate walk-in customers with very specific and often urgent needs.
Finally, I’ve never seen a Batteries Plus promotion. What offer could possibly drive traffic, when shopper needs are entirely utilitarian?
Taken together, these factors imply a different economic model compared with the typical burger or sandwich shop. Maybe this is a reason why Batteries Plus feels the need to offer significant franchisee incentives.
Batteries Plus is a limited franchise with a very limited income stream. Franchise investors need to be keenly aware of what this means both now and in the future, as well as the repercussions of always competing with retail giants like Walmart, and Amazon on each key sales item.
Definitely more limited than many types of retailer, but if franchises get into the B2B market there’s quite a bit of potential.
Batteries Plus has a solid reputation in our region, and unlike other franchised brands challenged by inflation and a pull-back in customer spend, BP seems to hold its own in capturing and growing market share.
Anything the company can do to soften the initial investment requirements is a win for both parties and should translate into success for their expansion efforts across the country.
Batteries Plus is certainly making an aggressive push with this incentive package. While waived fees and free inventory are attractive, it’s important to consider the intense competition for batteries, which are widely available in many stores and online. Even with these incentives, new franchisees will need to navigate a highly competitive market and carefully evaluate ongoing costs.