Eagle Boys and Video Ezy in loyalty program tie-up as franchisors band together to boost sales

Pizza chain Eagle Boys is the latest franchise to team up with another operator in a bid to attract new customers, although the peak industry body says franchisees should be wary of “multi-branding”.

As part of its expansion drive, Eagles Boys will join forces with the Video Ezy franchise, Australia’s largest video and DVD rental chain.

Eagle Boys will align itself with the Video Ezy Flash Rewards program, rolling out a nationwide offer as part of the 12-month program.

The partnership will give Video Ezy Flash Reward members discounts off Eagle Boys pizzas, in addition to other discounts across food, beverages, books, magazines, movies, music and event entertainment.

Eagle Boys chief executive Todd Clayton said in a statement the partnership will be an effective way to attract new customers to the brand and fuel 2011 expansion targets.

“While Eagle Boys is Australia’s second largest pizza maker [after Domino’s Pizza], we still see, and seek to identify, many potential markets for us across the country as we work towards the number one spot,” Clayton said.

“It’s a great opportunity for our franchisees to network and identify emerging demand by talking to new customers.”

Clayton said the company is experiencing rapid store growth as a result of increasing customer demand, spiking double digit sales growth and inquiries from potential franchisees.

“As a result, Eagle Boys Pizza will open an average of more than one new store each week during the first six months of 2011 as part of our $18.5 million expansion strategy for the current financial year,” he said

Steve Wright, executive director of the Franchise Council of Australia, says the franchise industry is facing major challenges as consumer spending remains at an all-time low and the skills shortage worsens.

Wright expects the franchise sector to embrace “multi-brand thinking” as businesses struggle to spark sales amidst falling foot traffic.

He says a lot of franchisees are considering the prospect of partnering with other franchisees in a bid to diversify their offerings.

“One example is Dymocks and Healthy Habits [with the establishment of Healthy Habit outlets within Dymocks stores],” Wright says.

However, Wright says there is a risk associated with franchisee partnerships, as seen with the recent downfall of bookstore chain Borders, which contain franchise-owned Gloria Jean’s Coffees outlets.

Earlier this year, the collapse of Borders’ parent company REDgroup Retail saw the appointment of administrator Ferrier Hodgson.

Ferrier Hodgson has since closed a host of Borders stores, affecting 14 Gloria Jean’s franchisees operating within these outlets.

Gloria Jean’s has said it is looking for new locations, along with preparing financial assistance packages, for franchisees affected by the closures.

“Although we have taken extensive measures to ensure continuous service to our valued guests, unfortunately the closure of these stores will force our coffee houses at these locations to cease trading,” the company told StartupSmart.

This article first appeared on StartupSmart, Australia’s top site for entrepreneurs starting a business.